Color Will Shut Down on December 31st

Ok, to be contrarian, "Why is this a good time?"

Here is what I don't agree with in this statement, you take the app they shipped and the money they raised and you then assert they could have done it for so much less.

The flaws in that claim are that the shipped application is probably not particularly close to the 'vision' of what they wanted it to be, no doubt it was a minimum viable product to test the basic concept, and you and I don't really know how much money they spent, we know how much they raised, they could have most of it still in the bank, less real estate and salary costs.

I don't think there was anything at all wrong with the color "concept" or what they were trying to achieve. The two things that failed were; they raised too much money and their management collapsed.

Raising too much money is a well known risk for serial entrepreneurs, after a few 'hits' you find a lot of people want in on your next project. (apparently this is true in Hollywood too but I've no personal experience with that). The 'right' thing to do is get your minimal funding and move on, use the extra leverage to improve the term sheet, not get more money. Rule #1 for any startup is have a plan for every single dollar you raise.

I can assure you that even if they had the printing money [1] product having that much dysfunction at the top level is going to kill it dead. Further its really impossible to ship something if your leadership isn't at least somewhat aligned and sharing the same goals. That is particularly true of the CEO. As its one of the CEO's primary responsibility to guide the train to its destination, if they are compromised the train stops. That is what you have a board of directors, having only the overall success of the company as their motivation they are supposed to recognize this and toss the CEO. Say what you want about Yahoo's board but they certainly have the 'fire the CEO' process down.

Color was a spectacular failure, but not because the app they shipped could have been shipped for less, rather their failure is that they executed so poorly against their original vision.

[1] http://techcrunch.com/2010/10/05/stupid-questions-vcs-ask/

The original idea was to build an implicit or 'implied' network with a social graph based on your behavior rather than social graph you manually select yourself (like on Facebook, Twitter, Path, etc). I think that was a pretty big idea, and it's a shame they couldn't get it to work.

( The photo app was just an MVP if I understand correctly. )

Bluntly, that's the point of investing. The investor assumes the risk that their invested capital vaporizes. The risk assumption predicates the possibility of higher returns than a less risky investment. It's not a savings account with guaranteed returns.

Last time I heard vague numbers thrown around, 90% of VC-funded startups fold, 9% go into some kind of functional equilibrium, and 1% make it big. Ergo, you should actually reckon on failure being the norm.

Put yourself in his shoes. You have seen that the team is not working well together. The product vision is getting executed badly. Lot of VC money went down the drain. What would you do? Wouldn't you exit while the sun is up?

There was IMO a third failure: they released an app with no clear purpose and no indications of what it was meant to do. I downloaded it after the hype about the acquisition, had to guess what the different icons did, I made a profile image and took some photos that were maybe uploaded somewhere?

I've no idea what was actually meant to happen, except it was supposed to share photos somehow.