The $41 million mobile app – or the Web bubble debate, now in full color!

March 24, 2011

Bubble or no bubble?ColorScreen

The debate has become a favorite pastime within the Internet industry, as startup valuations soar and investors vie to buy shares of hot private companies in the secondary market.

On Wednesday evening, a photo-sharing app maker called Color opened a spigot of fuel onto the fire when it revealed that it had raised a whopping $41 million before even launching its product.

“Think I might have just heard the bubble pop,” said one of many bewildered tweets that followed the news.

“They may turn out to be the Water World of app startups” said another tweet, referring to the 1995, $175-million-budget Hollywood bomb.

The blog TechCrunch noted that Color’s funding represents the most money that VC firm Sequoia Capital has ever invested in any pre-launch company, including its initial investment in Google.

Of course, Color also won plenty of accolades among the tech intelligentsia.

John Battelle wrote on his blog that Color has the potential to become the first breakout application based on the so-called augmented reality concept. And he lauded Color co-founder Bill Nguyen (who sold his last startup Lala to Apple for a reported $80 million) as “the real deal.”

Fred Wilson, an early investor in Twitter, blogged that Color was “pushing the envelope in social graph construction in an important direction” and that he was eager to begin trying the service, though he reserved judgment on whether it would ultimately become a big deal or not.

Whatever Color’s unique aspects and the distinguished pedigree of its founders, the company is entering a crowded field. Among the many photo sharing apps already out there are Instagram (recently raised $7 million in funding), DailyBooth (recently raised $6 million) and Path (which launched with its own heaping of hype last year thanks to the fact that it was founded by early Facebook employee Dave Morin).

If nothing else, the fact that Color pocketed $41 million before launching a product might represent a turning point in the latest Web industry narrative, which until now has been based on the principle that entrepreneurs no longer need big budgets to launch startups thanks to cloud-based services like’s EC2 and Google Docs.

The only question now, is how long it takes until shares of Color, and its valuation, get bid up by investors in the secondary market…


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Don’t we ever learn anything from our past! We’ve done this before ith the Internet bubble bursting. If we don’t learn from our past we are doomed to relive it again!

Posted by tubbycwilson | Report as abusive

in the Netherlands you don’t even need an app no more

with the mobiles from Vodafone you can even listen into the voicemails from the Ministers ne-voicemail-ook-lek-via-spoofing—update 2.html

T L.

Posted by Timelord | Report as abusive