What Happened To Klout & Why Did It Fail?

Klout was a social influence measurement tool that ranked individuals based on their online presence and interactions. Launched in 2008, it quickly gained attention but faced criticism for its scoring system. Despite initial success and a high-profile acquisition, Klout was shut down in 2018, marking its rise and fall.

What Was Klout?

Klout was a social influence measurement tool that ranked users based on their online presence. Its unique value proposition lay in quantifying social media influence, enabling brands to identify key influencers. Notable achievements include partnerships with Microsoft and Salesforce, and its acquisition by Lithium Technologies for up to $500 million.

What Happened to Klout?

The story of Klout is a fascinating journey of innovation, controversy, and eventual decline:

• Founding and Early Success: Klout was founded by Joe Fernandez in 2008, during a challenging period in his life. The beta version launched on Christmas Eve, quickly gaining traction and attracting investment from notable backers like Kleiner Perkins and Microsoft.
• Controversial Scoring System: Klout's algorithm, which initially measured social media activity, faced significant criticism. The controversy peaked with "Bieber-gate," where Justin Bieber had a perfect score while President Barack Obama had a much lower score, leading to public outcry and algorithm tweaks.
• Revenue and Partnerships: Klout generated revenue through its Perks Program, partnering with major companies like General Motors and Microsoft. These partnerships allowed businesses to engage with social media influencers, driving significant revenue and user engagement.
• Acquisition by Lithium Technologies: Despite its controversies, Klout's innovative approach led to its acquisition by Lithium Technologies for up to $500 million. This acquisition marked the end of Klout's independent journey but highlighted its impact on social media analytics.
• Eventual Shutdown: Klout was shut down in 2018, a decade after its founding. The shutdown marked the end of a controversial yet influential chapter in the history of social media measurement tools.

When Did Klout Shut Down?

Klout officially shut down on May 25, 2018. This marked the end of its decade-long journey in the social media analytics space, following its acquisition by Lithium Technologies in 2014.

Why Did Klout Shut Down?

1. Controversial Scoring System:

   Klout's algorithm faced significant criticism for its perceived inaccuracies and biases. The infamous "Bieber-gate" incident, where Justin Bieber had a perfect score while President Obama had a much lower score, exemplified these issues. Critics argued that the scoring system encouraged unhealthy competition and could be easily gamed, undermining its credibility.

2. Market Competition:

   Klout struggled to maintain its position in a competitive market. Despite early success, it faced skepticism and competition from other social influence measurement tools. The company had to continuously improve its algorithms to stay relevant, but controversies and public skepticism made it difficult to sustain momentum.

3. Technological Challenges:

   Klout's technology had to evolve rapidly to provide accurate influence scores. The company incorporated various signals like Wikipedia pages and Bing searches, but balancing consumer and enterprise products proved challenging. Differing opinions from investors on which to focus on further complicated its technological strategy.

4. Public Perception Issues:

   Public perception of Klout was mixed, with many viewing it as a vanity metric. Critics like John Scalzi dismissed it as creating "status anxiety," and articles from CNN Money and The New Yorker criticized it for encouraging narcissism. This negative perception hindered its ability to attract and retain users.

5. Integration Challenges Post-Acquisition:

   After being acquired by Lithium Technologies, Klout faced integration challenges. The merger with Spredfast to form Khoros LLC did not alleviate these issues, and the combined entity struggled to find a clear direction for Klout's technology. This ultimately led to the decision to shut down Klout in 2018.

Lessons Learned from Klout's Failure

• Algorithm Transparency: Ensure your scoring systems are transparent and fair to avoid public backlash and maintain credibility.
• Market Adaptability: Stay agile and responsive to market changes and competition to sustain growth and relevance.
• Public Perception: Manage public perception carefully; negative views can significantly impact user retention and brand reputation.
• Technological Focus: Align technological advancements with clear business goals to avoid internal conflicts and strategic missteps.
• Post-Acquisition Integration: Plan thoroughly for post-acquisition integration to ensure smooth transitions and maintain operational efficiency.
• Value Proposition: Clearly define and communicate your value proposition to avoid being dismissed as a vanity metric.
• Investor Alignment: Ensure alignment with investors on strategic priorities to prevent conflicting directions and focus.

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