can your twitter account get you a better table at a restaurant? should the number of facebook friends you have put you in first class? a tough with joe fernando, ceo of klout.com. and later, anthony wood, inventor of the dvr, on the spread of all those internet tv boxes. our reporters, techcrunch's sarah lacy and jon swartz of "usa today" this week on "press: here." good morning, everyone, i'm scott mcgrew. the next time that you check into a hotel or try on get past a bouncer at a popular nightclub the kind of room you get or

whether you get past that velvet rope may very well depend on whether the people know who you are on twitter. >> do you know who i am? >> do you know who i am? >> do you know who i am? >> do people know who the [ bleep ] i am. >> i don't why i'm going. >> in this day in age figuring out who you are and whether you're worth, letting past the velvet rope, can be figured out mathematically. the max plank institute in germany studied the influence of twitter users and found it's not the total number of followers that make you influential, but the quality of those followers. how often they retweet your messages, repeat what you say, and how often you come up in electronic conversation. measure that and you can instantly get a score of sorts, whether the person you're dealing with is -- >> kind of a big deal. >> really?

>> advertising age says a casino in las vegas and virgin american airlines are both experimenting with the idea of giving freebies and other benefits to twitter users with a lot of clout. >> wi-fi. free because i travel and so excited. >> reporter: in virgin's case, 120 influential twitter users were given a free flight. their messages generating 426 tweets about the airline and eventually 7.5 million page views on blogs and news outlets. so how do you figure out who's influential? joe fernando founded a website called klout, that's with a "k" to try to figure that out. i'm joined by sarah lacy from techcrunch and jon swartz from "usa today." i have a klout score of 42 and you both have klout scores of 58.

congratulation snos wow. >> we're tied. >> and now for reference here for reference oprah 65 and lady gaga has a klout score of 81. so i am the least influential among them but i still get a 42. so do you have a klout score? >> i do. i think i'm in the 50s right now. >> okay, you could probably change it all that you wanted to. >> yeah. apparently i don't have enough clout. >> the virgin airlines have worked with you, virgin america, and the sacramento kings, "cover girl" starbucks what do they look for when they say who is influential right. >> right they come to us, they understand that traditional advertising, people block it out in a lot of ways. we all trust what our friends tell us so this is kind of a tension economy that we're in. we understand who are the people who brokered that attention and influence their networks on any specific topic, and we connect brands those people. >> curiously although i mentioned lady gaga and oprah,

it's not always people that you think it is. tipping point the mavens he calls them, it is these strange little influential pivot points almost. >> right. >> and you're -- you think you're able to identify them. >> yeah and the way we think about it is is every person who creates contact line has some influence. what we care about in understanding is who they influence and on what topics? this idea of node optimization and who can spread information across a group of friends is what we're focused on. >> yeah and i guess that's my question when you're with a company is when you're boiling something down to a score so i think that probably there's many, many areas where oprah is far more influential than me, more than 14 points or whatever that is, but when it comes to a company getting funding, i think if i write about a company a start-up in middle of india they're more likely to get funding of that than oprah writing about a small company in

india. isn't influence really relative depending on what you're talking about? >> absolutely. so everything is contextual. so, yeah, you talking about oprah talking about video games. like -- or something random, those things all matter. on the site we just show an overall score. when we work with the advertisers, like audi, disney, virgin, we target on topics. so you might not be influential overall but you're the person to talk to about. >> we could do a full half hour on that, sure. >> how does one come up with the score? because i probably have a fraction of the number of followers that he has. i would dispute that i have an equal footer with her. >> you value. those graphs and colors. >> yeah, whatever. >> but anyway -- >> yeah you are tied. >> it's like the bcs rankings. it's all very subjective. what's the formula?

because i have a friend actually with 4,000 followers twitters and has a lot of influence in canada and her score is fairly low. >> and remember the techcrunch twitter account has millions of followers and everything i write gets tweeted off that so does that play into it at all? >> so a couple of things, we actually -- what we found is follower account like, joe said is the least impactful on your influence. we really care about the -- how people engage with the content that you create. so what are you talking about? being noisy doesn't help you but being effective -- the ratio content that you create versus reaction generated from that, and then how influential are the people interacting with your content. >> if i could influence ten influential people i'm far more influential than a thousand people who don't have any influence at all. >> right. so techcrunch, retweeting you or liking something that you do is going to impact your score. >> how did you -- i will not ask

