Dumb Idea…Serial Entrepreneur? How Do I Invest?

As an ardent fan of the now-defunct Lala Web site (may it rest in peace), I was really interested in this recent article in Forbes Magazine about the latest technology venture started by Lala’s founder, Bill Nguyen.

For those who didn’t know Lala, its original business model was to broker trading of used CDs among music lovers. Of course, this was way back in 2006-07 when people still actually bought physical copies of music some of the time. When the model didn’t work (for reasons that now seem obvious), the site changed its course to allow registered users to do the following

• Stream songs or albums in their entirety once at no cost—a feature I particularly liked because I enjoy exploring new music but wouldn’t likely buy a song without hearing it once all the way through



• Purchase MP3s for $0.89 (or 10 cents less than the prevailing price at iTunes)



• For $0.10, members could purchase the right to stream a song from the Web site as many times as desired (referred to as a "web song"). You could also upload MP3s for personal web access from any computer in what we now call the “cloud.”

The most important thing to know about Lala is that a failed business model was scrapped before it was too late. A new model was created that made Apple take notice—enough to buy Lala for more than $80 million. After the purchase in late 2009, Apple shut down the site and sent Lala’s members to iTunes.

Nguyen’s latest venture, color.com, markets Color, a photo-sharing app which allows you to share images, videos, and text with people nearby. No need for a login or password. Through the app you get access to photos from anyone nearby, including coworkers, neighbors, or the guy sitting across the coffee shop from you.

My initial reaction: Why would I want to look at the photos of strangers or have them look at mine? Sounds a little creepy, right? That said, I have great faith in the serial entrepreneur and the probability that prior success (or failure) will help breed future success. The new venture of a guy who almost made Apple wet their pants is certainly worth a closer look.

Most of the nine folks at Forbes were initially skeptical about Color as well. As detailed in the article, after trying out the app, most came away thinking they had seen something significant. An app that may change the way we interact with those around us. The venture community also seems to like Nguyen’s Color app, to the tune of $41 million of capital already raised. Of course, it’s possible that, like me, they just like serial entrepreneurs, too.

Bottom line: Like most new technology, the only thing I can be more certain of than the lack of utility for me in engaging in location-based photo sharing with random strangers is that, somehow, in a matter of months, I’ll wonder how I ever lived my life without this capability. This seems even more likely when the guy trying to convince me I can’t live without his technology is a successful serial entrepreneur.