Acquisition truths - Facebook/Instagram

So Facebook laid down cash and stock worth $1Billion to buy Instagram. In this world we live in the following can be true:

1. $1Billion is a ridiculous amount of money for a 15 person start-up with no revenue

2. Facebook could have copied much of Instagram’s work and saved a lot of money

3. Technology companies seem to have lost faith in internal development to some extent

4. There was likely some competition to buy Instagram

5. As Facebook is growing so fast and they will IPO soon, they most likely made the right decision in buying Instagram for $1Billion 

Thing is, shareholders/owners are fairly rational. They tend to agree on what is right to maximise value with some fairly near term horizon (i.e. 12-24 months). No shareholder likes dilution or less cash unless there is a reason for it. A number of strategy discussions would have shown, to keep building the picture upload story AND strengthen Facebook’s mobile position, Instagram were a fast growing threat…Eliminate that threat before an IPO before it becomes a viral monster hit. 

Now, I’ve been around a while ;) I remember Cisco paying $4Billion for Stratacom, no way it was worth that, far too much etc. It became the voice/data platform for Cisco which to some extent explains why “24” has Cisco IP phones…Some crazy prices are paid because the feeling is it makes sense in the long term, that’s what has happened here. Simple. 

PeerIndex raise $3M

And then PeerIndex raised money, about 10% of what Klout has raised but I feel they will get more in next 12 months. http://semanticweb.com/peerindex-raises-3m-in-funding_b27556

There is definitely room for 2-3 players in the space but Klout have been very good at building an elegant website and people actually talk about it as a currency. I think they are still very slow on Europe though, this is because they see US as the target market but the “influential group” they need is so small, the winner will be a global story. Maybe Klout and PeerIndex should merge and then get acquired?

As a simple user I hope there is more free stuff for Europeans ;)

Regardless good luck to @Azeem and team. I hope they make a more exciting site with really nice offers!

Klout - and the big bucks

They just raised $30M, that’ll fix a few things ;) A friend from a major research said the following, which I liked…There is no perfect measurement of influence yet and it’s probably best to follow two scenarios

1.  Use the information as based in a qualitative approach, so influence scores are less important OR 

2.  Think about an measure of influence, which is tailored to the specific conditions of discourse and actors / institutions who participate in this discourse

But the main issue is that non-registered people aren’t fully measured but if one company has momentum/adoption then they will have the largest coverage and solve that problem. 

I assume Klout will now invest heavily in business development and get the perks for all geographies, meaning we will all want to be apart of their currency and then they get the required network effect and more money from advertisers and more attention from you and I…

Like I always say, it ain’t perfect, but people have influence and “currency” and Klout are best at approximating it, not equal to it, but getting closer than anyone else, way ahead of Techcrunch darling PeerIndex…

Klout is a game

and I wanted to play it. I have even tried to talk with their founder to work with them, to stretch their reach into Europe. Its a fun and potentially commercially interesting idea. Measure the influence of someone and sell that information to advertisers. To me, that is compelling and while with Attentio I regularly saw companies prepared to pay money to get their stuff to the hallowed influential. But it is fraught, torn with anomalies, strife with laziness and married to ego. 

Klout in their defence, have tried hard. They have produced a nice looking site, (PeerIndex is ugly) and have brought in a few advertisers, some pretty sexy ones too, Microsoft, Spotify, Disney…They know there is something there, but I think they are failing at some basic rules of measurement. 

1. Don’t change the rules too often. Measurement needs to stay constant and change very slowly, imagine someone defining the “metre” a few times a year, wait a second, a second is longer than we thought. 

2. Have good maths. If I am lower on all measures than someone, I can’t have a higher Klout score, period. 

3. Hire serious mathematicians

But then I sigh. This is just a game, and not in that “life is a game” way, its just for fun. The best thing for Klout to do, is just to accept that and people who play the game well, get prizes or upgrades AND sometimes the advertisers will win, they may actually find an influencer who can change behaviour, that’s their prize!!!

