I love this story of Klout founder Joe Fernandez:
With his jaw still clamped shut, recovering in his Lower East Side apartment, Fernandez opened an Excel file and began to enter data on everyone he was connected to on Facebook and Twitter: how many followers they had, how often they posted, how often others responded to or retweeted those posts. Some contacts (for instance, his young cousins) had hordes of Facebook friends but seemed to wield little overall influence. Others posted rarely, but their missives were consistently rebroadcast far and wide. He was building an algorithm that measured who sparked the most subsequent online actions. He sorted and re-sorted, weighing various metrics, looking at how they might shape results. Once he’d figured out a few basic principles, Fernandez hired a team of Singaporean coders to flesh out his ideas. Then, realizing the 13-hour time difference would impede their progress, he offshored himself. For four months, he lived in Singapore, sleeping on couches or in his programmers’ offices. On Christmas Eve of 2008, back in New York a year after his surgery, Fernandez launched Klout with a single tweet. By September 2009, he’d relocated to San Francisco to be closer to the social networking companies whose data Klout’s livelihood depends on. (His first offices were in the same building as Twitter headquarters.)
Fast forward a few years and Klout has become a big deal (in social media).
One more interesting element of the story:
As the child of a casino executive who specialized in herding rich South American gamblers into comped Caesars Palace suites, Fernandez saw up close and from a young age the power of free perks as a marketing tool.
Which provides the final piece to the puzzle. The perks that Klout gives out allow the company to connect users with brands, and monetize their business.
It’s brilliant because it gives everybody something they want, whether it be free stuff or engaged customers.