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The Critics Are Wrong – Color Is The Next Big Thing

March 24, 2011

Apparently, very few people understand Color. There are several distinct propositions underlying the big investment and the bright future. Let’s start with the bright future. As Paul Graham has taught us, team is the most important element when it comes to startup success. More often than not, a great team can win regardless of product or technology. Color’s founders include some proven rock stars: Bill Nguyen, Peter Pham and DJ Patil. Sequoia, Bain and SVB obviously see great value in this team.

But there’s something else driving the huge investment – that something is the secondary market for private stock sales. Facebook, Twitter, Zynga, Groupon and others have helped to create billions in profitable secondary market private stock sales. The biggest investors and banks are now involved (Goldman Sachs, JP Morgan and Digital Sky Technologies). Finding another Facebook and taking it into the secondary market is very attractive. Investing $41 million might be very smart if in a year or two, that investment turns into a billion dollars or more.

Also seemingly lost in the initial analysis is technology. I agree with Robert Scoble that Color missed a golden opportunity to launch at SXSW, but disagree that Color is forever doomed because they missed SXSW. Josh Williams, founder of Gowalla gets it, based on a few tweets from last night. Here’s what most of the commentators are missing. Color is an implied social network. It is active when you are with other people in the same vicinity. Implied social networks are dynamic – they change in relation to the nature and scope of participants and the activities of those participants. This is very new and outside the box. Color’s platform is also based on post-PC peer-to-peer mobile networking. These are entirely new applications of technology that will spawn new companies and great potential to scale vertically and horizontally. This is huge!

I’m in the minority, but I’m very certain that Color is the next big thing.

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