Instagram competitor Color to shut down next month

Color intellectual property and engineering team purchased by Apple

Financial trends and news by Steven Loeb
November 20, 2012
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Color, the app that organized photos by event and location, was supposed to be the app that finally took on the giant of the industry: Instagram. Instead, it turned out to be a giant flop, and now the app is coming to an end, according to an alert at the top of its website.

“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,” Color has notified its users Tuesday.

The notice comes a day after Color co-founder Adam Witherspoon sued the company and its co-founder and CEO Bill Nguyen for, among other things, “intentional infliction of emotional distress” and “tortious interference with prospective econonomic advantage.” The suit confirmed that Color’s engineering team and intellectual property are being sold to Apple.

The suit alleges that Nguyen harassed and abused employees on a regular basis, “including bringing an armed crony into the workplace to threaten and intimidate employees cooperating in an investigation into Nguyen’s financial and other improprieties.”

The suit even goes so far as to accuse Nguyen of threatening violence against Witherspoon’s son on numerous occasions, and blocking Witherspoon’s job opportunities at Apple.

“When Plaintiff Witherspoon inquired about his potential future in a phone call, Defendant Nguyen falsely stated, “I think you would be crucial to what we are trying to do at Apple.” Defendant Nguyen ensured Plaintiff Witherspoon he would be part of the transition team to Apple. Since every other member of the engineering team was going to be hired by Apple, there was no apparent reason why Plaintiff Witherspoon would be excluded.”

Nguyen stepped down from the CEO position in September.

With all that drama going on, it is hard to believe that Color is actually a very young company, less than two years ago, having only launched in March of 2011.

At the time it was seen as a hot property, mainly due to the fact that it came out of the gate raising $41 million from Sequoia Capital, Bain Capital and Silicon Valley Bank. Sequoia’s contribution was confirmed to be greater even than their original investment in Google.

The app never took off though. According to AppData, it only has 130,000 daily active users and 500,000 monthly active users. Instagram, for comparison, has over 15 million DAUs and nearly 39 MAUs.

Apple will have the rights to Color’s intellectual property, its engineering team and its assets, so perhaps it could be revived in some form down the road.

Color is not the first Instagram challenger to be vanquished this year.

One of Instagram’s early competitors, PicPlz, shut down in early July.

Picplz, which had been around since 2010, was a similar service to Instagram, in that it allowed users to put filters on their photos, and to see how many users had viewed their pictures. Despite being a competitor to Instagram at the beginning, PicPlz quickly fell behind and was never able to catch up. Instagram was also founded in 2010, and by the time it got up to one million users, Picplz was only able to reach 200,000.

PicPlz was also never as popular with the VC crowd as Instagram. PicPlz rasied $5 million in funding from Andreessen-Horowitz in November 2010, and that was the extent of its funding. Instagram raised close to $60 million in funding, including a $47.5 million Series B round in March.

The Color notification was first noticed by VentureBeat. VatorNews contacted Apple, Color and Sequoia Capital for comment, but none could be reached at this time.

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