The funding and failures of Color, Silicon Valley's $41 million startup (wrapup of the week of hype and hate)

As you know I didn’t like Color’s launch a week ago. I thought the app just wasn’t very good. Turns out I wasn’t the only one. It still has a two-star review on iTunes. It got an incredible amount of coverage in the press for a new startup, including multiple plays on CNN and lots of other places.

The funding of $41 million also caused a LOT of people in Silicon Valley to ask “huh?”

These two things made me incredibly interested in Color. I kept using their app during the past week. My experiences on that in a second.

But yesterday I visited the company at 215 Hamilton Ave., in downtown Palo Alto. Interesting, I used to work in that building upstairs back in the 1990s.

I did a 49-minute audio interview with Bill Nguyen and Peter Pham, co-founders . It’s long, but incredibly revealing.

What did I learn from these two?

1. They got funded without doing a slide deck.
2. Their reputations got them a personal invite to Sequoia to pitch them. But the story of what they were working on is what closed the deal.
3. They needed the money to “compress” the time they need to ship a very advanced technology and vision.
4. They screwed up the launch, according to Peter. How? Bad UI, bad timing, noise from funding level. He talks about what they are doing to fix the problem.
5. Churn levels are very high. Churn means the number of people who hear about the app, install it, try it out, and then leave and delete it.
6. There are real drivers behind the new valuation numbers that the startup industry is seeing.
7. The technology behind the app actually is interesting. For instance, when you take a photo it measures the audio profile of the room, captures the compass reading and other sensor readings, and pretty accurately knows other users in the room at the same time. I could go into that more here, but really you should listen to the interview because this technology lets them build a new kind of “social camera.”
8. They “tried too much.” Peter worked at Apple and tried to do a very simple UI. That was a mistake because the app was too weird and nearly impossible to figure out and use.
9. This is an app designed for the “post PC world.” We talk a lot about what that marketing term means for apps in the future.
10. The new approach they are taking lets them build a new kind of social graph — one that’s based on who you actually were at the same location or concert or event with. It’s a bit mind-blowing after you finally get it to work and use it around town for a while.

So, now that I’ve used it for a week and have had training on what the app does and how to use it I’m more interested in the future but it still is an unusable app. Even after seeing what it does from the founders I find it infuriating to use. That’s why it has two stars. They know it’s a huge problem.

But, if you look beyond the horrible UI and the bad launch, there really is something here. If they can fix the UI I think there’s actually some magic here. But right now? It’s for people who are willing to put up with major early-adopter pain.

Despite all its trouble, it sure has caused a lot of conversations. This morning I was with executives from Procter and Gamble. The folks who do Pampers diapers. Color caused a major discussion and most of the people in the room already had it on their phones. How many apps out of the 500,000+ in the iTunes store can say that they caused this amount of hype and hate? I can’t think of one except for maybe Twitter and Foursquare.

Anyway, this is one of the more interesting conversations I’ve had in 2011. I’ll let you know when Color becomes usable.

Comments

  1. I listened to this yesterday and it was really interesting. It seems that their core technology is probabilistic location matching based on a combination of signals from all the available sensors in the latest mobile devices. This includes compass, gyroscope, microphones (plural), light sensor, etc. Doing this entirely on a server and managing multiple streams for each device while simultaneously running calculations to match the location is hard to imagine, but if I remember correctly, they also hint at offloading some of the processing to the devices themselves. They also talked about algorithms for understanding the “swarm” behavior of all the devices in a given area (e.g. they are all pointing at the same stage).

    It all sounds a bit creepy and frankly I don’t know if I would want to be monitored that intensively by an application unless I was getting something very juicy in return. They are really going to have to deliver on the promise of creating value via an ad-hoc, dynamic social network in order to persuade people to jump various tech / comfort / and usability hurdles and truly adopt their system.

  2. I’d have to say I’m more intrigued in some of the big picture vision and where the concept of the “social camera” can go, more so than in the app itself (at least in it’s current form). I just can’t see the current app having any real chance of gaining traction anytime soon. The average consumer will be onto the next “latest and greatest” app anyway long before they can rework the application and service.

  3. As I said yesterday, the two simple words “my fault” go a really long way in restoring my willingness … or maybe even eagerness, to give it another look later. I installed and played with the Android app. It’s not done, it’s not ready, it doesn’t make much sense. All those things are still true. But now I’ll try again when there’s updates.

  4. I was surprised to hear that the application actually records the ambient noise when determining your location (or “proximity to other users” – basically the same thing). Actively posting photos is one thing, but quietly recording sound in a room is something entirely different. I’d suggest that Color be more forthright about that part of their data gathering formula.

        1. But they very well could record actual sound data. Right now, the thought of using the app gives a very uncomfortable feeling yet very exciting feeling especially to see what they come up with. Perhaps in a year or two or even 5 who knows or perhaps they may need a better PR consultant. I mean, just imagine if Zuckerberg had revealed all the privacy thing back in 2005. It would have freaked people out.

  5. With ad lib. access to marquee VCs, why did they rush to launch? Most entrepreneurs have to launch quickly, because investors won’t give them the time of day, but these guys didn’t. Their choice makes no sense to me.