you to give meet algorithm but what social science do you use to figure out what's influence? >> what we look at is -- we're about making up math. we definitely look at page rank. things that are out there in the world already and kind of step on those and apply it to what's going on in human behavior now in social media. >> so given the amount of influence you might have on influencers, are people trying to find shortcuts or ways to rig the system, to give themselves more influence and more access? >> we definitely see that happening, and we have a team that every day is inter-rating on the algorithms. >> on ebay they had people trying to shield their own accounts or get other people to build their rankings. >> what we saw on google. manipulating. >> yeah, anytime you put an algorithm out there that has -- that gets some value and we're giving flights away and cool

stuff, people are going to do things and we just have to grow with that. >> i guess my question and my issue with this kind of thing, i think we're getting this overaddiction to self-measurement and boastful numbers. the social media companies that have done really well are ones that really played that human vanity need for validation which is what your whole company is about. i mean it's smart. those are the companies that have won, but is that really good for the web? is it good for society? for people to feel like they're doing all of these things that maybe irritating followers, may be irritating customers, may be selling out a little bit if they're a blogger and trying to get a free flight. it's in order to gain for this number. is influence really a number? >> it is weird putting a number next to a person. like a humannistic thing, everyone hates that, that their numbers are assigned to them. and use it to filter and sort in different ways. we try to be really mindful what

are actually good behaviors? like we use these tools. everyone in our company uses facebook, twitter, and everything. knows what's annoying and thinks about that in kind of the -- as we kind of restructure the algorithm and it changes every day, behavior on these new platforms is kind of growing every day, so we have to -- we have to look at that and kind of think about it and address it and get feedback and grow with it. >> give me your sales pitch. i'm a coffee company, like starbucks. i'm virgin america. and i come to you, and i say, i saw you on this tv show. what can you do for me? how are you going to make my product interesting to a lot of people? >> so, what we're going to do is -- whatever product you have, we know who the people are that are passionate about it. with "cover girl" we gave away lip gloss, like you'd never think that's something exciting -- >> oh, i would. >> but it generated huge

conversation because we know the people are super passion bait it and talk to our network and we have data that says when these people talk to their network, their network responds so we can help you find your prosumers. >> you find this core of 20 tweeters or whatever, you say you don't have to write about it. >> hey, here is some lip gloss. >> i understand that. but it would be shady if they said they have to because there are ftc rules, et cetera. but here is the thing. >> look, what i don't want as a world where like i leave here and get on twirt and go on and on about d -- dress. but it's like me obnoxiously doing this. >> we reached that era where social media are getting a bunch of freebies. offering cars for weeks. someone from auto company

offered my a car i said they can't do that because of where i work and they gave us -- >> speaking of products that people should buy, let's do a quick commercial break and come back with joe fernando for just a few minutes after this. so, we book a flight to hawaii using our points from chase sapphire. last minute... on christmas. and sitting next to us, chevy chase. and we really hit it off. we play golf, and then the luau. he's like da vinci with ice. and after, we help hang christmas decorations. wait, wait, wait. you flew last minute... on christmas... with points from chase sapphire? yeah. amazing. believe it. with points from chase sapphire, you can book airline tickets with no blackout dates or restrictions.

we're talking with joe fernandez, ceo of klout.com. one of the things that you have done is created an api and for folks who are not familiar with that, the hooks that someone needs to get inside of your score and transport it elsewhere, is that a fair explanation of what you're doing? >> right, that's taking our data and making it -- >> accessible to anyone. >> anywhere.

>> why yes, not force people to go to klout.com, or force people to stick to your property? >> we want to be the standard. we want klout to be the standard measurement in of influence and to do that we want the klout score everywhere. i get mad -- on cnn, tweets scrolling across the screen and there's not a klout score so you have some idea of the reputation and the sfloons you imagine the day when cnn, its graphics software, or whatever, can immediately take the twitter's name go out and grab it. >> right, like that would be great and we have a thousand companies using our api, and ten different industries, totally crazy things we never thought of. so it's really exciting to see people taking influence and innovate it in ways that we never thought of. >> go ahead. >> i was giving you a hard time in the previous segment about reducing people to a number, but on the other hand one thing i like about your approach versus a company like unvanished, where people okayed it's more like a

linked in but people can leave anonymous reviews. i think that it's an unfair and bad system. both of you guys are taking a different approach to this issue reputation. can you comment at all in sort of those approaches, whether they go to together, whether they're different. >> that's definitely -- it's really identity is kind of at the center here and reputation is the halo around that, and a lot of people are looking at it from different directions. we look at the kind of context of like what how people communicate and let that tell the story. other people look at what i say about you. our data would probably be helpful to each other. i don't necessarily that someone has to win and someone has to lose. >> if i do a story and if i want to talk to an analyst, people who have better reputations than others and sometimes it takes a lot of ground work to find out who that person is, and in a sense you're saving people time and putting them in touch with people whom they trust or from whom they can exchange ideas. >> the influence and reputation

