This might be a good time to point out that they could have built the same app for a tiny fraction of the amount spent. If they had done that, they'd still be moving down the road looking for traction.
Here is what I don't agree with in this statement, you take the app they shipped and the money they raised and you then assert they could have done it for so much less.
The flaws in that claim are that the shipped application is probably not particularly close to the 'vision' of what they wanted it to be, no doubt it was a minimum viable product to test the basic concept, and you and I don't really know how much money they spent, we know how much they raised, they could have most of it still in the bank, less real estate and salary costs.
I don't think there was anything at all wrong with the color "concept" or what they were trying to achieve. The two things that failed were; they raised too much money and their management collapsed.
Raising too much money is a well known risk for serial entrepreneurs, after a few 'hits' you find a lot of people want in on your next project. (apparently this is true in Hollywood too but I've no personal experience with that). The 'right' thing to do is get your minimal funding and move on, use the extra leverage to improve the term sheet, not get more money. Rule #1 for any startup is have a plan for every single dollar you raise.
I can assure you that even if they had the printing money [1] product having that much dysfunction at the top level is going to kill it dead. Further its really impossible to ship something if your leadership isn't at least somewhat aligned and sharing the same goals. That is particularly true of the CEO. As its one of the CEO's primary responsibility to guide the train to its destination, if they are compromised the train stops. That is what you have a board of directors, having only the overall success of the company as their motivation they are supposed to recognize this and toss the CEO. Say what you want about Yahoo's board but they certainly have the 'fire the CEO' process down.
Color was a spectacular failure, but not because the app they shipped could have been shipped for less, rather their failure is that they executed so poorly against their original vision.
There was IMO a third failure: they released an app with no clear purpose and no indications of what it was meant to do. I downloaded it after the hype about the acquisition, had to guess what the different icons did, I made a profile image and took some photos that were maybe uploaded somewhere?
I've no idea what was actually meant to happen, except it was supposed to share photos somehow.
Agreed the app had no clarity. At the time it released (the first app) it seemed like a real-time mash-up of that wedding thing where there is a camera on every table, and the guests are supposed to shoot candids of people around them, and then at the end of the event folks go through all the candid shots and create an album which captures the 'essence' of the event for your memory book.
Take that model, apply technology where everyone is already walking around with a phone, and boom you've got the 'color' app.
And it was a cool idea but the whole "its doing this all the time" thing really was weird. Our CEO was getting pictures of people's friends from Oracle across the street because we happened to be geographically "close." That was more creepy than interesting.
This might also be a good time to reflect on the opportunity costs squandered by Color. Surely other companies did build the same app for a tiny fraction, who are either struggling or dead by now.
I remember color, their photo sharing app, never actually working... even in their 'best case' scenario. If somebody makes an app that actually works then we would know, I still think Color tried to solve a problem.
This might be a good time to reflect on the flawed ides that simply because a prior company failed with a similar idea or product, that you too are destined to fail.
This might be a good time to reflect on the individuals who bootstrap a product without any outside investment in a seemingly dead or toxic market and still succeed.
I doubt they spent $45MM on the app. Actually, I wouldn't be surprised if they returned most of the money to investors OR are doing another type of app/business.
