
Google Tried To Buy Color For $200 Million. Color Said No. - csmajorfive
http://techcrunch.com/2011/07/21/google-tried-to-buy-color-for-200-million-color-said-no
======
natural219
I might be the only person in the universe who thinks Color is a fantastic
idea, but not because it's trying to be an uber-cool new social network.

Location-based photo sharing is an incredible idea. When I'm at an event --
say, a concert -- there are hundreds of people around me taking lots of
different pictures. I want those pictures, but I don't know any of those
people. Imagine going to a venue, not bringing a camera, but still coming away
with awesome, memorable photos of the band, from people that have nice
equipment and know how to take photographs.

I'm not sure it justifies the huge valuation, but I can easily see why this
product had the potential to be a huge player in the photo-sharing space. I
feel like the press from their first round caused such an unnecessary uproar
around their brand that coming back and producing a humble, useful app was
nearly impossible.

That said, I probably would have taken a $200 mil payoff for an _idea_ for an
_iPhone app_.

~~~
DarkShikari
Whether there's good money in solving this sort of problem is another question
-- but sorting through shared photos at events is a surprisingly hard problem,
as I learned recently.

I attended Anime Expo 2011 in costume. Over the course of the two days I was
there, I probably had at least 100 people stop me for photos -- not unexpected
with thousands of people walking around carrying cameras. I attended a photo
shoot and the whole deal: surely it'd be easy to find at least one of these
pictures later, right?

After the event, some friends were curious and wanted to see a photo of me. So
I just search through the albums uploaded to Flickr and...

... well, it took days after the event for anyone I knew to find a single
photo that even had me in the frame. The volume of uploaded photos was so high
that you'd probably have to search for hours to find _anything_ in particular.
Nothing was tagged. Want to show your friend a really cool cosplay you saw?
_Unless you took a picture of it yourself, with your own camera, the odds of
being able to find it are practically zero, even if hundreds of people took
pictures of it._

Now I understand the need of so many people to bring cameras with them: it's
not necessarily that they need to have their own personal pictures of the
things they liked. It's that if they don't take them, _they'll never be able
to find anyone else's pictures either_. We're overwhelmed by such a sheer
volume of photos and left unable to find what we want.

~~~
derefr
Sounds like a good case for NFC. Put RFIDs in the attendee badges, and a
sufficiently-advanced camera app could auto-tag those people as the picture is
taken.

~~~
DarkShikari
Does that sort of technology work directionally? Typically the place was so
crowded that you'd often have 40 other people within 15 feet when taking a
photo, so it'd have to identify exactly the people in front of the camera, and
not to your sides or behind you.

~~~
sparky
GP conflated RFID and NFC a bit, at least their colloquially accepted
meanings. What we normally call 'NFC' has a range of <20cm, often <<20cm
(<http://en.wikipedia.org/wiki/Near_field_communication>). This is what also
makes NFC more suitable for mobile payments than RFID.

~~~
derefr
Hmm; true. Maybe just passes with large, simple QR codes on the front of them,
then? Then the device taking the picture wouldn't even have to decode them
just-in-time; the data would be encapsulated in the picture itself.

~~~
kooshball
QR code on a name tag or conference badge would be a great idea.

------
SeoxyS
For me, the brilliant idea behind Color, (which they did absolutely not
realize in their app), is the idea of an elastic social network.

In real like, friendship isn't binary. It's a scale of how close we are, what
we talk about, what we share in common, etc. If you came up with a social
network that would figure out who your friends are based on how often you
talked, hung out, what you talked about etc., I'd call you a genius. A social
network where there's no awkward friend requests to accept or reject. A social
network that shows me feed items based on how much I _currently_ care about
the person and the kind of content...

~~~
calbear81
Absolutely, I think this is exactly the _BIG_ idea that the VCs saw that
others didn't really get. I would add that I don't even think it's about
"friends" in your elastic social network, it is that the social network exists
based on the context (where you are, who you're with, what you're doing)
regardless of whether the other person knows/friends you or not. There is a
shared thread that is tied together by a shared experience and Color was
trying to capture that.

------
joshu
i feel like HN is fascinated by but has relatively little understanding of how
deals work.

companies don't just show up on your doorstep with an acquisition offer and a
giant check. many times the deals are staged and dependent on progress.
consider google's acquisition of dMarc, the talked about price, and the actual
price.

