Color CEO on Funding and the Future of Social Networking

Color has captivated the technology world. The mobile app has only been publicly available for 24 hours, but it already has hundreds of articles dedicated to it and currently sits at #26 (and rising) on the iTunes Top Free apps list.
Why is Color getting so much attention? Perhaps it's because of its unique location-based social networking features, or maybe it can be attributed to the company's all-star lineup of founders, including former Lala CEO Bill Nguyen and former BillShrink CEO Peter Pham.
The hype could also be explained by the company's jaw-dropping $41 million in pre-launch venture funding from Sequoia Capital, Bain Capital and Silicon Valley Bank. Whatever the reason, Color's launch on iPhone and Android has the tech world's attention.
Color's launch hasn't been smooth sailing, though. The app has gotten some harsh reviews and has received mixed review in the App Store (around two out of five stars). That hasn't deterred Nguyen and his team though; Color is a company they intend to turn into a billion dollar business by becoming the social network of the future.

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Rocky Road
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As we reported earlier, Color will directly address the criticism that the app has a terrible user experience when nobody else is around. Nguyen in fact agrees with the criticism; he says that it's simply meant for groups. "That's how we've always designed [Color]," he told me.
That's why the company will be releasing a major update to the app next week. It will incorporate a principle of "dynamic network" to determine who is near your location. While the app currently chooses people within 150 feet of your location, the new app could choose a distance of half a mile or more, based on population density. The app will also lock itself down if there is nobody in the vicinity using the app.
The team worked on the app for nine months, so it's understandable that Nguyen and his team took some of the criticism personally. "My feeling are hurt that not everybody got it, but what are you going to do?" he stated.
As for the criticism that Color should have launched at the South by Southwest (SXSW) conference in Austin earlier this month, Color's CEO had a simple response: "I hate conferences." Elaborating on his comment, Nguyen explained that while he now gets the opportunity SXSW could have presented, the sheer volume of startups competing for attention and pitching to countless venture capitalists and journalists simply would have made it feel "inorganic."
While Color may prove useful at tech conferences, it's clearly not Color's target market.
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A Research-Centric Company
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So why did Color take $41 million before it even launched? Sequoia capital, which chipped in $25 million, didn't even give that much money to Google, which required thousands of servers and data engineers in order to expand its ability to crawl the web.
Color's CEO contends that a similar problem faces his startup. "We're a research company," Nguyen claimed during our interview. When I asked him to elaborate, he gave the example of a birthday: you're going to meet people you don't recognize, but you want to know things like how they are friends with the birthday girl and what they have in common.
What does that have to do with research and data? The answer is simple: Nguyen wants to make discovering this type of information a painless and intuitive process, but in order to do that, the company needs to gather, track and analyze huge amounts of data. Not only that, but the full power of Color isn't truly unleashed until you and your friends have used it for several months.
Perhaps that's why Nguyen recruited D.J. Patil, the former chief scientist at LinkedIn. His data expertise has been crucial to creating and tweaking the precise algorithms that determine proximity and friendship. And as the company grows, so will its need to gather and process data, an expensive affair that Nguyen expects will require even more money.
"We need the money," he succinctly states. Be believes the $41 million is money that the company will need to push the boundaries of social technology and data.
"I'll tell you something about the funding and the mission: they're very correlated to each other."

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The Mission and the Future
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At its core, Color is not a company about photo sharing. You won't find Instagram-like filters because that's simply not the point of the app. When I asked Nguyen straight up to enumerate the core goal of Color, his responses was, "to make small communities."
Color's team believes that "friending" and "following" are archaic ways of determining who is in your social graph. Why go through all that work maintaining a social graph when Color can (and should) do it for you?
Instead, Color helps create small communities of friends and strangers. His thesis is that people do actually want to meet strangers in the same location, but they're often not comfortable simply approaching someone. Color provides a conduit where you can find out who's in the room and what they're like, making it easier to start a conversation and meet new friends.
Central to all of this is the phone. "During my time at Apple, We spent a lot of time thinking about the post-PC world," he said, explaining that smartphones are devices capable of collection loads of unstructured data. It's his job and his team's job to take the data they collect and turn it into something useful for the average user.
Color isn't your typical app and it isn't your typical company. Because of its blockbuster funding, the media will be keeping a close eye on developments with the company's apps for a long, long time. Nguyen and his team will have to prove that they can spark mass user adoption, keep them consistently engaged, and find a business model within a short time frame. And it will have to do it under the glaring eyes of the media and the pressure that comes with a $41 million bet that you're the next Google.

Posted in: Silicon Valley