are not always the same thing. you could be very influential in a very negative way. >> sure. >> i guess. >> not everyone is on twitter and there are many very influential people. mark dreessen not a big tweeter. the big funders the big people who make things happen in the background in silicon valley not big twitters. >> in the office we call it the warren buffett problem. influential? he's a little bit influential. >> what's his score. >> but you look at our system and it's not there and we look dumb and like -- how do we fix that and how do we take the bigger world into account? right now that's not what we do. we focus on -- we're looking at interactions in digital, social media. this idea of word of mouth and how it's never been able to be calculated and tracked before, we're using social media do that. >> jon swartz one last question of joe fernand sneeze given the narcissistic nature of what this is who has the highest score, who is in the 95. >> so barack obama's pretty

high. ashton kuchar. like some of the celebrities. but like fred wilson. b.c. most popular personality, you know, hugely respected. he's high in the 80s. so it's a mix of public and semi i believe. >> and let me ask, justin bieber. >> justin bieber is kind of huge, yeah. it's crazy to see how much -- like engagement those people generate. >> all right, joe fernandez, the ceo of klout.com. up next the guy who invented everyone's favorite device, the dvr, talks about the new trend on the internet. anthony wu is up next. on travel. are woe we're like forget florida, we're going on a safari. so we're on the serengeti, and seth finds a really big bone. we're talking huge. they dig it up, put it in the natural history museum and we get to name it. sethasauraus. really. your points from chase sapphire

preferred are worth 25% more on travel? means better vacations. that's incredible. believe it...with chase sapphire preferred your points are worth 25% more on travel when booked through ultimate rewards. welcome back to "press: here." one of the rules of thumb in silicon valley is that hardware doesn't pay software does.

put another way, don't sell the box. >> the rule of software is becoming more important. >> bill gates, after all, is the world's richest man because bill gates sold software. microsoft's made money every time a pc was sold even as computers got less and less expensive, microsoft made money anyway because they didn't sell the box. >> it's never been done before. >> now, as with all rules of thumb, you can find exceptions. apple has made aminced selling ip ipods. and take companies like tivo and it makes sense. the beauty of tivo isn't the box, it's what the box does, the software, the interface. tivo, some analysts say, would be betterach purely as a software company. that's the route roku is taking, its little box, brings internet television to your living room

tv. while it's been successful on track for a million sold by the end of the year, the company hopes licensing out its platform will bring more profit. its first partnered netgear actually sells a roku device for less money than roku does. anthony, what is the founder of roku? roku by the way is japanese for six. it's the sixth start-up. also incredibly enough to use the invent or of the dvr. you've been on the show before and i thank youed for the dvr v but again let mimi thank you for making the dvr. business insiders said that you had to start selling -- or licensing your software to other companies, is that accurate. >> no that's not accurate. primary business is still hardware, that's where we do. obviously, most of our engineers the workers at roku are software engineers but we pack it up. on black friday recently we sold

a million dollars worth of boxes all online so it's a big business for us selling hardware but the reason that we're licensing is that we want our -- our channel store, our platform to be -- to continue to be the number one channel store on the internet -- on the internet delivered television and we want to make sure that it's available everywhere. >> explain that to me channel store. you want roku to sell more rokus than anywhere else and why do you care who sells rokus. >> it's a box that we sell and also a platform. a third party can go to our website. download our software kit. and like write an app -- >> and every time it benefits you. >> yeah and we've got over a hundred channels on our box and one of our big goals is for us to be the leading channel store for television. and so licensing is a big way for us to get our platform more widely distributed. >> can you tell us a little bit about what you see just going on in the industry. we've had a fleury of news all around getting internet content on the tv. big players like google and

apple coming in here, netflix, hulu. already fighting. right now netflix is taking up 20% of the primetime bandwidth and in streaming and it's a small percentage of their audience. comcast is saying they're going to clamp down on them. people are wondering about competitive. i mean it just seems like a mess from the outside. >> well, i think it's exciting, what's happening is there is millions and millions of people downloading netflix, hulu, pandora, all of those internet-delivered services and i think that it's exciting times. netflix has gone from primarily dvd-delivered company. >> i will just interrupt for a second and say that netflix was a major investor of yours at one point? >> they were -- >> not so much of a question, i mean go ahead but i just want to make sure that the viewer knows. >> they were an investor. they don't currently own any shares. >> no, i wanted to -- as we talked about netflix. i'm sorry, please continue.

