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Is Color the Webvan of Photo Sharing?

In March 2011 we reported that an iPhone photo sharing app called Color had raised a whopping $41 million in funding before it had even launched. Sequoia Capital, one of the most prominent VC firms in Silicon Valley, invested more money in Color than they had originally invested in Google. Now, just three short months later, Color is still struggling to find users while its less-funded competitors are leaving it in the dust.

Its two main competitors, Instagram and PicPlz, raised just $500,000 and $350,000 of funding — much more reasonable amounts for photo-sharing apps, we must say — but are adding users by the droves. Earlier this month Instagr.am signed its 5 millionth member. For people in the tech and business worlds crying “bubble”, there seem to be quite a few similarities between this situation and with startups that existed back in the dot-com bubble. Investors are pouring money into startups in search of the next big thing, but the companies that survive are the ones that spend money wisely and offer a great product.

Despite having 5+ million members and roughly 100 million photos, Instagram only has four employees and only recently acquired the instagram.com domain name (they started out at instagr.am).

Color, meanwhile, spent $350,000 to buy the Web address color.com, and an additional $75,000 to buy colour.com. It rents a cavernous office in downtown Palo Alto, where 38 employees work in a space with room for 160, amid beanbag chairs, tents for napping and a hand-built half-pipe skateboard ramp. [#]

In response to the general public’s disinterest in the app, Color has decided to admit defeat and “reboot”. The company recently fired co-founder Peter Pham, and is working on a new app that focuses on group messaging, recommendations, and local search (replacing the idea that had originally raised $41 million).

Luckily for the company, it’s changing course while there’s still time and money, unlike Webvan (called the largest dot-com bust in history), which burned through $1.2 billion in two short years before declaring bankruptcy in 2001. Given the market (photo sharing vs grocery), however, Color may be seen as the Webvan of the photo sharing space unless they can figure out a way to survive. Consider this: back in 2005, Yahoo acquired all of Flickr for just $35 million.

(via NYTimes via TechCrunch)


Image credit: Webvan Delivery Van by Mark Coggins


 
  • http://twitter.com/michaelbird michaelbird

    I am constantly irritated at tech articles that point to companies at the center of bubblicious failures as bearing the fault for their collapse. There’s a two-way relationship in these scenarios and no one ever points the finger in the other direction: uninformed, excitable investors with unrealistic expectations. No tech company has ever succeeded based on over-investment. You cannot buy, through capitol, consumer interest; not with all the incessantly recurring Google ads in all the world.

    Color didn’t present a set of new features that inherently grabs the interest of the consumer. Websites succeed in massive ways because supposed niche values match unpredicted boutique appeal. Its important to have the former, but its meaningless without the latter. These companies defy fulfillment not because they had the audacity to expect to succeed, but because investors put too-highly-placed expectations in a start-up with no reasonable claim to spontaneous market share. That’s just outright stupidity (or rather, the reasonable risk associated in investing in any start-up). Hisk-risk-high-reward. Funny how people always forget the first part.

  • http://twitter.com/michaelbird michaelbird

    I am constantly irritated at tech articles that point to companies at the center of bubblicious failures as bearing the fault for their collapse. There’s a two-way relationship in these scenarios and no one ever points the finger in the other direction: uninformed, excitable investors with unrealistic expectations. No tech company has ever succeeded based on over-investment. You cannot buy, through capitol, consumer interest; not with all the incessantly recurring Google ads in all the world.

    Color didn’t present a set of new features that inherently grabs the interest of the consumer. Websites succeed in massive ways because supposed niche values match unpredicted boutique appeal. Its important to have the former, but its meaningless without the latter. These companies defy fulfillment not because they had the audacity to expect to succeed, but because investors put too-highly-placed expectations in a start-up with no reasonable claim to spontaneous market share. That’s just outright stupidity (or rather, the reasonable risk associated in investing in any start-up). Hisk-risk-high-reward. Funny how people always forget the first part.

  • http://twitter.com/michaelbird michaelbird

    I am constantly irritated at tech articles that point to companies at the center of bubblicious failures as bearing the fault for their collapse. There’s a two-way relationship in these scenarios and no one ever points the finger in the other direction: uninformed, excitable investors with unrealistic expectations. No tech company has ever succeeded based on over-investment. You cannot buy, through capitol, consumer interest; not with all the incessantly recurring Google ads in all the world.

    Color didn’t present a set of new features that inherently grabs the interest of the consumer. Websites succeed in massive ways because supposed niche values match unpredicted boutique appeal. Its important to have the former, but its meaningless without the latter. These companies defy fulfillment not because they had the audacity to expect to succeed, but because investors put too-highly-placed expectations in a start-up with no reasonable claim to spontaneous market share. That’s just outright stupidity (or rather, the reasonable risk associated in investing in any start-up). Hisk-risk-high-reward. Funny how people always forget the first part.

  • Dtyhfj

    colouorer sucked, i lol’d

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