Reputation is more valuable than Gold

Early this morning I shared a short conversation with talented hacker Laurent Eschenauer* about the recent announcement of Color going live and receiving $41 million dollars of investment.

$41m raised for a geo-fenced picture sharing iPhone application ? Hellooo ?? Why ?? I don't get it. #colorblind
Laurent Eschenauer

@eschnou it makes sense, VCs like to pay a premium on options for experienced teams. Color has a successful group with a track record. #rep
Mark Essel

The conversation continued…

Me: but 27 people in the co already. They must have raised and silently built up the product

Laurent: Exactly, 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. @VictusFate Worst piece of the story is that the reviews are bad and they launched two weeks after sxsw ??? I don’t get it. #colorblind

Me: that’s not a great sign, but with 40mil they can relaunch next year or the year after

Laurent: It is sending the wrong signals to young entrepreneurs, I don’t think this bubble is healthy for anyone. Don’t you agree ?

Me: if the 27 person, 41 mil investment makes a good return than it’s a good bet. Agree that its more than I would invest. But Sequoia has different criteria for putting their large funds to work

From Jason Kincaid’s coverage it’s clear that the team behind the startup has a proven track record. Bill Nguyen and Peter Pham have successful exits, and DJ Patil was LinkedIn’s chief scientist. There’s little doubt that Venture Capital will pay a premium on experienced operators. Even if the company is delivering products that look like spin offs of other photo or group apps, it’s only the beginning. Forty one million dollars buys a generous runway, even for a team of nearly 30 people. Their start is anything but lean. You can count on Color going BIG or going home.

*= I know of Laurent because of his work as architect of Onesocialweb. Mr. Eschenauer is currently busy building Comodit, a cloud services company.

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  • eschnou

    Thanks for pumping up my reputation, need to turn that one into gold someday :-)

    Thinking about it, this is just a matter of spining the story. What the press could have said: “An awesome team of startups veterans and engineering talents raised $41m to create Color Lab. They plan to reinvent the way people interact in the real world using mobile, location, augmented reality and more. Their first toy app is called Color, but they have a pipeline full of insane innovation in the field.”

    THAT is the story I would have been happy to buy, so yes, I’ll wait to see what is next in the pipeline. So far, it seems they have fumbled on their first launch; at least looking at the reviews on the Android store.

  • Mark Essel

    You’re obscurely famous!

    Bulls-eye on the story spin doctoring. Remind me to come to you next time I want to release a product :)

  • Leland

    I agree with the value of experience in a startup. I used to believe that it was 100% motivation, and while that is an important part of the success equation, it is definitely not 100%.

    There are many MANY small things and bumps in the road to success that cannot be planned for/avoided unless the person(s) at the helm have had experience doing it before.

    I think the most effective team is a mix of experienced and inexperienced members. Ideally, they all want the same thing out of the startup. If you have a bunch of salary workers mixed in with ideals-driven superstars, it’s not going to end up very pretty. :)

  • Leland

    I liked you guys just because I can. :)

  • Mark Essel

    Yes, team alignment is a necessity.

  • dissertation service

    the photo is amazing – not less) is it real? i mean does this car exist? about your conversation… honestly my attitude to twitter is quite indefinite, i cant make myself trust it. i feel like it is all just lie and cant be truth in any case. but when i see examples like yours i think that maybe it is time to change my mind..

  • WhoIsJG

    Seems like a ton of capital but with the success of Facebook, they will likely need that cash to execute properly and quickly to stay ahead of everyone else who tries to compete with them with $400k. You can acquire a ton of customers for $41MM.

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