my job to interrupt. >> isn't it about royale? it's an exciting time for the consumer, but -- >> i think what is happening is there is this huge -- you know hundreds of billions of dollars of entertainment dollars that are spent by consumers every year, and it's shifting. everything from dvds to television, the way consumers get that content in shifting and so everyone being companies are trying to like you know take advantage of the shift in these dollars and so in the case of netflix, what's happening is, companies are not getting dvds anymore -- i mean consumers are not watching dvds as much as they used to and they're watching streaming instead and that trend is a widespread trend that's happening throughout the internet. >> this question is kind way out of left field but in terms of content that's being streamed could you see eventually a point where maybe we don't have as many movies or tv shows to show, maybe we start seeing live sporting events or concerts or -- just live contents -- >> you use the network. >> right. >> so, yeah, television and movies are very popular,

obviously. but in terms of screening but live is popular as with. for example, we have bible our bo -- we have baseball and that's live. announced hockey. and so live is definitely starting to take off. >> if you couldn't go -- say years ago if you couldn't go to a concert you could watch it through a theater, through closed-circuit stuff. i am dating myself. through the '70s and '80s. versus pay-per-view. >> well it is pay-per-view. >> in a sense, yeah. >> i think that's a good example of i think -- one of the things that's happening with the streaming is it's -- you know it's convenience for customers. it's ondemand. well, dvd was one step on-demand but this is the ultimate, everything ever made available on-demand, yes so it's the next step and whenever i want to watch it i can watch it, but the other thing that is happening is opening up the distribution to smaller companies. so i think -- but to your company you know of streaming live concerts is an example

where a company that maybe couldn't get distribution on the cable internet, they could get distribution. a lot of them are smaller. church's become being our network. so many churches now. created a new category in our channel store. >> something that you could never do even on the simplest of cable channels. why is that google television costs $300, lockgitech's. >> many reasons but we realized as a company early on in the case of television equipment consumers don't like to pay a lot of money. >> yeah. >> we focused a lot of effort of just building the simplest, lowest cost box that works well that we could, where i think -- speculating, but what google has done well let's put an intel processor in there and make a super powerful box that gives you everything on the web, haven't quite achieved but that's their goal. and that just requires a much

more expensive box. so we've said, no, that's not what customers want. >> netflix on the tvp it's not about the box. >> right, don't overdesign a cat lack. i just need a bike to get from here to there. >> not have a what do you make about hulu's role in all of this. they are an interested company because they were started by the network. one of the examples of old media and building a very good service and a really good site that consumers love but when it comes to moving that content back onto the tv, their owners get very upset with them and the ceo has been in a very awkward situation and consumers get unhappy and the network ultimately have their way. what does that mean for hulu going order. >> i think what most customers don't understand and i think rightfully so, they zieshd not only charge based on how you watch that content. if you watch it on a mobile phoneun that's a different person inside of the studio that you have licensed that content from, versus if you watch it on your television, television is

completely different than pc. so i think they're a little confused because the internet doesn't make -- >> essentially it is, and i'm confused. and my company is essentially hulu. the nbc universal that it's free on my computer and it costs me, what, $7.99 a month on roku. >> yeah. >> is ridiculous. and i realize that you can't call hulu ridiculous because you need hulu. >> i don't know if your viewers want to know but the reason they try to do that is because when they distribute the content, like abc -- or nbc over a cable network they get paid by the cable operators, right. >> yeah. >> they get up to a dollar per subscriber each month to distribute that content so when they distribute the internet over the pc they don't get that money so they're trying to like reclaim those dollars so that's what the economic battle is that is happening. i don't know where it will end up. it is confusing when you can get something for free on a pc and you have to pay for it when it is delivered to your television. >> anthony wu is the city of woku. if i'm still here next week

after dissing hulu, we'll have to talk more. "press: here" will be right back to talk more. "press: here" will be right back in just a moment. last minute... on christmas.phir and sitting next to us, chevy chase. and we really hit it off. we play golf, and then the luau. he's like da vinci with ice. and after, we help hang christmas decorations. wait, wait, wait. you flew last minute... on christmas... with points from chase sapphire? yeah. amazing. believe it. with points from chase sapphire, you can book airline tickets with no blackout dates or restrictions.

that's our show for this week. my thanks to joe fernandez and anthony wu. we're back it a regular schedule so we'll see you again next week same time. i'm scott mcgrew. thanks for making us parts of your sunday morning.