Sequoia gives photo-sharing startup more money than they gave Google

Color seems like one of those ideas that would be pretty rad if 1 million people already used it. Because no one has the app yet, if you fire it up it's totally blank. You take a picture of yourself, post it, then the rest of the UI is whitespace. There's nothing to look at or do. It's possibly the worst first-run user experience I've ever seen.

I wonder if the Color engineers were always using the app together and always seeing each other's photos. If that's the case the UI was always full of stuff to look at, and they probably demoed it to journalists like this as well. Did they ever actually see the app as an empty slate like everyone will see it the first time they use it? My guess is: no.

"All of your contacts are presented in a list of thumbnails ordered by how strong your connection is to that user. Whenever Color detects that you’re physically near another user (in other words, that you’re hanging out), your bond on the app gets a little stronger. So when you fire up the app and jump to your list of contacts, you’ll probably see your close friends and family members listed first. But if you don’t see a friend for a long time, they’ll gradually flow down the list, and eventually their photos will fade from color to black-and-white.

...If you fired up Color in that restaurant example from earlier, you’d only be able to see photos that had been taken by friends and strangers within 100 feet of that restaurant. That is, unless you jump to your social connections. Tap on your best friend’s profile photo, and you’ll then be able to see all of the photos that have recently been taken within 100 feet of them. In other words, Color is trying to give you a way to see everything that’s going on around you, and everything that’s going on around the people you care about."

"Color is also making use of every phone sensor it can access. The application was demoed to me in the basement of Color’s office — where there was no cell signal or GPS reception. But the app still managed to work normally, automatically placing the people who were sitting around me in the same group. It does this using a variety of tricks: it uses the camera to check for lighting conditions, and even uses the phone’s microphone to ‘listen’ to the ambient surroundings. If two phones are capturing similar audio, then they’re probably close to each other."

That photo is now public to anyone within around 100 feet of the place it was taken. So if anyone else in the restaurant fires up Color, they’ll see the photograph listed in a stream alongside other photos that have recently been taken in the vicinity.'

Correct me if I'm wrong, but when it comes to photo sharing, aren't the people in your immediate vicinity at the time you take a photo the people who are going to be the least interested in getting that photo shared to them?

  "But how exactly is Color going to make “wheelbarrows of
  cash”... the company is still very early on, but it 
  eventually plans to offer businesses a self-serve platform
  for running deals and ads

The photo-sharing aspect just sounds like a hook to get consumers to actually put it on their phones. I'd imagine that the bigger play is trying understanding where people go, who they go there with, when they go, all of that. Facebook has the data to reconstruct that information after the fact, when people come home and upload their pictures, but this looks like an attempt to see it unfold in real time.

Advertisers are already getting used to having this kind of information on the web, with tracking cookies, twitter, and real-time ad auctions giving them immediate, constant feedback from and control over people's online experience. The company that figures out how to get a similar datastream out of and targeted advertisements into meatspace is going to make mad money; if these guys have a legitimate shot at doing it, $41M probably isn't so crazy.

On the other hand, just downloaded the app, and the first cut is kind of crap.

That out of the way, we are certainly envious about the 100-200 million dollar evaluation they got on day one. With about 4k spent so far, in our case and with three of us chipping in any extra time we have (me - any extra time I have outside of lurking here), we are still a couple of months away from a MVP that will make us cringe ever so slightly when we see how far we will have to go. Till then, no real sleep, and a lot of heartburn. Still, its good to see Color validating some of what we do, but in the end, we both will have to prove there is a market. We however can afford to fail early and not give any VC's any heartburn, just our own families.

One thing is for sure, we do not plan to build sonar capabilities. We dont have the knowhow and I am not sure that will be the make or break for us anyway.

We also dont have the same pedigree, and therefore its clear that VC's will not be snapping at our heels (But we go back six years, all three of us). We are ok with that, but heck..41 million is a lot of money.

As the weeks peel away, I hope to share here on HN where we stand with the product and hopefully even line up some kind souls here who will be willing to beta test for us in return for some good karma. We cant afford to pay (please refer back to the 4k burn total).

We however have some ideas on how we plan on monetizing. We plan on finding out as early as we can, whether our ideas coincide with real needs from local businesses.

Right now, I am shamelessly stopping people on the street, as they veer away, ignore, stare, and sometimes stop and tell me what they need and what they want. I do this as behind the scenes we toil away on building something that in the end we can be proud of.

In all fairness, right now, they have a far more capable app, employing 9 times our current strength and vastly more capital and brain power. In the end, may the best viable product and company win.

* 7 founders (~14% split evenly, unlikely though)

* 41M raised

* Staff of 27 (obviously get some equity)

Some valuation math:

(Dilution) Pre-Money Post-Money (Founder dilution from ~14.28%)

  15% 232.3M 273.3M  12.1%

  20% 164M   205M    11.4%

  25% 123M   164M    10.7%

  30% 95.6M  136.6M  9.99%

  40% 61.5M  102.5M  8.57%

  50% 41M    82M     7.14%

Think of a bar conversation, or a restaurant or something "It's quiet now but check it out on a Friday night! It goes mental!".

