Nothing gets Sillicon Valley watchers talking like money. Color, a new startup founded by Lala founder Bill Nguyen, has lots of it--$41 million to be precise. It's the most money the influential VC firm Sequoia Capital (one of three VC firms investing in Color) has ever invested in a pre-launch startup--more than it gave even Google. The massive haul already has Valley watchers astonished at how a company that sells a free photo-sharing application and has a staff of 27 could possibly be worth so much.
But first a quick explainer. The Color app, available for iPhone and Android, is kind of like the Twitter of photo-sharing. When Color users take a photo on their smartphone, it instantly shares the image with other Color users in the nearby area. Here's a product demo from the company:
While some are delighted by the new product, a number of tech gurus such as Robert Scope and Om Malik were not impressed, citing problems getting the app to work and its limited appeal in areas that aren't densely-populated. "The concept of Color is very lame if you don't live in a big city," tweeted Scoble.
And that was just the beginning.
"The reviews are bad and they launched two weeks after sxsw. I don't get it," tweets Web entrepreneur Laurent Eschenauer. "You don't need 27 people and a senior founder team of 7 for such an app. Giving 400k to motivated kids would be enough."
Tech writer Jacques Mattheij added Color to his list of 41,000,006 reasons why he thinks we're in a tech bubble.
"A $41M investment at this stage in the life cycle of a business is normally associated with either something that is technologically complex and thus capital intensive or that requires new processes to be designed from scratch," he writes. "I don't know how big a percentage that $41M represents but let's assume that this is for 49% (the highest percentage that would make sense at this point) you're still looking at North of $80M in valuation."
Meanwhile, the VCs are holding strong. In an interview with Financial Times, Sequoia partner Doug Leone says "once or twice a decade a company emerges from Silicon Valley that can change everything. Color is one of those companies.”
This article is from the archive of our partner The Wire.