Don't bet against a world-class hustler who can also build cool shit. And that's Bill Nguyen.
Let's remember how Lala came to be. He built a service for swapping physical CDs, which promised to make sure that every album ever recorded made its way onto Bittorrent (since someone could rip and flip an album that had never been encoded for <$1). He managed to use that as leverage on the record labels to give him extremely permissive licensing for the Lala streaming service, in exchange for shutting down the CD swapping business. I've been involved in content negotiations with record labels, and they do not give up ground easily. Not even Apple seem to be able to get that far...and they're Apple.
Then, he managed to get Sequoia to give their highest-ever pre-launch funding round. Sequoia isn't known for being a pack of dummies. Color has probably spent less than 10% of that round so far. There's a billion dollar market somewhere in this mobile photo sharing thing (I can't see it yet, but I can smell it), and I wouldn't be shocked if he's the one to cash in on it. Color has an accomplished team, and enough cash to make plenty of mistakes. He might have used every buzzword on earth to raise the round, but it worked, and now he's got plenty of gas in the tank to build something genuinely disruptive. And if Lala is any indication, he knows how to disrupt markets and build tight products (Lala was at least 2 years ahead of its time as a product).
While Color app might sound like it was created by pasting together TechCrunch and FastCompany articles, this is only the beginning for them. Color is clearly in it for the long haul.
I second your thought. Nguyen has a crazy track record.
He sold OneBox in 2000 for $850M (I realize that's insane-o bubble money), then started Seven (which is used by pretty much every carrier I can think of), and then sold LaLa to Apple for $80M.
Hello, my name is Ms. Connie Jones . I am from SILICON VALLEY . I have recently inherited a social program from deceased prime minister of SILICON VALLEY with valuation of USD 100,000,000,000 . Contact my barrister to arrange transfer of USD 41,000,000 to secure ownership
Parent and (especially) all its replies are really depressing in their redditness.
Edit: Sure, okay, parent gets a pass. It is almost insightful. But the rest is noise, plain and simple, and that’s sad.
Final addendum: Redditization is a serious concern, and per broken windows theory, Reddit-like comments should not be encouraged at all: http://paulgraham.com/hackernews.html
> The most dangerous form of stupid comment is not the long but mistaken argument, but the dumb joke.
If you resolve the abstract humor, I am critiquing the investment as a swindle which is a good example of the bubble that we are in. This is in line with the tongue-in-cheek critique that the item I'm responding to skillfully displays. My apologies that replies to my comment don't evoke the humorless, dry discussion of the merits of startup investment that you obviously came to this thread looking for; I'll do my best to comment without humor and without requiring a bit of thought as to the meaning behind my messages from now on.
The constant, incessant, unstoppable bitching that Hacker News is turning into Reddit makes me kind of wish that it will, just so everybody will shut up about it and get back to discussing news. You should have completed the trifecta with a "Flagged." on a line by itself.
Irony that a community founded around Y Combinator finds its greatest fear of evolving into a Y Combinator success.
Edit: Oooo, a pass! Is it single-use, or can I save it for my next almost-insightful comment?
We should go all-out FYAD style and have one weekend where CSS and flash embedding is allowed. Then on sunday night, run a script to clean the place up, and permanently delete the accounts of those who abused their temporary privileges. The definition of "abuse" should be an arbitrary, seemingly random one.
Those of us who followed the exodus out of reddit when it got full of noise and shrillness have a sense of foreboding. Those of us who still read reddit are thrilled to see it come to Hacker News.
I bet there is a clear age division between the two groups. I had the distinct impression that reddit had gotten younger when I left.
Ms Connie Jones,
Thank you for your offer. However I am always distrustful when offers appear to good to be true, as I am sure you are yourself.
In my circle, it is customary for such investments to be accompanied by a Ruby, some railway track, and sometimes a small mammal called a 'mongo', or if one can't be found, a couch is acceptable.
As an act of good faith, please post a photo of yourself, proving that you have said items.
This sounds awesome. I would love to help you out. Yet, I am myself in a predicament ... I'm looking for some actors, could you help me out?
http://vimeo.com/1449435 (Dead Parrot Sketch with Nigerian Scammers ;)
This is the best thing in 2011 by far. I enjoy the fact that more people are seemingly calling bullshit on this industry, it kind of needs a dose of realism.
I'm not so sure. According to Forrester, the average American will use 187 different photo sharing services by 2016. It seems like this could be a good chance to get in on the ground floor.
