It's not a nail int the coffin by any means but you would think it would make strategic sense for them to be making a concerted effort to get people using their service at a conference like WWDC ala Twitter/Foursquare... big missed opportunity to get influential people using their service.
I'd much rather bootstrap than take VC money – but that’s beside the point.
If Color ends up burning through $41M doing another failed social service (which seems likely), no one wins, and stories like these cast doubt on the whole startup economy.
Maybe the point was that there are a lot cooler ways to piss away 41m than taking 5 photos at WWDC. Perhaps few of them would sound interesting to a VC though.
MVP out the door and in the hands of us early adopty-type folks and then work to make a much "better" (whatever this means in your mind) product? It's what I would do.