The auto-social network based on proximity is awesome, though. I can't wait for this and the creep factor will be gone in five years anyway since we are all moving to a more open society.

webvan anybody?

There's no getting away from the fact this is just an app that shows you photos taken near you, by strangers.

I just don't get it. I might be wrong, in 12 months I might be kicking myself, I just cant imagine it.

I sure believe they've hired a staff of 29 very talented people. But even if you give each of them a salary of more than 1 million dollars it would still take a year to burn that money.

The goal is to flip this to the next sucker. A cool domain name, a celeb team, an app that's bound to attract media hype (look for "The Color.com Revolution" coming from Tehran University in 2012) - a year or two from now, provided the bubble doesn't burst, Sequoia can unload this on Google or Facebook and make a tidy profit.

I'm considering building a clone on android and GPLing it. Who's in?

Likelihood of success? Low, but that's ok as long as it works once every 10 years.

I've been working on something similar... $41M sure would be nice! For a group of proven talent I can understand the investment, but $41M is pretty crazy.

EDIT: Ok, RTFA seems to indicate that these groups are fluid and intended to form themselves according to whom you hang out with most often, so presumably if I keep taking pictures then it will figure out who my friends are. That's a neat idea, but unfortunately still moves against my instagram-a-like point above: if we should have learned one thing about how people make friends in the year 2011, it's that physical proximity doesn't really enter in to it.

1) The idea of creating groups on the fly to take photographs from a shared location is what got the funding.

But using a tighter geofencing (remember how in Gowalla one had to stand at a point to check in) the same can be brought in Instagram which already has a million or so members.

2)The photo is public for anyone in the vicinity of 100 feet or perhaps everybody (sorry for missing that) but one does realise that it limits my ability to share things with the world. I mean only in case when something is cool would I want to share it with the world and other times stop short of making myself look not so cool.

3) Local+Social+Mobile is great on paper but these are not the dimensions that make a great app. It is the underlying mechanics. For a $41 million investment and a overpriced domain name, they sure did not blow my mind off.

4) As far as the white noise of social apps is concerned it was the same problem with all apps, facebook included if you were in the party early! Can't hang them for that.

5)For the latent interest in finding photos around an area or location, there always are foursquare/gowalla (sitting on huge data) and instagram with the tags lately (remember #sxsw ?). You really think one would use them?

5) I remember Chris Dizon lately writing about investing in people over ideas and it looks like with 7 rockstar cofounders, thatis what happened here. But hey, who said anything about turning a blind eye to the idea?

6) Last, people around me wanting to see photos around them :) can just turn around or shoot foursquare to find a lot more info over a longer period of time than using the app, right?

Of course I am saying this all since I am a hater for seeing them receive such a huge funding for no apparent (to me) reason!

That passed. Wrote it all up on the blog, but here is what I think they have wrong and our Pixamid has right:

Privacy: I think most people want to more privacy on their photos, not less. If the camera can sense who you are with (like Pixamid and Color try), by default, share ONLY with those people. By default, Pixamid shares with only your friends at he same place as you - you can choose to share with everyone there too.

Network Effects: Color™ might be cool in a world where everyone uses Color™. But we don’t see such a world anytime soon. People will use lots of different apps: Instagram, Facebook, Flickr, Twitter, Picasa -hell, even Ofoto (thanks Mom). We want to pull in your friends’ photos from any of these services, automatically as much as possible. See our post below about the Instagram magic we do; we’re dong a lot more of this cool stuff now.

Addressing a real problem: We are all taking more photos with our great phone cameras. But we hate to organize our photos. And if we add in Friend photos, it is even worse. Users of Pixamid get automagical photo organization as a byproduct of using the app. Each set of photos, with place, event, and who you were with. The things we will do with this in the future - can’t wait to show everyone! But we believe that our solution will revolutionize how people share photos online.

http://blog.pixamid.com/post/4060807527/the-color-tm-challen...

The idea is interesting, but not defensible enough for them to stop a couple of hackers with $15k from besting it.

Do they just have a mean, scalable roadmap that we are unaware of?

It seems like all Facebook need to do is add a "Merge Albums" feature for use between friends.

And I've come to the conclusion they're just after FB stock via acquisition. Fair plan.

Yeah, I definitely want an app that is listening to what I say all of the time. Great idea.

The automatic Social Graph based on proximity is a good idea. But doesn't it make you best friends with all of your neightbors (at home and work) and other random people you just happen to walk by or meet every day?

And why would I want to see pics of a restaurant that some friend sits in?

I am not sure why the article did not have the link for the application.

edit - never mind they updated the article.

How does that algorithm work? Is that like a point-in-a-polygon problem? It could be lots of updates as to who is near what, etc. I just don't know.

This group is at the very popular intersection of photo-sharing, social network, real-time, local/location and I'm sure more. They have a rock-star proven team, and tech is a popular investment now.

If you discount the investment to 1999 value, it's under what Sequoia gave Google.