No no, you missed the point. It's not that 187 photo sharing services will exist, it is that each American will personally use, on average, 187 photo sharing services. About a thousand will exist. Forrester also projects that Scoble will be the top user on all of them.
I agree. However I have learned not to mention the B word on HN - as I did recently in response to a large funding round for another service startup - lest I be downvoted into oblivion. I upvote this!
I love how the backlash of this app racing through the web.
I'm not sure if this one bad investment is a horseman of the startups apocalypse but I think the valuation is definitely wayyyy off.
I still wish them the best but until this thing hits critical mass I don't see myself using it....
Maybe that was the plan all along.....Get alot of hype and backlash at a crappy app...get alot of users willing to try it since it sucks soo much...BAM...critical mass => the app now has value??
I have a serious question: why do people get upset at bubbles? Is it jealousy that others are getting investment or flipping their companies where you perceive little value? I'm not asking to be a bitch - just curious cause i feel some of those emotions myself but I rationally know that they are counterproductive.
Shouldn't we be happy for our startup brethren? Does color's funding hurt you (or the industry?). I imagine all this froth is serving to make it easier for worthy people to get investment, raising developer salaries and other generally good things.
Recalling the .com bubble, when the bottom falls out there is a lot of collateral damage, and not just to the players involved. Those of us on the sidelines and not involved in the idea-investment-flip cycle will suffer when the industry inevitably implodes upon itself. Facebook's valuation, specifically, has a lot of echoes to the past.
I was too young to experience the job market post the first dot-com bubble but I would argue that if you're in a job that is going to suffer from the collapse of this current bubble, you're most likely currently benefiting from the bubble already. If not, the collateral damage should be relatively low. Would a 37signals, patio11's BCC really be affected by a crash of this current investment bubble? Probably not.
After a bubble bursts, the pendulum tends to swing the other way, towards extreme thrift, caution, and near-paranoia - it affects spending as well as investment. The over-correction can hurt everyone.
> I was too young to experience the job market post the first dot-com bubble but I would argue that if you're in a job that is going to suffer from the collapse of this current bubble, you're most likely currently benefiting from the bubble already.
A good point, but with respect to the .com bubble, Internet commerce's crash also affected the entire economy as well as ancillary companies in the IT sector. So I'm not sure that I necessarily agree; I work for a hosting company, and all of these bubble companies need hosting. You can see where A meets B, there.
While I agree with most other replies to you, I'll provide an alternative point.
Bubbles sicken me because they truly bring out the worst of the investor types, the ones who will throw money at anything regardless of its use case.
This is $41 fucking million dollars we're talking about here, and it's spent on a god damned mobile application to connect people with others in random arbitrary situations. People do not have a difficult time doing this, an application on a phone isn't going to make a difference. We're all human at the end of the day.
Now stop and think about what that $41 million could do in this world. This is nothing more than a bunch of rich kids circle jerking one another in what's a disgusting take on business principles in general. $41 million could create several businesses that could further create more jobs for the US economy; $41 million could be fucking used to help Japan out of a bind.
Instead, it's being used to buy a domain name for $350,000. It's being used to build another mobile application that isn't even that technically impressive. It's sickening, and I would never consider working for a company like that. As an engineer, I'd very much question those who'd consider it.
I have a serious question: why do people
get upset at bubbles?
Because bubbles are unsustainable. Almost anyone who gets into a bubble, even at the beginning, will end up losing in the end.
But more importantly, a bubble doesn't keep going. It eventually pops and then the entire industry suffers. Why would you want the industry to suffer? You make money in it, I assume.
It isn't just the industry, it is the entire economy that suffers. The rush of funds to the industry drives demands for service industries and their jobs, among other things. When the bubble bursts, the industry certainly takes a hit, but so does everything that built up to support the industry.
Bubbles create large wealth when on the upside but wealth creation at a rapid extend creates a high volatility in markets until a point where people can no longer follow their current way of life. By then the bottom of the pyramid falls and the economy collapse. Your clients are to one bringing the business and is wealth is not properly give away they cannot afford them anymore and your the one suffering and the end. Read Henry Ford's theory.
> I have a serious question: why do people get upset at bubbles?
Bubbles collapse, generally with painful consequences for the entire industry. Great business ideas that would've gotten funding during a non-bubble often can't find funding after a bubble.
Because overinvestment in a specific sector of the economy necessarily results in underinvestment in other sectors of the economy.
In the case where investment capital flows to ultimately unproductive enterprises like photo sharing, and away from productive enterprises like efficient batteries, cancer drugs, etc, humanity suffers in the long term.
