RIP Color App: What We Learned From Colors Failure

Although this happened in Oct 2012, there is much to learn about color’s failure, the app that raised $41 million in their first round of funding before they even launched.

Color was apparently plagued by problems since the very beginning. Yes, they managed to raise an impressive round of funding thanks to the track records of the two co-founders, Bill Nguyen and Peter Pham, but that doesn’t mean anything if the app itself misses some crucial element for success such as a product market fit, KPI’s around engagement and a viral co-efficient of at least 1 or greater.

The problems color experienced are common with all two-sided markets. Any product serving two distinct sets of users is addressing a two-sided market. eBay connects buyers and sellers. Google connects searching consumers with advertisers. Social sites like Twitter and Facebook are also two-sided connecting consumers with advertisers. Now, think about two-sided markets when it comes to apps. You spend all this time and resources because you have a vision for an app, build a team around it, design it, test it, pivot after pivot, analyze data etc all for the purpose of attracting and on-boarding users by the troves. And guess what, everything you’re doing is for the purpose of then eventually attracting advertisers so they can pay you to be in-front of all those users.

Color initially came out with an app that allowed you to build social networks based on proximity. If you and another user were at the same event and taking photos, Color would merge your photo streams. If you were often with the same users, then it would mark them as friends in your social network.


What we learned from color app

A few weeks later, Color released an important update after users complaining that there was nothing for them to do in the app when their friends weren’t nearby. The update included the ability for users to see photos from events “Nearby”, a “Feed” of relevant photos, and a “History” of groups that users can participate in. When the app launched, it has great momentum because of the media hype that was built around the company raising $41 million without even launching.When they launched, they got 1 million downloads. And, only 3 months after launch in June 2011, one of the co-founders, Pham left Color.3 months after that, in September 2011, Color reportedly had 100,000 active users.

What can we learn from Color?

1. The product you are designing and building must have a crystal clear market fit. If you put the app into the hands of the demographics you are targeting and they are confused with the app in any way (UI, UX, purpose) then you might as well expect immediate failure. You will have to continue to pivot and iterate until you nail it.

2. Content is King.  There are two types of users, content creators (usually less then 10% of all users) and content lurkers. If your app doesn’t cater to both types of users when they first open the app, then it will not be a good user experience. For your app to take up real-estate on your users phone, it better be worth it. Expect most your users to be lurkers, and lurkers want to be able to sit on the bus (or on the toilet) and discover engaging content on the app that would make them forget where they are to the point that their legs are numb and …well the rest you can leave to your imagination. Color had to come up with an update to solve this problem and unfortunately when it comes to users, it’s like that one opportunity you have to impress a girl. If you don’t “wow” her in the first impression, then she’ll either never give you another chance or it’s significantly more difficult to impress her in the future.

Luckily for bumpn, we are smart and wise enough to learn from the mistakes of the past so we have carefully designed the experience for on-boarding, that is the first time a new user opens the app. It’s important that when users open the app it’s a “wow” factor and they are motivated to use it and most importantly, provide them with enough value to tell their friends to download it.

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I'm a Family man and Entrepreneur. bumpn is my latest start-up which I am the Co-Founder and VP of Marketing. I believe in abundance and sharing value to everyone I can reach. I love tech, mobile and marketing. Follow this blog, or find me on FB or Instagram to learn from all the crazy stuff I'm part of and of course help you along your journey!