What’s Really So Cool About the “Color” Network?

An ambitious new social photo-sharing service just launched. It’s called Color, and it’s getting a lot of attention for a few reasons. First, it’s a pretty cool idea. Second, it’s got some well-known entrepreneurs behind it. Third, it raised a lot of money - $41 million from some well-known VC funders.

In fact, many are scratching their heads, wondering why Sequoia Capital, Bain Capital and Silicon Valley Bank would invest that kind of money in this app. On the surface, it’s basically a photo-sharing service with an interesting twist: it doesn’t share with people based on an explicit list of people that you tell it about. Color pulls together transient networks of people based on their physical proximity to you. That’s how it generates your network, and that network morphs over time, based on whether those people continue to remain near you.

The idea behind this app is that you end up sharing photos with people who are near you, say in a club or something. Huh? That doesn’t sound like a $41 million idea from top-tier VC firms to me. But lots of people do like to share pictures and videos on Facebook, Flickr, YouTube and other places. So photo and video sharing is an interesting thing that you can start doing immediately with technology that builds ad-hoc, proximity-based networks. But that may just be something to bootstrap the network – with its real purpose still to be revealed. In other words, photo sharing is probably not the real focus of this company.

Technology that automatically generated a social graph based on proximity might be extremely useful in building a very different type of social network – one that was built from the ground up for mobile devices and fundamentally oriented around everything local.

Local networks are commercial networks in the sense that most of what we buy, we buy locally. Back in 2005, I wrote a piece called “The “Local Tail” Exposes What’s Hidden Right Next to Us” which riffed off Chris Anderson’s notion of the “Long Tail.” There is a huge opportunity for the web to expose merchandise, services and all kinds of other opportunities from the businesses that are right in front of us. It’s a huge play, and I’m wondering if this is what might really be behind the Color story.

Could it be that what this company is doing is adding a little “local color” to the web?

If so, they will have their work cut out for them competing against Facebook, which is making big investments in mobile these days. And foursquare has a good lead on the local commerce front. If you’re going to take them on, you need a fundamentally different strategy. An ad-hoc, mobile network is different – but will they be able to get a critical mass of people to download it? I’m not sure sharing photos with people I don’t know is enough of a catalyst, but I for one, will be keeping an eye on Color.

It may not be what it seems…