Color
From Invertopedia, the encyclopedia of how things fail
Color was an iPhone and Android app from Color Labs that showed users the photos everyone nearby was taking[2]. It raised $41 million before launch[3][4], more than Sequoia had ever put into a startup that had not launched[2], and went live on March 24, 2011[4]. After pivots to Facebook video and live streaming, its engineers went to Apple in late 2012 and the app was switched off at the end of that year[6][7].
Contents
The bet
Color would replace the friend list with location. There was no following or friending: every photo was public to anyone within about 100 feet, and the app used the phone's sensors, even its microphone, to work out who you were with[2]. Over time it would learn your real social circle from who you spent time near[2].
According to Nguyen, Sequoia told the founders, "Not since Google have we seen this"[3]. The round grew from a planned $14 million to $41 million, with Sequoia putting in $25 million and Bain Capital $9 million[3]. Nguyen talked of making "wheelbarrows of cash", starting with a self-serve platform for businesses to run deals and ads in the app[2].
What happened
| Mar 24, 2011 | Color launches with $41 million in funding and a staff of 27. Sequoia invested three days before the launch.[2][4][9] |
|---|---|
| Mar 2011 | A backlash builds over the $41 million. TechCrunch's M.G. Siegler calls it "absolutely pointless" with no one else around.[3] |
| Apr 1, 2011 | An update adds labels to its icons and "Nearby", "Feed" and "History" views[1]. Co-founder Peter Pham tells Robert Scoble the launch was botched: bad interface, bad timing, noise from the funding[10]. |
| Jun 2011 | Co-founder and president Peter Pham leaves, less than three months after launch.[11] |
| Jul 2011 | TechCrunch reports Color had turned down a $200 million offer from Google before launch. Chief product officer DJ Patil has also left.[5] |
| Sep 2011 | Sequoia's Doug Leone says to "stay tuned" for the next app, which is tied into Facebook photos.[9] |
| Oct 17, 2012 | A leaked email says the board and major shareholders voted to wind down the company. A spokesperson says Color is not shutting down.[12] |
| Oct – Nov 2012 | About 20 engineers, nearly the whole company, move to Apple, in a deal TechCrunch's sources put at $7 million.[7][8] |
| Dec 31, 2012 | The app is switched off. Color had announced on its website in November[13] that it would no longer be available after December 31[6]. |
The kill shot
The app only worked if lots of people near you already used it, and on day one nobody did. It had nothing to offer the first person who downloaded it.
TechCrunch's M.G. Siegler named the problem on launch day: Color was "a service that is only useful when a lot of people around you are using it. If they're not, it's absolutely pointless"[3]. VentureBeat's reviewer, after a promising demo, downloaded it and was "left scratching my head about what exactly to do, especially when there was no one using the app with me"[1].
The money did not fix it. Leone later said the bad press came from "a big splash announcement with not a lot to show for it early on"[9]. Color had raised years of cash at once instead of earning each round by first proving the idea[12], and it kept changing the product: a Facebook-connected video app, then live video for Verizon phones[7][12].
Red flags ignored
- Useless alone. With no friend list, an empty room meant an empty app.[2][3]
- Hard to explain. Even its launch review said it was difficult to describe with a list of features.[2]
- Funded before tested. Sequoia invested three days before launch, and the round grew from $14 million to $41 million before any user had tried it.[3][9]
- Leaders leaving early. The president and co-founder and the chief product officer were both gone within four months of launch.[5][11]
- Pivot after pivot. Proximity photos, then Facebook video, then live streaming for Verizon.[7][12]
The cost
$41 million raised before launch[3][4], at a valuation TechCrunch reported as $167 million[5]. By October 2012 the company had something like $25 million left in the bank[7], and Business Insider reported that some assets were wired to shareholders in November[13]. The engineers went to Apple in a deal TechCrunch's sources valued at $7 million[8].
The inversion
If your product needs a crowd to work, find out how the first user gets value alone. Launch where the crowd already is, or give one person a reason to open it on an empty street.
What survived
The team. About 20 engineers, almost the entire company, joined Apple in late 2012[7][8]. The app itself was shut off on December 31, 2012[6].
References
- ^ “Can Color beat the backlash with an improved interface?”. VentureBeat (Anthony Ha), April 1, 2011 (read via the Internet Archive). Palo Alto, the April update, the reviewer's experience with no one else using it.
- ^ “Color Looks To Reinvent Social Interaction With Its Mobile Photo App (And $41 Million In Funding)”. TechCrunch (Jason Kincaid), March 23, 2011. How the app worked, Sequoia's biggest pre-launch bet, Nguyen and Lala, the 100-foot radius and sensors, the staff of 27, "wheelbarrows of cash".
- ^ “Color”. TechCrunch (M.G. Siegler), March 24, 2011. The backlash over the $41 million, Sequoia's $25 million and Bain's $9 million, the round growing from $14 million, the "Not since Google" line, the chicken-and-egg quote.
- ^ “Color: New social photo app arrives for iOS”. ZDNet (Jason O'Grady), March 24, 2011 (read via the Internet Archive). Launch day, the $41 million from Sequoia, Bain Capital and Silicon Valley Bank.
- ^ “Google Tried To Buy Color For $200 Million. Color Said No.”. TechCrunch (Michael Arrington), July 21, 2011. The $200 million Google offer, the $41 million in debt and equity, the $167 million valuation, Patil's departure.
- ^ “Color (official site)”. Color Labs, archived December 21, 2012 (read via the Internet Archive). The notice that the app would no longer be available after 12/31/2012.
- ^ “What's Really Going on With Color: A Small Apple Talent Acquisition”. AllThingsD (Liz Gannes and John Paczkowski), October 18, 2012. About 20 engineers to Apple, about $25 million in cash left, the pivots to Facebook video and Verizon live video.
- ^ “Sources: Apple Paid $7 Million For Color Labs”. TechCrunch (Colleen Taylor), November 19, 2012. The Apple deal for about 20 people at $7 million, per TechCrunch's sources.
- ^ “Sequoia's Doug Leone: We Are 'Thrilled' To Be Investors In Color, 'Stay Tuned' For The Pivot”. TechCrunch (Leena Rao), September 18, 2011. Sequoia investing three days before launch, Leone's "big splash" quote, the Facebook-linked next app.
- ^ “The funding and failures of Color, Silicon Valley's $41 million startup”. Scobleizer (Robert Scoble), April 1, 2011 (read via the Internet Archive). Pham on why the launch went wrong.
- ^ “Troubled Startup Color Loses Cofounder Peter Pham”. TechCrunch (Michael Arrington), June 14, 2011. Pham's exit less than three months after launch.
- ^ “Color, The Multimedia Service That Could Never Figure Out What It Does, Is Closing Down According To Reports”. Android Police, October 17, 2012. The leaked wind-down email, the spokesperson's denial, the pivots, the raise-it-all-at-once strategy.
- ^ “Color, The $41 Million App, Really Is Shutting Down Now”. Business Insider (Owen Thomas), November 20, 2012. The shutdown announced on Color's website and assets wired to shareholders.