One thing worth noting, for those that are questioning the "sanity" of this or asking how Klout can be worth $100s of millions, etc:

"...a mix of cash and Lithium private stock..."

So take any publicized valuations with a very very large grain of salt. It's fuzzy at best to value a deal based on the stock of another company which itself has a valuation based on the fractional investment pricing of 3rd party VCs.

(Note: I don't have any skin in this game either way, so please correct me if I'm wrong somewhere!)

Lithium is pretty late stage so the stock value is probably close to reality.

Klout is a perfect example of great marketing trumping great product. Klout scores influencers, but in reality it's not that much superior to tools like Followerwonk, BuzzSumo, or Twtrland. But they came up with a score that ppl could digest, they had a memorable brand, and they created PR with the gamification of these social scores.

I might be wrong, but the real value if any in Klout is that they have a bunch of data aggregating social media profiles for a bunch of influencers, but only some of it is public like Twitter - stuff like Instagram/FB is opt-in (I might be wrong). But all in all, it's not something you can't gather on your own with a year worth of development.

Klout was the first modern "love-to-hate" startup. It's the proto-RapGenius.

RapGenius is a bad example. Their product (crowdsourced lyric annotation) obsoleted other lyrics sites almost immediately. That they had to play the dirty SEO game is unfortunate, but not surprising, given that they were competing against a field of even dirtier sites.

Klout, on the other hand, offered little more than reputation snake oil, which is why few take them seriously and the investors are lucky to be leaving with the shirts on their back (which is what a low nine-figure sale means). Much like Quora, there was a focused bubble of intense love, with a very long tail of disdain outside. Except Quora has a purpose.

Obsoleted is pretty strong - do you have data to support that?

Have you seen other lyrics sites? They're tripod-level garbage.

Rap Genius:Lyrics Sites::Stack Overflow:Q&A sites

Doesn't matter if they're garbage - the point raised was whether RapGenius has made other lyric sites obsolete. So far, we've heard opinions from people, but I've seen no data to support the theory that these sites are now out of the game.

That's not what obsoleted means, and subjective. When all you want is lyrics and the lyrics are the same across all sites the sites themselves are pretty interchangeable.

Depends. When I'm looking up lyrics, I'm looking them up to try to figure out what they mean. Before RapGenius, the only decent crowd-sourced lyric meanings site was SongMeanings. RapGenius, on the other hand, has a much better interface for allowing the community to pick apart songs, without any of the shady stuff (on the site itself, at least).

All great - but not proof that RapGenius has obsoleted traditional lyrics sites like azlyrics.com or metrolyrics.com.

You're right. Klout as a standalone service was unviable from the beginning. Especially in light of the up-and-coming services like Quora, Thoughtly, Medium, etc., that actually attempt to measure and curate according to the quality of the person talking, Klout is extremely lucky to be making their exit now.

Quora was a bait and switch, much less ethical than Klout. Medium is a self indulgent blogging echo chamber.

Rap genius acted badly, Klout inspires others to act badly. Seems like an entirely different scale.

I hate to jump on the Klout-trashing bandwagon...but it definitely was floundering around. Its new redesign made it look like another generic social aggregator, contained significantly less data and insights (hard to believe, but yes), and was unreadable, to boot. But the randomness of the "Klout Perks" initiative seemed to be a sign of real meandering..."Use Klout and get a deal on Chicken McNuggets!" (http://www.publicrelationsprincess.com/2014/02/mcdonalds-chi...)

Yeah, hard to say what their pivot was going to be, so this acquisition is a better outcome than where things seemed to be heading.

Ugh. Klout is the worst sort of horoscope scammy bullshit out there, it sucks that the industry is so broken that worthless companies like this can make profitable exits.

The last valuation for Klout was $200M, and they are being acquired for "low nine figures" ($100M-$200M). This is far from a profitable exit.

I don't get it. This is completely baffling to me that this is a company worth 9 figures.

You can't assume an efficient or even real market. Valuations are designed to benefit certain people. There's virtually nobody that would benefit from marking down the valuation of a company, and there are motivations that would lead to acquiring at inflated prices. For one, if you're buying something for the prestige of owning it you don't want to prove it worthless.

And worth nine figures to another company which appears (from TFA) to be worth nine figures itself. The Valley is amazing sometimes.

1. Raise $100 million.

2. Hire 100's of talented engineers for above average salaries and perks.

2b. Make them do something that sounds challenging and hard to understand, but ultimately useless.

3. Sell to a greater fool as an acqui-hire for $150 million

4. Earn a few million in profit.

5. Repeat! (because you didnt get a 100X return, just a slim one)

Perhaps the take-away lesson here is that the hiring process hurts a lot, and companies will pay millions of dollars to avoid it.

So, a startup that hires a bunch of developers to hack as a team on some open source project and fires quickly then flips the team to a bigger company[1] could work?!?

sadly, I thought of a domain name for this: teamchurn.com

1) obviously paying a chunk to the team

It's only worth it because someone was willing to pay it. The last chump to hold the stock before the company unravels eats the loss. Early founders and VCs have cashed out long before that. It's an unfortunate game, selling dreams instead of substance.

It's about generating noise rather than value...because humans.

Who would buy a failing start up for $100m? I guess that's why I'm not an investor.

I wonder what Klout's "klout score" would be for themselves, if they examined their mentions on social media.

I haven't heard anything about this nonsense for months.

Klout's "klout score" = 87.

http://klout.com/#/user/klout