There's been much discussion around Color, their new mobile application, and the fact that they raised $41 million dollars in VC money.
Most of the criticism I've read has been around a poor first time user experience of the application, the fact that they were able to raise this much money without a single customer, and that their advertising revenue model is unlikely to succeed. I agree with pretty much all these things, but I'm also very intrigued by the use case of the application.
At it's heart, Color is intended to be a social network that works to bring people together, physically. I've written elsewhere that I believe the next generation of social networks is going to do just this, and so because of that I'm willing to buy that there is potential, and I actually kind of want them to succeed because of this.
But I think there's something much more ominous than a poor version 1.0 and being made fun of that their investors should be worried about. And that is that the founding team, regardless of their previous successes (which are large), are showing a general lack of creativity and a misunderstanding of the marketplace in which we currently live.
This is evident most clearly in the fact that they paid $350,000 for the domain name color.com and another $150,000 for the domain name colour.com. That's right, half a million dollars for two domain names.
The problem with this isn't necessarily the cost of the domains, but the fact that they even think domain names matter anymore. I was talking with a friend and he made a great point that if someone was selling diapers, and it was 1997, and they bought diapers.com it might actually make sense.
And that's just the problem. It's not 1997.
It's 2011 where people know, understand, and expect that domain names will be taken. We just don't care about them anymore, and if your product is awesome we're able to find it. I just registered two domain names over at GoDaddy: http://mycolorapp.com and http://mycolourapp.com. I paid $24.37, including tax, for both of them.
Are we really to believe that color.com and colour.com justify spending an extra $499,975.63?
And, let's pretend that domain names DO matter anymore, which again, they don't, but let's pretend. Then this should have been used as a reason to come up with a new, different, and unique name for their application.
Again, they're not selling diapers. Supposedly they are going to REINVENT THE WAY WE CONNECT WITH PEOPLE.
Seriously? You're going to reinvent the way we connect with people but you can't think of a creative name with an available domain so that you can hire another four software engineers to, you know, work on your awesomesauce?
Call me skeptical.
The investors in Color should be worried. Not because version 1.0 sucks. Not because people are making fun of their investment. But because the people they gave their money to are acting as if they have absolutely no regard for the opportunity they've been given.
And, they're already indicating that when a problem arises, they're going to attack it with the blunt instrument of more capital, instead of the creative labor that today's successes require.
That can only last for so long.
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Update: I was reading some of the comments and just noticed that I didn't link to the Tech Crunch article that referenced the domain prices. Updated, and sorry about that.
Their investors gave them the extra money to buy the domains because they raised billions and didn't have anything better to do with it. Money isn't that valuable anymore.
ReplyDeleteyou just made a whole post about their domain name. it must be mission accomplished for them.
ReplyDeletedomains don't matter because ppl don't expect you to have the most obvious of the domains. So in the situation if someone actually comes out and gets diapers.com or color.com ..then it's really an awe-factor.
their app (in functionality) failed and that is the only reason they are struggling. other than that their PR stunts (we raised huge money, we got great domains, we have great team, we have everything mobile/social/local) worked like a charm.
@anonymous You very well may be right, and I certainly felt the irony when writing the post. :)
ReplyDeleteMy point, which hopefully came through, is that the issue with the domains is more that it's an indication of a larger problem....
Domain names are scarce, and will only get scarcer. Even if this company fails, their domain names can be resold. And they were clearly betting on the wow factor of having a single-word .com domain. Doesn't sound like a losing investment to me.
ReplyDelete@wylie domain names are less scarce than creativity.
ReplyDeleteYour post makes for interesting reading. Apart from an article I read on TC, there just doesn't seem to be that many people who think that the investment in color is either justifiable or wise. The point you make about domain names quite resonates with me: domain names matter (to some extent), but they aren't as important as they used to be in 1997. The way we interact socially may well change. Whether or not it will change in the manner envisaged by Colour is something that only time will tell. I for one would like to see Facebook trumped by a 'more social' tool. For now we way just have to wait and see. And hope.
ReplyDeleteDomain names are still totally valuable. It's about building a brand not just letting people find your site.
ReplyDeleteDomain names matter a great deal to normals/non-hackers If Color wants to go after everyday consumers, it will be advantageous for them to have the .com. It also would have cost them a lot more money to buy it later (after they have publicity/notoriety) than it did to buy it now.
ReplyDeleteWhy is it even called colour anyway?
ReplyDeleteDomain names do matter. How successful would fb or twitter be with http://mysocialapp.com/ ?
