Lithium Technologies, which makes social software that connects companies with their customers on social networks, was set to announce that it is acquiring social influence measurement company Klout on May 27. However, the news had already been leaked to major US tech media long before the official announcement, with stories in TechCrunch, Business Insider, and Fortune among others.
The news had actually been discussed in February, with US$100 million batted around as the aquisition amount. While Facebook just bought virtual reality company Oculus for US$2 billion, and chat service Whatsapp for US$19 billion, Klout is worth just US$200 million to Lithium.
In the past, several hundred million would have been considered a respectable acquisition amount, but Facebook has been changing the goalposts with its billion-dollar deals. It’s easy to see the potential of virtual reality gaming with Oculus and Whatsapp is extremely popular; but technology that can put a value to influence on the Internet is arguably equally valuable, if not more so.
Sequoia Capital estimated what WhatsApp had 450 million active users in February 2014, while Klout’s website notes that it has scored over 500 million profiles. It may not be an apples-to-apples comparison if WhatsApp is viewed a service that users may need to use every day, whereas a Klout score is a reference tool.
The reality is that Klout scores were not very popular as reference tools. They are less popular than more concrete forms of measurement like the number of Instagram or Twitter followers. Its Perks reward programme is US-centric, so less interesting to Asian users. It had come up with a proposition for users to share ‘+K’ points with other users, but generally few people bothered. It all meant that people might have signed up to check their Klout score, and not returned after that.
Lithium announced in February that it serves 100 million unique users a month. It could well inject some fresh interest in Klout, which has also been trying to become more relevant to its users, as a popular Mashable article notes.
But is it undervalued US$200 million? It’s hard to say. But it’ll likely be easier to get a return on investment on that amount than on a billion dollar acquisition deal.
Update: Lithium Technologies confirmed its acquisition of Klout shortly after this article was written.