  6. All the VCs keep talking about building solutions that solve problems but I don’t see the problem that Color is solving. Is there perhaps more to the app that they haven’t revealed to us hence the big funding… The people involved are not stupid, the investors are not stupid, and certainly we the end user can’t be stupid so what is it that, we the end user, are missing but the VCs and Color team see in the app?

  7. Robert – you killed. Thanks for capturing and extracting this great interview. It is an amazing concept and it also shows a tech team that can recognize how it missed the KISS concept of a product. I think most early adopters will give them another chance. Its one of the reasons I keep nearly 600 apps on my iPhone, I’m more interested to see what gets updated and makes bad apps cool that I will eventually like.

  8. i doubt usability is that much of an issue. I think people are going to opt out due to the creep factor. Theres a reason you dont talk to strangers. No app will make you forget that. Its called sanity.

  9. I was at an event last week and made pictures with color, I was the only one.

    My colleague on the other hand looked around in his iPhone twitter client with ‘tweets nearby’ and found many people who took pictures, and that was really fun.

    But if the app has a way to know where someone is by using audio capturing then that is very clever. I’m very interested in how they do that.

  10. I turned a bunch of people on to the app yesterday…seven or so people all downloaded it at the same time as we sat around on a production set. Everyone “got it” right away and within five minutes we had a hilarious shared photo album. I’m definitely looking forward to see where this app goes and I’m confident Bill, Peter and team will deliver based on their past endevours. Lord knows they’ve got some “runway” to figure it out ;-)

  11. honestly, at this stage I don’t care about being an early adopter… so while all of you go through the pain and patience, just ping me when the thing starts working.

  12. It may be all impressive and have the greatest technology in the world, but I just don’t see how they’re gonna get people to use this. Hopefully their media influence will help them resolve the issue, they seemed to get a lot of attention and downloads, but like you said Churn rate was too high.

    In practice, when you’re out there and you want to take a picture with your mobile device, you’re more likely to take that picture with the default Camera app which you might have easily accessible on your home screen.

    Also, I noticed that once you take a picture with Color, there’s no way to delete it, rotate it, or manage it. It’s almost as if they weren’t thinking of how people actually use their phones to take pictures. They need to try using the devices like the average user.

  13. Good time spent listening to it but the best quote was definitely the ending one: “Nah, i’ll just put the whole thing up [recording] ” :)

  14. Had a long conversation about Path and Color the other day with an industry colleague: what’s amusing is how both have taken a very traditional PR approach to their launches, going to the big papers first.

    It’s a post – eventually – when I figure out what I want to say. But I wonder if both of them bypassing the usual suspects in the Web 2.0 world is because the products weren’t ready for launch.

  15. Great interview Robert! I never would have guessed the amount of technology in that product. It seems like they could have done something a little less effective a lot easier but they pushed to get a really advanced product out. Hopefully things start to work out better for the company they seem like smart guys and I like that they are inviting everyone round to see their data.

  16. Why give them so much benefit of the doubt? Why defend them as you do? I don’t get it. They have so much to prove – let them prove it and then and only then start giving them the coverage they will deserve. In the meantime I just don’t get it – do you own stock in the company? Are they a customer of one of your vendors?

    Entrepreneurs, like me, are frustrated because we have real traction (10% of smartphone users have my app on their phones) and you have never covered us. Instead you cover the company that has done nothing because they might do something in the future.

    Our April Fool’s joke was focused on Color because it is so easy to make fun of: http://shopsavvy.mobi/2011/04/01/greyscale-reinvests-loneliness/

  17. Robert Scoble: could you post links to your photos on Color.com so that we could see them via web browser without iPhone/Android? I like your photos but on color.com there is nothing like color.com/users/scobleizer what is annoying…

  18. excellent subject. no way the media reaction to this is organic. would have liked tougher questions on that. we are all being played; interesting to compare this interview to the old Twitter interview Scoble recently posted: like Twitter, Color will probably be used for something other than currently sold. add: if you see me worrying over my phone at a concert, then you know the concert sucks

  19. There is definitely a photo sharing app bubble. I take a pic on my iphone using camera+, enhance it, save it then choose where to share it to. I have many choices. Instagram, Facebook, Flickr, Twitter, Tumbler, etc. Then there’s more apps I don’t have that others do: like Path Picpliz or Color. Enough with the photo sharing apps.

  20. one thing that I have learned running a startup is that no matter how good you are, it’s very difficult to get it right the first time. Startups are about quick iterations with order of magnitude improvements. Learning on the fly — quickly. We’ll see if $41 mm can help Color iterate and improve or if all Color really does with $41 mm is hire 9 women to make a baby in 1 month (credit to Mark Suster).

  21. Most folks are viewing this as a Photo sharing app, but it’s more intriguing to think of it as a social collaboration app that enables like minded people to interact and share ideas who happen to be in the same vicinity, airports, sporting events, music concerts, take your pick. If a Tweet is worth 140 characters isn’t a picture worth a thousand words!

    I personally won’t mind seeing the idea of having a closed group option as well, right now everything is open I can go join anyone’s group, which I know is the premise of Color. However, I could be at a restaurant with a bunch of friends and should have the ability to create a closed group, so we don’t see any outside noise, just pictures taken by the group appear in the multi lens view. Of course one can take pictures using the regular camera and then email/share on Facebook etc but i l like the idea of instant gratification. The concept is very fascinating and dozens of Use Cases come to mind.