Why Klout Is Worth Way More Than $200 Million

Klout, everyones favorite red-headed step-child, was purchased by Lithium for $200M. That riled a lot of feathers in the tech world. Everyone loves to hate on Klout. Whether they hate Klout because they don’t think people should be graded or simple jealousy, it is clear that the media’s hate towards Klout dramatically hurt their value. People are talking about the data infrastructure capabilities and data science resources Klout will bring to Lithium, but the real value of Klout, and why they are worth way more than $200M, is in the data itself.

Disclaimer: I work for Gnip, and we provide access to social data, so I am inherently biased about the value of social data, but I’m also incredibly close to it and can see the immense value it can provide.

Klout has amazing data about a person; it has their score, topics they share about and are interested in, behavioral data, even consumer preferences through their perks program, but they have one piece of data that no one else has; federated social identities.

I know that “federated social identities” is jargon that most people, even those in social data, don’t understand or think about; but it is incredibly powerful. Let’s take analyzing a single person as an example. If you look at a single person on Twitter you can glean a lot about them and you can draw many conclusions about their tastes, preferences, affinities, etc. Now let’s take a look at that same person on Facebook, again you can glean a lot, often different things than you could from Twitter. Now do the same for Tumblr, Instagram, Google+, LinkedIn, Foursquare, YouTube, WordPress, last.fm, even Bing search behavior and what do you come out with. A completely different view of that person —  a more holistic view. Without being able to tie all of those different insights back to a single person, you have many fragments sets of insights about what are seemingly different people. Klout has the ability to tie that all back to a single person, no one else can do that.

Now imagine being able to federate hundreds of millions of accounts together. According to details from the deal Klout has 500 million accounts they can combine and assign. That’s HUGE!

Think about it this way, adding this new data in to the view of a person is not additive, it is multiplicative. Having federated social identities means you have exponentially more insight into a person than you do with siloed social identities. In a world where SnapChat is valued in the billions, I have no doubt that the federated social identities alone are worth more than $200M in the long run.

I’d like to give congrats to Lithium for recognizing a smart buy and the hard working, often outcasted, people at Klout for building something truly amazing.