ReplyDelete"Domain names are still totally valuable. It's about building a brand not just letting people find your site."
ReplyDeleteBuilding imaginary brands is outdated concept. People want something real this days.
Don't you mean, "*Color* me skeptical"? Eh, couldn't resist.
ReplyDeleteI can't recall the last time I typed in a URL blindly (not knowing it beforehand). The only reason I could see that would justify getting a domain like that would be if you have a profound distrust of Google and their ability to surface the correct URL.
Domain names are of course still valuable from a branding perspective, but the point being made is that the value is much less now.
ReplyDeleteYou can easily do what Foursquare or Instagram did - start by using the more creative variant (playfoursquare.com or instagr.am), and get the domain once you know you have a hit, and you have enough money to afford it. Color had the money, but clearly not the product.
For 1/5 amount that they spent on their domains, we built a much better proximity-based photo sharing service. Having more money would of course have been nice, but wads of money will not solve every problem. In fact it lets a company be lazy with creativity - the domain name issue was just one illustration of this.
Because "Apple" had a lot to do with computers and electronics before Steve Jobs got to it.
ReplyDeleteI agree with all of the points made in the article plus: "color.com" is tricky from an SEO point of view.
ReplyDeleteDo you *really* believe that mint.com could have been such a success if it were called theminttool.com? I quite don't think so.
ReplyDeleteDomain name is your web brand. You are just saying "Guys, the brand on the web doesn't matter anymore" Do you mean the brand doesn't matter or the web doesn't matter? I don't think you wouldn't agree to any of the both.
Half a million bucks for a mainstream brand? Cheap. Inverstors must have thought : let's put 41 more and they'll rock.
thefacebook.com
ReplyDeletetwittr.com
Didn't seem to hamper those guys.
good post. i think ppl are missing the point in the comments... its not just about domain names not mattering (which i agree with) but that this decision is a leading indicator of how this team is going to approach the extremely rare and unique chance they have ($40mm) to launch what could truly be a life-changing product... with zero creativity and innovation. And also the product does kinda suck.
ReplyDelete@mp exactly.
ReplyDeleteAm I missing something? If the primary interaction model is via an app, why did they need a great domain name?
ReplyDeleteThey transformed $500k cash capital into intellectual property probably worth about that much. That domain, like a building or land or other capital, can always be sold and converted back into cash.
ReplyDeleteObviously, Color is going to reinvent the way we connect with people in the same way that the Segway reinvented travel. Don't you remember how a few years ago every major city in the US was redesigned to facilitate travel via Segway, just like Segway's inventors predicted?
ReplyDeleteI was actually marginally impressed for about a minute that they had THE domain name. Made them seem more legit.
ReplyDeleteWhy do domains matter? I download the app. I use it. Or not. It happens. I never actually see the domain. Stikes me as the worst kind of vanity domain.
ReplyDeleteCall me skeptical.
ReplyDeleteOr even "Color me skeptical."
Your only criticism seems to be that "domains don't matter." That's a really valley-centric comment. Outside of your bubble it matters what you call yourself. A good name must be memorable, easy to spell and hopefully suggestive of your product. If you want to win on a really big scale, you still need an awesome name.
ReplyDeletecolor is old news, what if we put democracy on the internet
ReplyDeletehttp://whoshouldbethenextpresident.com/
@anonymous First, I'm in Chicago, not the valley.
ReplyDeleteIt's true, I don't believe domains matter all that much, but this is of course an opinion and not a fact. There is a large delta between paying half a mil for a domain and the the uncreative "mycolorapp.com" that I reference however.
Surely if one believes domain names to be critical to success, there had to be other options than buying color.com
My point is and was that spending that much money on a domain is an indication of how the company plans to act in the future, and that burning that kind of cash in that way should be worrisome to the investors.
"At it's heart" s/it's/its/
ReplyDeleteIf domains don't matter, why buy the domain mycolorapp.com? Hoping to sell it to them?
ReplyDeleteColor.com = Cuil.com
ReplyDeleteGroupon paid a quarter of a mil for Groupon.com - a much worse domain than either Color.com or Colour.com. Something tells me that didn't hurt Groupon.
ReplyDeleteIf you have the money, why NOT buy the elite name. People aren't going to wonder where to go to find the app, will they?
Not to mention they didn't need a domain name at all. It is a mobile app. http://color.com just points to the app store and android market.
ReplyDeleteIf the world really does move toward apps, aren't domain names even less important?