~~~
ojbyrne
I think HN is much better than TechCrunch/Mashable/etc in that regard. The big
tech blogs seem to have a vested interest in promoting the idea of huge
acquisitions. People here seem genuinely interested in the details and the
detailed outcomes.

~~~
joshu
I dunno. It feels like a lot of the comments are either angry/chip on
shoulder/etc or are presenting opinions as fact for puffery. Hardly any
better.

There's not even a glimmer of doubt in anyone's mind that the reporting might
be incorrect, etc.

~~~
josefresco
We use the the article as the basis for the debate here. Sometimes that debate
stays on topic, sometimes it does not. For the sake of timeliness we mostly
have to assume the article is accurate, however sometimes the debate itself is
regarding the authenticity of the publisher, author or sources (or lack
thereof). The HN system is quite healthy IMHO

------
zoul
I feel like I live in a different universe. Can please someone explain to me
what rational thinking might be behind such offers?

~~~
ziadbc
These deals often faul through at the last minute. Much of the time, the
company making the offer just wants to get a look 'under the hood' of a
potential competitor.

Think of all the companies google has made these offers to and the deal didn't
happen. Strategy at this level is kind of like macroeconomics, it just doesn't
map to what makes sense on face value.

~~~
ww520
The small guy is sort of at a disadvantage if the big company just tries to
jerk around. Is there break-up fee as part of the letter of intent?

~~~
jonknee
Depends on the letter.

------
pclark
I think that Color is an incredible idea for an application, and when I read
their pitch I wanted to bang my head on the desk for not coming up with that
concept because it is _so beautifully simple yet obvious yet useful_!

Isn't it obvious that if you are at an event, say, a birthday party, you'd
want to see what photographs your friends are taking as they take them? What
about at a sports game or concert, can you imagine how amazing that'd be?

Raising $41M, selling for $200M, all irrelevant versus the grand scheme of
this idea. I worry that they have this awesome idea, and are poor at actually
building the product, and this makes me sad because I really want someone to
do it right.

I really do not understand the hate at Color, they have made mis-steps, but
their concept is actually a good idea - compared to a lot of stuff that Hacker
News thinks is dumb.

~~~
seunosewa
Doesn't Facebook solve this problem already?

~~~
pclark
no, not at all. Facebook exacerbates this problem if anything.

------
jsherry
TMZ is to Lindsay Lohan as TechCrunch is to Color. Constantly reporting upon
(and clearly enjoying) the precipitous demise.

------
hamner
A lot of the comments below are criticizing "irrational investors" that were
"duped" or the product as "vaporware."

This is not the case. Color had a very talented team attempting to attack
multiple technically challenging problems, that remain unsolved today.

The first is the discovery of your implicit social network, as defined by your
virtual and real-world interactions with others. Facebook currently uses this
to determine what information is shown in your News Feed and make friend
recommendations, but is not using it to its potential. Google Buzz tried to do
this directly via your emails and flopped partly since it did not account for
the privacy implications. The ability to transform people's natural
interactions into strong recommendations of what they should pay attention to
and who should meet each other is still an open problem.

The second is the mapping of real-world events (initially defined by the
pictures and people) onto the virtual world. There is potentially a lot of
value, both to participants and outsiders, to say (1) who came to real world
events, (2) how they interacted, and (3) what happened, while properly dealing
with the corresponding ethical implications.

For both of these to work, Color needed a viral social product to gain data
and users. They failed on product/market side, especially because they did not
have enough focus on "what is the experience we want our users to have the
first time they launch the application?" The opportunity remains open, for
Color to redeem itself, for the big players to improve their products, or for
a new startup to come along and show the world how it's done.

~~~
neilc
_Color had a very talented team attempting to attack multiple technically
challenging problems, that remain unsolved today._

Sure -- so what? Just because you've got some smart folks trying to solve hard
problems doesn't mean you're worth $200 million.

