undefined | Better HN

0 pointsbcantrill13y ago0 comments

My point is that Color Labs was obviously a dud when it was funded by Sequoia[1] -- and that it almost certainly satisfied none or nearly none of Sequoia's own putative criteria. They are certainly entitled to their duds -- but when they are of Color's magnitude, it makes it a little hard to endure their sanctimoniousness around building sustainable businesses.

[1] http://news.ycombinator.com/item?id=2364463

0 comments

5 comments · 2 top-level

jpk13y ago· 2 in thread

Color was pictures plus location, that's true. Instagram is also just pictures and filters, which is equally dumb but turned out pretty well from an investor's point of view.

However, you make a good point. Neither Color nor Instagram were/are "sustainable businesses". Sequoia just wants a return. Google is a sustainable business, and if you build one, Sequoia will get their return. You can also just get a bunch of users and flip it to Facebook. They'll get their return then too. And I'd bet Sequoia doesn't really give a crap which way you do it.

daemon1313y ago

>> And I'd bet Sequoia doesn't really give a crap which way you do it.

Very succint and clear explanation of the venture industry. All start-up teams shall print this in big letters and read daily.

ahuibers13y ago

This is pretty cynical and not my experience.

1 more reply

bduerst13y ago· 1 in thread

It's easy to say after the fact that Colors was a dud, because it ended up turning out that way. Instagram, which is similar, ended up being a good investment.

My point is that VC financing is high-risk, so things that you may think of as being high risk investments, or "duds", are probably potential investments.

VCs also have to deal with the agency effect. If five firms jump on one startup and your firm doesn't, and that startup ends up being successful/gets a return, you stand to lose your clients as a VC.

pbreit13y ago

It's not that easy to say Color is/was a dud considering that it is still around and has enough money in the bank to support its efforts for a decent period longer.

j / k navigate · click thread line to collapse