So I guess it's not a big deal that a company owns a short brandable and memorable domain like Apple.com or Amazon.com or Monster.com or Kayak.com or Mint.com or Pandora.com? Should I go on? Spending 500K might just be the smartest thing they could have done.
ReplyDeleteWhy not critize the boy wonder at Facebook for spending '10 million' for FB.com or maybe
critize how much money they are paying lawyers trying to trademark the word 'face'.
Take a look at the press coverage given to the purchase of color and colour.com. It was well worth it.
ReplyDeleteHere is what is wrong with your reasoning.
ReplyDeleteBranding, typo's and lost traffic.
How much traffic and sales did Yahoo lose by naming its service flickr.com rather than securing Flicker.com for low six figures over the years.
A ton
many comapnies and products use teh word color by owning the .com u r basically becoming the most important of them.
ReplyDeleteThe author is obviously ignorant of the benefits a generic, universal and powerful domain can be. Marketing and Branding are driven by a company's ability to make a connection to their audience in a relevant and meaningful way. The word(s) Color (Colour) already have a meaning/connection to the audience making the branding efforts and the domain that much more a powerful tool. Say what you want but those domains have Gravitas and Built-in credibility. Noone will be able to forget how to get to their site or what their name is now. How much effort will it take for their audience to remember how to contact them?
ReplyDeleteThe domains recently purchase by the author have no such meaning and will require marketing efforts and resources to help drive traffic AND understanding to the audience if that is what the intention was.
PS Speaking of overpaying, does the author know that he overpaid by more than 2X for those same domains from GoDaddy? You can't swap one ignorance for another.
MyColor is TM'ed check US Trademark office, since the poster is so smart, maybe he should learn to do his homework before speaking out about others actions.
ReplyDelete@everyone the "mycolorapp.com" registration was simply an example of one domain alternative. Feel free to play with your favorite registrar and get creative.
ReplyDeleteBy the way, over at Daring Fireball, John Gruber was just writing about Hipmunk. According to many of you, they should have shelled out a ton of money for flights.com. I of course would disagree with that sentiment.
So Andrew Wicklander is now considered a SQUATTER for registering a TM'ed term? See how easy perceptions change
ReplyDeletePost is wrong on so many levels.
ReplyDelete- The name MATTERS.
- So does the domain.
- If possible, secure name, misspeelings, .net and trademarks first. Ignore morons.
- They didn't fire an engineer to buy the domain names, they spent like 1/80th of the money they have.
- Getting a name like 'Color' after they get big would cost them 2-10 times more, since it's a generic name and cannot get it with a trademark.
- Color.com at least can be sold at around the same value, long after they sell their last aeron chairs in "gone kaput" sale. Color can be used for digital prints etc so the payment is not that outrageous. Either way it will (or should) retain quite a bit of value.
So their service may suck, but the did the right thing on the domain name front.
Nice to meet you Andrew. What's the name of your business /url again?
ReplyDeleteIt's easy to remember: IdealProjectGroup. Some sucker actually wanted $250 for IdealProject.com and another $10,000 for Ideal.com but I am not dumb. Hahaha
VCs are starting to realize excellent .com domain the caliber of color.com is essential; by far the most important marketing asset you can have, way more important than your VP of marketing and all your marketing department put together.
ReplyDeleteThere are less than 100 .coms the caliber of color.com - popular color, popular animal, popular first name, etc - that can be acquired. You can expect prices to escalate dramatically into 7 figures and possibly 8 figures with increasing demand and near zero inventory. $500K for color.com was a real bargain for sure.
$500k for color combo package of domains was a real steal. This blogger needs to stop stealing TM's, and ketchup packets from McDonalds, and get involved in real business, and figure out how much branding costs.
ReplyDeleteIm sorry but color.com /colour.com where sold for cheap and could easily of commanded a million dollar price tag, they only person to of overpaid for a domain is you ... have you never heard of discount codes $7.67 for domain registration a godaddy.
ReplyDeleteoh and you also brandjacking/ cybersquatting with those domains expect udrp soonish.
ReplyDeleteAndrew you have not responded to your squatting comment, why are you squatting on a TM'ed term?
ReplyDeleteIf I were "squatting", I probably wouldn't be pointing it at color.com. To be clear, I'd happily hand over these domains to Color Labs. I registered them merely to make a point, which I feel I've made pretty clearly.
ReplyDeleteAlso clearly, time to close comments as theres no substantive conversation actually happening.
Nice name though. ;)