[manuscreationis]

Hindsight is 20/20, but I think a lot of people looked at Color with very skeptical eyes. It seemed like a really strange concept (to me, at least, and I'm sure others) at the time that garnered a great deal of attention out of nowhere (not to mention an enviable amount of cash). I think some people wanted to believe it would be the next big "social thing", and they looked at the folks behind it and thought "Well, there's no way people wont eat this up!".

I mean, they made headlines by blowing a ridiculous amount of cash on a domain name. Why weren't they making headlines with how solid of a concept they had?

Why were we talking about their valuation, and how seemingly overblown it was, instead of how revolutionary their product was going to be, and how it was going to change / disrupt / whatever some existing market or industry?

Having an amazing set of people at the helm of a ship that no one seems interested in boarding doesn't do you much good.

[mammalfriend]

I suspect that the investors thought the worst case scenario was an aqui-hire of a highly-credentialed team, at a value close to the cash invested. And likely with enough preferences to return the entire acquisition to the investors.

While this was an erroneous assumption, I can see how this may have contributed to a perception of lower risk to the investors.

What they seemed to ignore was that stuffing a very early consumer startup with a ton of cash and a lot of hype to live up to might have contributed to the failure. Instead of giving them resources to figure out the space, investors contributed rope with which the company could hang itself.