There's been much discussion around Color, their new mobile application, and the fact that they raised $41 million dollars in VC money.
Most of the criticism I've read has been around a poor first time user experience of the application, the fact that they were able to raise this much money without a single customer, and that their advertising revenue model is unlikely to succeed. I agree with pretty much all these things, but I'm also very intrigued by the use case of the application.
At it's heart, Color is intended to be a social network that works to bring people together, physically. I've written elsewhere that I believe the next generation of social networks is going to do just this, and so because of that I'm willing to buy that there is potential, and I actually kind of want them to succeed because of this.
But I think there's something much more ominous than a poor version 1.0 and being made fun of that their investors should be worried about. And that is that the founding team, regardless of their previous successes (which are large), are showing a general lack of creativity and a misunderstanding of the marketplace in which we currently live.
This is evident most clearly in the fact that they paid $350,000 for the domain name color.com and another $150,000 for the domain name colour.com. That's right, half a million dollars for two domain names.
The problem with this isn't necessarily the cost of the domains, but the fact that they even think domain names matter anymore. I was talking with a friend and he made a great point that if someone was selling diapers, and it was 1997, and they bought diapers.com it might actually make sense.
And that's just the problem. It's not 1997.
It's 2011 where people know, understand, and expect that domain names will be taken. We just don't care about them anymore, and if your product is awesome we're able to find it. I just registered two domain names over at GoDaddy: http://mycolorapp.com and http://mycolourapp.com. I paid $24.37, including tax, for both of them.
Are we really to believe that color.com and colour.com justify spending an extra $499,975.63?
And, let's pretend that domain names DO matter anymore, which again, they don't, but let's pretend. Then this should have been used as a reason to come up with a new, different, and unique name for their application.
Again, they're not selling diapers. Supposedly they are going to REINVENT THE WAY WE CONNECT WITH PEOPLE.
Seriously? You're going to reinvent the way we connect with people but you can't think of a creative name with an available domain so that you can hire another four software engineers to, you know, work on your awesomesauce?
Call me skeptical.
The investors in Color should be worried. Not because version 1.0 sucks. Not because people are making fun of their investment. But because the people they gave their money to are acting as if they have absolutely no regard for the opportunity they've been given.
And, they're already indicating that when a problem arises, they're going to attack it with the blunt instrument of more capital, instead of the creative labor that today's successes require.
That can only last for so long.
Update: I was reading some of the comments and just noticed that I didn't link to the Tech Crunch article that referenced the domain prices. Updated, and sorry about that.