May 06, 2010

Scout Labs Acquired By Lithium to Combine Social, CRM

Social media measurement and tracking firm Scout Labs is set to be acquired by Lithium, a provider of social CRM and community solutions. The deal, first mentioned by Mike Arrington on TechCrunch, is confirmed and will be announced officially on Tuesday of next week. I spoke with the company's vice president of product, Margaret Francis (@margaretfrancis), tonight, and she said the companies will be working together to combine Scout Labs' social monitoring capabilities with Lithium's more community-oriented tools. In addition, the combined company, which will have approximately 140 employees, will be better resourced to serve larger customers - something Scout Labs has been straining to do with its small team.

While terms of the deal were not disclosed, TechCrunch's estimated range of $20-$25 million was said to be in the ballpark, and Francis termed the buy as "pretty much the biggest deal that has happened in the social media space," adding "as a multiple on revenue, this is pretty great." She added that Scout Labs had spoken with other potential acquirers in the first quarter of 2010, and some were taken aback at the company's relatively high valuation when compared to their revenue. "Some of their jaws dropped to the floor," she said.

As I mentioned last night, when discussing SocialPing, Scout Labs is one of a small list of enterprise quality providers of social media measurement, in the same breath as Alterian and Radian6. But the company had just short of 20 employees, and the product, while very robust, did not have enough resources behind it to serve larger customers. While Lithium, started by former co-founder Lyle Fong, had a smaller customer base than Scout Labs, they were better positioned for big clients, including HP and Barnes & Noble - which led to them being a lot more profitable than Scout Labs as well.

Scout Labs' offerings served to give a solid picture in aggregate of what people say about your brand, "but it is a lot cooler to tie it to your Web data and your CRM," Francis said.

The price tag for Scout Labs is nice, but not one that looks to see the company's employees taking extended vacations any time soon - and it doesn't sound like they want to, if today's call was any indication.

"Every employee is sticking around for this, and we are highly incentivized to do so," Francis said. "They knew they needed us, and it feels like that."

While there are other players, like Radian6 and Alterian, in this space, Scout Labs believes that marketers are extremely underserved in terms of applications and true business intelligence. One wrinkle that could help going forward for the new company, which will be housed in a new office on Market Street in San Francisco, is that Lithium shares a common board member with Twitter, in Peter Fenton of Benchmark Capital. This could potentially help the company gain access to the valuable Twitter stream in full for data mining.

"We have been negotiating with Twitter for access to data for some time," Francis said. "We want what Google has, and we are pretty happy about the board relationships with Twitter."

More details should be made available this upcoming Tuesday. Until then, you can find Scout Labs at and Lithium at