Now it's possible that the proliferation of photo sharing services is increasing the efficiency of photo sharing that people were doing previously, thus freeing up time to engage in other productive pursuits, so it's not necessarily a bad thing to sink investment capital into ventures that appear unproductive in and of themselves.
But I would highly suspect that this is not the case for the current bubble. It's quite likely that photo sharing apps are actually generating demand for photo sharing activity, thus being a net drain on actual economically productive activity.
This is a very low-quality post and an even lower-quality thread. Stop to think. Sequoia have the best track record in the industry. Is it likely they're completely fucking stupid? Because that's what follows if these snarky comments have merit.
Man am I thankful I have something awesome to do with the rest of my day.
I'm sorry - do you think that people on Wall Street were stupid when they were creating CDS and pumping huge speculation bubble around subprime mortgages?
I think that we have enough evidence that smart people make mistakes - actually much bigger and more expensive mistakes then anyone could have expected.
The two cases are different. The guys manufacturing credit default swaps had someone to sell them to. But (unlike in the 90s) there is no one buying lame startups for billions of dollars.
More likely, this Colors app is probably a very, very tiny part of what they really got funded for.
Conclusion: no one really knows what they got funded for. Sure, a stealth company getting 40M in funding is bad; but getting 40M for an app called Colors is what's got people ticking.
I've read Halting State before. This is a secret government operation! The mobile photo social sharing app is just a cover for the Dept. of Homeland Security to prevent terrorists from acquiring our nation's coupons!
I fully expected that some part of your app would involve porn. In fact I think by using a .xxx you're obligated to include porn...well, at least you should be obligated.
Add porn, raise the round to 80 mil and we have a deal.
I followed the link on the last slide. You have an opportunity to give $100 on Paypal for "Color.xxx Venture Funding Capital Investment for Equities." :-) I wish I could flattr this too. Gave my coworkers and I a good laugh this morning!
Seriously though, how many "social"...excuse me "elastic" networks do people need to be a part of? I'm one of those weird people who doesn't care that my "friend", whom I've never actually met or spoken a single word to, is getting ready to brush her teeth (yes, I know she is probably a he). With Color in particular, I don't understand how sharing photos with people who are within eye sight is interesting considering you are seeing the same thing!?!?
The presentation of Color is slick, but from a usability aspect, the video looked very confusing. Admittedly I haven't tried using the app since no one I've talked to about it has installed it and the app store description clearly states "Warning: Don't use Color alone". I personally hold nothing against the Color team for taking the money, but VCs COME ON! Even if VCs are investing in apps like this in hopes of a Facebook or Google acquisition, $41,000,000 seems ridiculous. Then again, I'm just a developer hoping someday I'll create something that someone thinks is worth a buck.
I just listened to the Richter Scales' "Here Comes Another Bubble" last week. I would repost it as a thread, but I'm not sure how well it'll fare, so here it is on all its glory.
all that could be said by a lot of startups. After the somewhat unexpected success of twitter, facebook and all that social crap, all investors are afraid of missing out on the next opportunity. Thus, artificially increasing the market and inflating the "bubble"
Don't bet against a world-class hustler who can also build cool shit. And that's Bill Nguyen.
Let's remember how Lala came to be. He built a service for swapping physical CDs, which promised to make sure that every album ever recorded made its way onto Bittorrent (since someone could rip and flip an album that had never been encoded for <$1). He managed to use that as leverage on the record labels to give him extremely permissive licensing for the Lala streaming service, in exchange for shutting down the CD swapping business. I've been involved in content negotiations with record labels, and they do not give up ground easily. Not even Apple seem to be able to get that far...and they're Apple.
Then, he managed to get Sequoia to give their highest-ever pre-launch funding round. Sequoia isn't known for being a pack of dummies. Color has probably spent less than 10% of that round so far. There's a billion dollar market somewhere in this mobile photo sharing thing (I can't see it yet, but I can smell it), and I wouldn't be shocked if he's the one to cash in on it. Color has an accomplished team, and enough cash to make plenty of mistakes. He might have used every buzzword on earth to raise the round, but it worked, and now he's got plenty of gas in the tank to build something genuinely disruptive. And if Lala is any indication, he knows how to disrupt markets and build tight products (Lala was at least 2 years ahead of its time as a product).
While Color app might sound like it was created by pasting together TechCrunch and FastCompany articles, this is only the beginning for them. Color is clearly in it for the long haul.