------
badclient
More likely: Google offered a few bucks for Color and millions if they met
milestones 1, 2, 3...; Color knew they couldn't so they turned it down.

~~~
jonathanjaeger
Good point. $200 million in cash or stock and how many milestones you have to
hit are significant factors.

------
nextparadigms
In Groupon's case ($6 bn offer), Twitter's case ($10 bn offer) and now Color,
I feel as if Google got _lucky_ those companies didn't want to sell, because
it seems they would've been a huge waste of money. Google seems to be pretty
happy about over-spending on these companies, but is extremely cautious about
over-spending for patents that could save Android in the long term.

~~~
megablast
I guess that with the patent issue, Google evaluated the fact that it will be
cheaper to fight them, using lobbying, and licensing, than to pay that much
for them.

------
trotsky
Nobody pays $200MM for nothing. It's exceedingly hard to believe google valued
a small pre-funding startup at over low eight figures. While most of the time
I look at tech crunch leaks and believe they're real albeit spin infused, this
just doesn't pass the wtf test. Arrington has appeared to have a grudge
against color in the past based on the tone of the TC coverage. I'm inclined
to believe this is entirely made up.

This is why you don't want to get your news and journalism from the people who
are also financing deals. Now I'm not sure when to trust them at all.

~~~
vnchr
\-->"It's exceedingly hard to believe google valued a small pre-funding
startup at over low eight figures." But Sequoia did when they made the $40mm
investment. That's what's so odd about it.

~~~
trevelyan
This "de-bubbles" Color in my mind. Not crazy to get a high valuation when you
have Google interested in buying you for significantly more.

~~~
vnchr
Maybe I'm missing something, but I'd chalk it up to 2 groups with deep, deep
pockets making a long shot bet because they can.

Once Sequoia invested, the acquisition was derisked for someone like Google.
Then Google just needed to offer a price of some multiple of the investment
("How about 5x? Not bad for 6 months!"). Conversely, Sequoia might have hoped
for a flip knowing Google was so aggressive for social startups at the time
and invested accordingly. As far as I can tell, the Color leadership were
blinded by their own genius and these early "signals" of success and they
screwed up their acquisition, launch, and thus far all meaningful execution.

------
null_para
Something must be there in their product that everyone is willing to pay top
dollar. And these are all smart people who are ready to pay btw, not any
average joe investor

~~~
vailripper
If the product was released differently, it very likely could have been
successful. It seems to me that once they got all that VC funding, they were
desperate to release something to prove their worth. But, since their product
depends on tons of people all using it in a geographically tight area, it
crashed and burned. I think had they started releasing at events (ala twitter
@ sxsw), they could have had some success.

~~~
OstiaAntica
Yeah, it could have been a cool thing-- like "This Conference with Color" or
at certain trendy clubs. Get some celebs on there too.

~~~
cpeterso
"SXSW... now in _Color_ "

That sounds like a great co-branding opportunity. Color could also sell/host
conference services such as preloading conference-related photos/ads or
providing additional Color photographers to "augment" the conference's Color
photos when the app's adoption is still low.

