The Startup God of Wealth Destruction: Color Officially Shut Down

Sorry about that $41 million.

Mr. Nguyen

A day after we learned about a lawsuit alleging Color CEO Bill Nguyen inflicted “emotional distress” on an employee with a guy sporting a Glock, Color has announced it is shutting down. The news posted at the top of the company’s website is succinct: “Alert: We hope you’ve enjoyed sharing your stories via real-time video. Regretfully, the app will no longer be available after 12/31/2012.”

As PC Magazine notes, regardless of what kind of craziness went down in Color’s offices, the app held little interest for potential consumers:

Nevertheless, the app simply failed to gain much traction with users, with reviewers often commenting that Color appeared to be an app trying to solve a problem that didn’t seem to exist. The New York Times famously asked, “What if you threw a $41 million party and nobody came? A start-up company called Color knows how that feels.”

Color has had an eventful history for a company that only launched last year. As AllThingsD reported last month:

Color had started out as a social discovery product with $41 million in funding from Sequoia Capital and Bain Capital, then pivoted to a Facebook-connected silent video app, and most recently had scored a deal with Verizon to distribute a live video app on Android phones that launched in May and showed early signs of going well.


After raising that $41 million in early 2011, the app partnered with Reese Witherspoon and the film Water for Elephants to help boost its cred. In May of 2011, it launched with a refreshed UI as an “elastic social network” before pivoting to the Android live video app.

Last month, rumors swirled that the company was shutting down, then that Apple was swooping in to the rescue with a deal to buy Color for a price in the “high double-digits” (millions, natch). The reality, it appears, is that Apple paid a lesser price—$2 to $5 million, per AllThingsD, to “acquihire” the company’s engineering team.

Color kept its intellectual property and technology, and was believed to have $25 million in the bank. Those assets are now being wound down, Business Insider reports, with the company returning an undisclosed amount of funds to investors. The report of funds going out to investors came from Harmeet Dhillon, an attorney representing former Color employee Adam Witherspoon in Mr. Witherspoon’s lawsuit against the company.

Color’s CEO Bill Nguyen left the company back in September, reportedly to go on a long vacation. “I do this historically,” he told TechCrunch at the time. “I take off for a little while and I vacation. It’s nothing new or exciting. The roles of founders and CEOs is to get everyone engaged and give opportunities to people. And when things haven’t worked out as expected, the best way for me to recharge is to go on sabbatical.”

Color Labs hasn’t publicly responded to Mr. Witherspoon’s lawsuit, but the timing of its shutdown may be response enough.

This is a breaking story and we will update the post as we learn more. The Startup God of Wealth Destruction: Color Officially Shut Down