Color Labs raised $41M before launch — then shipped a photo app nobody understood

In March 2011 Color Labs launched a photo-sharing app backed by $41 million: $25 million from Sequoia Capital, $9 million from Bain Capital and $7 million in venture debt. Sequoia invested just three days before the app appeared, and a partner was quoted telling the founders that not since Google had the firm seen anything like it. The company had paid $350,000 for the domain name alone. The money arrived before the product had proven anything — it arrived before most people had even seen the app.

The app launched on March 24, 2011 and promptly disappointed. Color grouped photos by location and social connections — who was near you, who you knew — but users found the interface baffling and the purpose unclear. It earned 2 out of 5 stars on the App Store. Downloads reached about a million, yet by September 2011 active users were below 100,000. The co-founders themselves admitted the launch had been a wasted opportunity.

The fall was fast. In July 2011 reports emerged that Google had tried to buy Color for $200 million before its launch, and the founders had said no — the high-water mark of the whole story. Through the rest of 2011 the team unraveled: a co-founder left in June, the chief product officer resigned shortly after, and a Sequoia partner began publicly hinting that a pivot was coming, telling observers to 'stay tuned.' Color re-launched around groups, and still could not find an audience.

In October 2012 the board voted to shut the company down. Apple bought what was left — the roughly 20-person engineering team and some of the intellectual property — for a reported $7 million, and the app closed at the end of 2012. From $41 million raised to a $7 million talent deal in nineteen months. The bet was on a founder story, not on a product users could explain, and no amount of money could make the product any clearer.