------
acrum
(Sorry-- Off-topic) HN Powers That Be: How did this get submitted twice? The
URL is the same as far as I can tell... except a trailing slash? (see:
<http://news.ycombinator.com/item?id=2790700>)

~~~
mestudent
And that trailing slash is exactly how it didn't get caught by the dupe
filter.

------
localhost3000
i keep reading in the press that color had a "superstar" team and this was a
main driver of the massive funding. Yet, I've never seen an explanation - why
are (were?) these guys generally considered "superstars" ?

------
lazy_nerd
Did Google dupe Sequoia and other VCs into thinking that Color was actually
worth investing $40million dollar into even though eventually when they
launched it turned out to be vaporware?

------
slackerIII
I guess that explains the valuation.

------
corry
If the average employee of Color didn't already know this... wow, talk about
an upsetting topic. Imagine doing the math on your options, seeing that you
could have made a killing, then thinking about how the founders said 'no' to
the deal, then thinking about how some of the guys who made that choice jumped
ship... it all would make for some bad morale.

------
agscala
Color's service would be a killer feature for Google+. Color is an excellent
idea assuming that there are users who are willing to post pictures and share
location data. Unfortunately for Color, it will be a long hard road to get
these users. Google, on the other hand, already has a ton of users, the
beginning of a social network, and a really strong presence in the phone
market. If Color-like functionality was built into Android, Google would find
themselves with a very valuable service right from the get-go. A lot of the
hard work is behind them.

------
moheeb
Wouldn't Color be the worst copyright/privacy infringer ever created unless
they setup some system to blackout certain areas? Sounds like a nightmare.

What happens when Tool and Madonna don't want photos at their venue?

<http://asmp.org/tutorials/property-and-model-releases.html>

------
arihant
Color's elastic network would be if only here were more people in it. I think
they suffer with a massive chicken and egg problem. I hope they figure things
out.

I am yet to use Color with another person in the same room.

I think Google is after their sound technology.

------
pinaceae
as an outsider, i don't understand the allure behind color at all.

elastic social network? is this something a 16 year really thinks when using
facebook? oh i wish it was more elastic? sounds like nerdvana.

proximity photo sharing? why would i want to do that? i am careful about which
pics i share with the world. they transmit my persona, so i don't share shots
that suck. or maybe i am taking pics no one else is supposed to look at - as
in private. why would you want to look at my kids, perv?

honestly, not all ideas by talented and bright people are good. just look at
asana, yet another project tool.

------
suneliot
$200 million. For the domain!

At the rate the value of that domain was rocketing, seems like a decent
investment at the time. Too bad no one's going to want to be associated with
it after what team Color did to itself.

~~~
Sayter
$200 million for a domain as an investment? Only one domain has ever sold for
more than $10 million. You get below the $1 million range before you're even
out of the top hundred. Domains are not as valuable as people think they are,
and the rules change entirely once the new TLD system hits.

For the record: Color.com was purchased for $350,000

~~~
tgood
Ultimately the most expensive domain ever was broadcast.com, to just be
forwarded now...

------
parfe
Is this just pure greed? Did Color think they had a billion dollar idea? From
my understanding they're a public photo album. What revenue source did they
target?

~~~
j79
The same revenue source all "social" sites target: You.

Okay, maybe not "YOU" you, but the end user. A public photo album where you
provide who you are (via registration) and WHERE you are? Real-time targeted
ads would be just the tip of the iceberg!

------
SODaniel
$200 million for a start up excluding hard patents is almost always a clear
sale. Yeah, it's a good idea but not by any means something completely
revolutionizing.

------
rdl
Remember Microsoft offering to buy Yahoo for $45 billion back in 2008? It is
worth about $18 billion now (less, actually, especially if alipay goes badly)

~~~
rudiger
Well, an acquisition would have to be for a premium of Yahoo's publicly-traded
market capitalization, so it's tough to say how much they "lost" by scuttling
the deal.

~~~
rdl
And there's always the counterexample of Larry + Sergey wanting to sell to
Yahoo back in the day for $1mm, and Mark Zuckerberg turning down $1b from
Yahoo later. (I sense a theme here...)

------
csomar
I didn't try the iPhone application, but it has 1411 ratings with 2 stars. How
is this a good idea if people don't actually like it?

~~~
kristofferR
The idea was good, it was just the execution that was bad. The app itself was
really buggy and the proximity-limit for near photoes was way too limited.
Even in tech centers like SF it was empty. <http://cinch.fm/scobleizer/194769>

------
njloof
$200 million isn't cool. You know what's cool? Uh, $0 million.

------
clobber
Maybe this just looked like a good idea to Google at the time. Sometimes you
have to make acquisitions to look progressive to your shareholders. Now, I'm
betting they're glad they didn't make this purchase.

Look at Google Ventures and you might see some questional investments as well:
<http://www.googleventures.com/portfolio.html>

------
ristretto
I agree with most here that it's a good idea, but it's been out for months, so
maybe this idea was another dime in a dozen. I guess Google has lots of cash
to spare on a domain name and a hype machine.

------
mkramlich
I have a few rules in life. Somewhere pretty high up there is, "Never turn
down a buyout offer for $200 million."

