Ideas Can Be Funny: From Ridiculous Color To Meerkat Love
Meerkat, a live video streaming smartphone app, is the startup of the month judging by screen upon screen of media love for all things Meerkat. But Color, a very similar smartphone app, was ridiculed four years ago.
Color Labs, founded by serial entrepreneur Bill Nguyen (above), raised a $41 million round in March 2011— and triggered a cacophony of clueless criticism in the media.
For some reason, Color became a viral symbol for Silicon Valley's reckless funding, and it was used as a sign that a "bubble" was likely developing. For gleeful Silicon Valley outsiders, Color's funding was a heaven-sent example of how Silicon Valley's "smart money" VCs were as dumb as a dumbass.
Color was not any of those things. It was a bold attempt at creating a new type of shared social experience, it went far beyond Meerkat in capabilities and ambition.
Color Labs initially raised a $14m funding round but then Sequoia, the iconic Silicon Valley VC firm, wanted a slice, saying, "Not since Google have we seen this." Sequoia reversed the numbers on Color's round from $14m to $41m — and that's when a tidal wave of ridicule by the clueless media began.
Money too small to mention...
These days, $41m funding rounds are too small to mention and so are their novice startup teams. But investing in a Bill Nguyen venture is always going to be a smart move because of his excellent track record.
He's founded several companies and sold two of them: Onebox for $850m and LaLa.com (my favorite music service) for $80m.
Meerkat recently raised $12 million. Founder Ben Rubin has no track record, he is a former "fashion trends" importer based in Israel. And nobody laughed.
Instead, there has been a tidal wave of media love towards Meerkat and Rubin, from the very same news sites that ridiculed Color.
The evolution of good ideas often follows a three-stage progression: first, everyone laughs at the idea; then they accept it and love it; then everyone considers the idea so blindingly obvious that it's not even worth mentioning.
Was Color too early? Probably, but as Dan Scheinman, when he was head of M&A at Cisco once told me about startup failure: "You can be too early, too late . . . or right on time." It's tough building a successful startup — it's not just about the timing.
Color Labs failed but that's part of the Silicon Valley game: if you don't play you can't win. Bill Nguyen will be back and I'm looking forward to hearing about his next startup idea.
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Hat tip: Matt Foremski