Joe Fernandez knows how much you’re worth—on Facebook (FB) and Twitter (TWTR), at least.
He is the co-founder and chief executive of Klout, a website and app that ranks people on a scale of 1 to 100 based on the influence they wield online. The Klout Score is determined by an algorithm that tracks how many social-media connections someone has and factors in such sources as Wikipedia along with other information that the company keeps under wraps. The six-year-old company analyzes more than 15 billion pieces of data every day and computes more than 100 million scores.
Trading in popularity has its benefits. Last week, Klout reportedly was bought by software maker Lithium Technologies (LTHU) for an estimated $100 million—re/code broke the story—but so far neither side has confirmed the deal.
Fernandez spoke with Bloomberg Businessweek just on the heels of the deal reports—he wouldn’t confirm them for us—about the philosophy behind the popularity ranking, the loneliness, and hunger that drove him to create Klout, and why sharing an office address with Twitter was a good thing.
Were you always a math nerd?
No, not at all. I was a low-C student in high school and didn’t realize how behind I was until college [at the University of Miami]. There were all these books that people assumed you’d read that I hadn’t. I’m supercompetitive, so once I found that out, I just focused on studying. I had a really high GPA, but I never graduated college.
You didn’t graduate?
You know how you’re supposed to have a certain number of credit hours to graduate, but they have to be in certain core categories? I didn’t have the right categories. It wasn’t a problem. No one has ever asked to see my diploma. I’m honest about not graduating. I prefer to say I “retired” from college.
So what did you do after you retired?
I took a job with a tech consulting firm that moved me to Los Angeles. I was basically an engineer working on writing code for startups. This was in 2000. I was hired at the height of the dot-com bubble. I was making great money at a job I liked, and a year later there was this complete dot-com implosion. I honestly thought my career had peaked at age 23.
Then what?
I got a couple of really lame temp jobs just so I could pay rent and not be homeless. I was an entry-level engineer at a company that built software for auto-body shops and another one that managed 1-800 numbers in commercials.
What do you mean, “managed 1-800 numbers”—don’t you just get a phone number, and that’s it?
You know when you see a commercial late at night, and there is a 1-800 number on the screen? That company has most likely booked a call center for the certain hours that the commercial airs, because that’s when people are going to call. Say I’m Girls Gone Wild and I air all my commercials between 1 and 2 a.m. I’ll book a call center from 1 to 3 a.m. That’s why the ads are always like, ‘Call now.’ After that, the number is used for another company.
So what happens if I write down a 1-800 number off a commercial at 2 a.m. and then sleep on it and then wake up at 9 a.m. and try to order something?
You’ll probably get an operator for the wrong product.
You just blew my mind.
Isn’t it fascinating? It blew my mind when I learned it too.
In 2003 you founded your first company, Evalulogix, which built software for schools. How did you get that idea?
I randomly met this guy who’d been a school psychologist for something like 30 years. This was right after the No Child Left Behind Act—schools now had to constantly test kids and report their findings to the government. The guy I met said he was spending all his time on paperwork instead of helping kids, and he hated it, so he was retiring early.
So I started the company that built a software system to help schools do their paperwork efficiently. At one point we got our software into about 80 percent of schools in the U.S.
You seem to have a real interest in large amounts of raw data.
That’s certainly true. My jobs are all about taking massive amounts of data and using them in interesting ways. It’s funny, because I literally failed math in high school. You might assume I have ninja math skills, but I don’t. I’m more into the opportunity and strategy around data.
Every article about Klout mentions that you came up with the idea while your jaw was wired shut. What happened to you?
I wish there was a cool story about how I got into a bar fight, but there isn’t. My jaw was misaligned, and when I was 17 I was told I’d have to get surgery one day.
I had pretty much every complication you could get from that surgery, and my jaw ended up being wired shut for three months. To drink, I’d have to use a syringe and spray it between my teeth. It was mentally and emotionally harder than anything I’d ever experienced.
Do you remember the moment when you thought up Klout?
Sort of. I was on a lot of drugs at the time, but I remember writing “Klout” with a K on top of a notebook page and then sketching out the basic idea.
What was that idea?
Because of my jaw, Facebook and Twitter became my only means of communication. It changed the way I looked at how we communicate and where it was going. The ability to command great audiences is being democratized. I wanted to understand it and measure it.
Also, because I was so hungry all the time, I started recommending restaurants to people. I thought I should be compensated for sending business people’s way, but restaurants didn’t have a way to understand that. So Klout was a very basic measure of my broadcasting ability.
Klout has been criticized a lot for being sort of meaningless. When it first started, Justin Bieber had more Klout than President Obama, for example. I know you’ve since changed the algorithm to fix that, but isn’t the idea of ranking people based on their social-media profiles still a little simplistic?
I didn’t fully appreciate the psychology of the score when I was coming up with it. A 1 to 100 score seemed like the clearest way in my nonmath mind of understanding the notion of influence. But I did worry. A week after Klout [was] launched, I was invited to present it at the New York Tech Meetup. I remember walking to the event and getting off the subway and thinking, “I’m about to get on a stage in front of 1,000 people and tell them I have the algorithm that explains how important everything is.” I thought I was going to get my head ripped off.
Did you?
No. That’s the crazy thing. The way I presented it is that it’s not about figuring out who’s on the A list and who’s on the B list. Every single person has certain areas where they’re influential and certain people they influence. No one is worthless. The Klout score is supposed to be a way to compare and digest what that influence means. We’re doing something controversial, and we know that.
Klout’s office was in the same building as Twitter for a while, right?
Yep, we were. We aren’t anymore. In 2010, I moved Klout out to San Francisco because you kind of have to do that these days. I rented space in the same place as Twitter. I would keep track on Twitter, and if celebrities or brands would tweet “I’m in SF today I’m going to go meet guys at Twitter.” I’d tweet back, “Stop by Klout we’re on the first floor.” And they would.
Let’s talk about Klout Perks, where companies give freebies to people with high Klout scores to try to get them to talk about their products. Doesn’t that just turn social media into one endless stream of publicity stunts?
I think the Klout score itself is protection against that. You can only build Klout if you’re effective at getting people to engage with the content you create. People are smart enough to sniff out shilling and spam.
In 2011, Klout changed its algorithm, and people’s scores dropped significantly. There was a huge backlash.
We didn’t realize how much people cared about Klout scores. #OccupyKlout was actually trending on Twitter that day. At the height of the movement my phone number was also trending, because if you searched for “Klout phone number” online, my cell phone came up. I got hundreds of death threats. It was frightening but also kind of awesome.
So did you change your phone number?
Not right away. I’d had that number for 10 years and didn’t want to change it, so I waited to see if the calls would die down. For months I’d get up to 50 calls a day from people being like, “Why did my score drop? I was on vacation, it’s not fair!” Or “My dog was sick!” “You guys are so mean!”
Klout is now recommending that content people can share online to up their score.
The most common question I get asked is, “How do I build my Klout score?” For the past five years I haven’t had an answer to it. It’s like, “Uh, create good content? Good luck with that.”
Our new product suggests content that your audience cares about from you—relevant topics you’re influential about. We’re helping you craft that persona that you’re trying to be online.