In everything I have seen, Joe Fernandez comes across as sincere and nice, but I think he will need to hand this over to an advertiser/agency guy, who sees this for what it is and sells to advertisers so there is glut of goodies for the players, then ultimately sell the business. It’s just a game…

GM Police not using online influence wisely…

I talk about online influence. Of course situation or timing is important. With recent riots in the UK, police twitter accounts are getting greater following. One example is the Greater Manchester Police @gmpolice with near enough 100,000 followers. But a lot of these “newly influential” need advice on what they should write, so they can wield this power properly. A classic example of this was displayed just an hour ago. 

@gmpolice wrote the following “Mum-of-two, not involved in disorder, jailed for FIVE months for accepting shorts looted from shop. There are no excuses!”

The tweet fails, it is insensitive, even ridiculous, but why?

LACKING EMPATHY: The sentence is seemingly harsh, why rejoice in that?

PSEUDO TEACHER: Why would the police feel it is their job to warn us via twitter on what can happen to “naughty people”

NO SYMPATHY: This is a mother of two, who will presumably be behind bars for half a year. What about her children and her future earning potential with a criminal record.

AUDIENCE: The people reading the tweets are likely not the people who need the lesson OR they put it there to show people that they are doing their job, which shows a real lack of confidence…

They pulled the tweet, but it still here http://yfrog.com/kg1f0pp - they rightly apologise, but this will be retweeted and no doubt will enter mainstream media. Note @davidallengreen is writing a piece on good use of social media by the police in the New Statesman…

Going forward for police/authorities: make sure your tweets pass the “effing obvious” test, is the tweet passing on vital information, is it your duty or responsibility to pass on the information, are you writing it in a calm manner? If yes, then proceed. 

Klout’s big plan (musings)

Klout is building up critical mass meaning targeting millions of active profiles (people who log in and connect to sources). They are generating data about these people and classifying them as influential about topics and get others in network to vote. They are starting to work with advertisers to get perks to the people who are using the site. This creates word of mouth and more people join. NO REAL MONEY WILL BE MADE HERE, this is “small beer” and with nice graphics and regular score changes it is just to get people to the site. 

When there is critical mass they can sell their stream of data to search engines. So when you or I search there will be a scrolling module showing people who are influential about the topic and in your vicinity (note their partnership with Foursquare). The big three will pay a lot for this and so will other services like LinkedIn (recruiters get extra data). 

Their second model will be to sell the data to social media measurement companies but also to companies that measure reputation. These streams will be cheaper than the sale to search engines but will still be multi-million business. 

If Klout is super successful and lucky they can have their own search engine and be the first really successful people/skills search engine but I feel they may get acquired before that…

Klout and Foursquare, I know why, now ;)

If you have Klout and you check in to a location, the tie up means that the retailer can offer a special deal to those with Klout over 40, 50, 60 and so forth. It is a partnership to give value to the Klout currency, but means absolutely nothing for the actual Klout score (IMHO). Thanks to @graphicdesignNY for putting that point across…

Klout and Foursquare, why?

Klout has now integrated Foursquare into their score. We can see no good reason for this. How often you check in, hardly gives you influence, even if you are a mayor, King or Lord of the manor. It’s not that Foursquare isn’t useful, we just don’t know how it infers authority. If one does lateral thinking you could argue that someone checking in to the White House, or Houses of Parliament may be influential, but its a stretch. 

Feedback on their Facebook page isn’t very good. It is interesting also to have feedback from really influential social media people through twitter, who think it’s a little bonkers…

http://www.facebook.com/TheRealClint/posts/2241870969041

There are other posts if you scroll to the link here 

http://www.facebook.com/kloutfb

In the end, if you are not a major user of Foursquare apparently that won’t hurt your score, but then, why add it all?

Jay Baer on building online influence

Jay Baer explains how to build up online influence —- in short, there are no shortcuts…http://corp.klout.com/blog/2011/07/klout-stars-jay-baer/