Klout’s start and finish are both stories of perseverance. CEO Joe Fernandez conceived of the idea while recovering from recovering from jaw surgery – very Kanye. He probably didn’t expect it would be as controversial – some people had very strong negative reactions to the idea of a third party rating their influence – given that the original intent was aimed helping identify what you know about and connecting you to other people with similar interests and expertise. I got to know Joe while Klout was heating up because it turns out we share a love of not just social products but hip hop, pinball and magic. After watching my friend remain a committed leader when others might have abandoned hope, it was awesome to see Joe land Klout with a $200 million exit to Lithium in March 2014. I’ve always appreciated Joe’s honesty and he agreed to share some lessons learned with me.
Klout Founder Joe Fernandez on Hype Cycles, Lessons Learned & Rapping to His Dog
Hunter Walk: Within social media echo chamber, Klout rode a hype cycle up and down prior to a successful exit. Emotionally must have been a difficult journey?
Joe Fernandez: It was intense. The biggest thing I learned is that you can’t get too high or too low. Things are never as good as the press makes it out to be and are rarely as bad. As a team I believe we did a relatively good job staying focused on the big picture. We were able to do this through our commitment to the mission we set out to achieve. We knew we were doing something controversial and we did our best to own it (Klout employees refer to themselves as Kloutlaws). We also knew that what we were doing – helping people be recognized for the power of their voices – was important and it was worth whatever shots we might take to accomplish that goal.
HW: With 20/20 hindsight, any strategic or tactical decisions that you would have done differently at Klout?
JF: I now believe there are two ways to build a company. You can flawlessly execute your way to a good outcome or you can nail product market fit in such a major way that most of your mistakes are forgiven and you likely see a massive outcome. So with 20/20 hindsight, I would go back and really nail product market fit on at least one thing rather than always experimenting across multiple initiatives. The success that might have been driven out of this could have given us the air cover to live and learn through a lot more strategic and tactical errors.
HW: Some Klout alums have gone on to big time jobs (eg Emil at Uber). Were there consistent attributes you look for among your early hires?
JF: There is nothing I am more proud of than seeing all the cool companies that Kloutlaws are joining in key roles or starting themselves. Besides the fact that I worked with these people and know how talented they are, I am not surprised by their successes. The consistent attribute that bonds all of these people is the desire to take on nearly impossible challenges. You need a certain pioneering mindset to sign up to build something like Klout. We set out to analyze data at a Google type scale to create a standard around what had previously been an unquantifiable emotion. The technical, product, marketing and PR challenges to accomplish this attracted the bold and strong willed. Obviously I am biased but I think you would be hard pressed to find a more battle tested crew in the valley.
HW: Homebrew wasn’t around when Klout started, but what would I need to do to back your next company – what do you look for in a seed investor?
JF: My seed investor expectations are pretty straightforward: Talk about how awesome my company is every chance you get. Give me insights into what you are seeing get traction in the market. Be a reality check on the metrics I need to show for my next round. Give good product and strategy feedback. And finally, be comfortable having difficult and intense conversations in sketchy taquerias.
HW: You’ve admitted to changing hip hop lyrics to be “dog-relevant” when singing to your pet – such as “bones will make her dance” – do you know how weird that is?
JF: It’s funny how bummed my dog gets when I do this. I do think it’s important to have a Plan B if this whole startup thing doesn’t work out. My fallback is to be the Weird Al of novelty dog hip hop songs. Might drop a Drake inspired mixtape at Petsmart.