Lithium buys Klout: a tale of fish-balls and cat-cheese
You have a company that really doesn't have a business model, it has a cool name, and panders to the vanity of the kind of people who like to promote themselves incessantly. What would you do? Sell it for a $100 million in play money, that's what.
Let's get a little background here: social media is big. Facebook, Twitter, blah, blah.
Marketing people, who are always the first to get laid off or fired when things are not going well in sales, are desperate to get their employers noticed on social media because, it's engagement. Engagement is a word that means that you are relevant on the Internet because someone said something about something that has a URL or a link to something that you have online.
There are more companies in the world than fava beans who claim to have <insert name of thing that may or may not be a technology> that promises to help <insert the word brand or marketers> the ability to identify <insert the word conversations or influencers> in social media who can help <insert something that sounds vaguely ROI-ish or engagement-y>.
This is the social media gold rush where, on the back of Facebook and Twitter, start-ups promise to get you noticed by getting people to talk about you.
Klout claims to be able to objectively rank people based on their social media activity. Interaction, re-Tweets, Likes etc. etc. It's cat-cheese. Everyone knows it is cat-cheese because it once ranked Scoble higher than Obama. It is an over-hyped failure once you take into account that it has raised close to $40 million to serve up this mess.
Lithium Technologies has raised $150 million to build a SaaS platform that delivers something to enterprises. That something is supposed to do something with blogs, forums and live chat, and stuff to tie you in with your customers and engage with them. It helps doofuses in corporations who have to please their geezer bosses with something social media-ish.
According to re/code, which broke the story:
The deal is signed but not closed, said sources. And, while the numbers are fuzzy given they account for a mix of cash and Lithium private stock, the acquisition is “in the low nine figures” — that is, at least $100 million.
This is the play money because, Lithium doesn't have a $100 million to fork over, and Klout isn't worth a $100 million. But, there's lies, damned lies and over-stretched venture capitalists trying to spin poop into silk.
Mark my words, this is the bursting of the social media marketing bubble.