color

Color’s a Failure But That’s Okay in Silicon Valley

By Mark Evans in Startups 3 Comments Tags: , , ,

After raising $41-million and then pulling off one of the most inauspicious debuts since the Flock alpha, Color is apparently preparing for a pivot.

Here’s what I say about this “pivot”: When you raise $41-million before you have any users or revenue, you shouldn’t get to pivot because it shows that the original idea was terrible, and who knows if the pivot is going to be any better.

Color entered the ultra-competitive photo-sharing market with a product that wasn’t compelling, interesting or appealing. It generated a lot of “meh”, which is the death knell for any start-up.

How Color managed to raise $41-million let alone $4.1-million is anyone’s guess but strange things happen in Silicon Valley that the rest of us apparently don’t understand. Despite Color’s disastrous debut, there was something under the hood that we explain its ability to raise so much money. So far, we haven’t seen anything other than a new project with super-duper potential (tongue planted firmly in cheek) called Blue.

Color illustrates why Silicon Valley is so fascinating and there are so many successful start-ups: failure is not bad even if means having a $41-million investment blow up. Failure means you get to pivot, learn from your mistakes, and then try again with the same project or another project down the road.

Everywhere else around the world, failure is a terrifying prospect. In Canada, investors are so scared of failure that start-ups struggle to raise even modest amount of seed capital. We look at entrepreneurs who have failed as losers, while Silicon Valley sees unsuccessful entrepreneurs as brave warriors.

In Silicon Valley, it means Color gets an opportunity to pivot. I would be extremely surprised if Color was even modestly successful but at least it gets to try.

What’s the Color of a Bubble About to Burst?

By Mark Evans in Social Media 1 Comment Tags: , , ,

In late-2008, units within a proposed 80-story luxury condo in downtown Toronto went on sale. The real estate market was so frothy that people lined up for more than a week to purchase a unit. Some of these people had been hired by buyers or real estate agents for several thousand dollars. In other words, it was a crazy situation.

If I had been prescient enough, it would have been a blatant indication the decade-long economic boom was about to bust. It was deja vu all over again on the front page of the newspaper. But most people were far too bullish to pay any attention. Lo and behold, the global economy went in a wicked tailspin, fuelled by an overheated real estate market in the U.S. In the process, the condo project fell apart, leaving an embarrassing empty lot.

Fast forward less than three years and there is full-blown evidence of another bubble about to burst. In this case, it’s a $41-million financing done by Color, a mobile photo-sharing startup looking to establish a foothold amid a sea of photo-sharing startups.

But wait the blogosphere and media breathlessly proclaim, Color is different because it’s a “proximity-based social network” and – wait for it – Color is all about implicit rather than explicit relationships.

“This tweak may well resonate with people who feel their Facebook and Twitter friend lists are random, outdated and overwhelming,” gushed Liz Gannes, who is clearly drinking the Kool-Aid being served up in Silicon Valley these days.

Money talks, and $41-million is giving people a warped view of the world: the idea being that if a start-up can raise $41-million, it must be something special. Color may be special but not in the way that its founders and investors believe.

For one, there are already critics who believe Color is especially bad. Mike Rundle opines Color has already blown it, while Jason Fried declares Color botched the “blank slate user experience”. In many respects, Color reminds me of the inauspicious launch of Flock, which was supposed to be the social browser.

If I were a high-tech investor, Color paints a perfect picture of how we should be running for the hills. Color has bubble bursting written all over it. It’s an over-financed, over-hyped and underwhelming start-up trying to break into an overly-competitive marketplace. Somehow, it has managed to convince some pretty smart people it has come up with a better photo-sharing mousetrap.

And that is a dangerous sign that would be colored red.

Related Links:
Investing Like It’s 1999 (New York Times)

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