You may have heard that Color Labs, a Palo Alto-based startup that raised $41 million on the concept of a media sharing app called Color, has collapsed as its shareholders and board last week voted to shut the company down. There’s a chance you also felt excited about the prospect of Apple acquiring Color Labs for “high double-digits” millions and breathing new life into the company, per Ken Yeung and Matthew Panzarino of The Next Web.
Looks like the authors got it wrong because what Apple has really paid a couple million bucks for is its handful of engineers because the company itself is worthless. A new report by a blog owned by well-informed The Wall Street Journal has it that Apple is reportedly paying something to the tune of $2 to $5 million for  Color Labs’s engineering team comprised of about 20 people…
Color Labs is being “acqhired” by Apple, Liz Gannes and John Paczkowski report for AllThingsD:
Apple is not buying Color’s technology, intellectual property, domain names or liabilities. Those are being left with the company, which still has considerable cash in the bank — something like $25 million — and is going to be wound down.
Looks like Color was anything if not a huge money pit. The $25 million Color Labs has left in the bank will be returned to the investors.
I’m not surprised at all how this story has developed.
As a rule of thumb, Apple usually dismantles companies after buying them. Virtually all of its acquisitions were talent-related, from iTunes to Siri to Quatro Wireless to fabless semiconductor makers Intrinsity, PA Semi and AuthenTec.
See, Apple prefers acquisitions only when it makes sense, not just for the sake of it. Despite boasting a $110+ billion cash hoard, Apple has not yet made a strategic acquisition that would rock the industry.
Something along the lines of Apple buying Facebook (wouldn’t that be match made in heaven?) or Apple snapping up Twitter or – the craziest of all – Apple acquiring mega-publisher Electronic Arts.
There’s a reason for it: Apple is a difficult company to deal with.
It has a unique corporate culture and any mega-acquisition is bound to turn into an AOL-Time Warner type of catastrophe. I cannot imagine Twitter people getting along well with club Cupertino.
Apple, like any other company, has its way of doing things.
But more than any other company on the planet, it is in Apple’s DNA to control all of the technologies that go into its products and never let the company’s values erode due to mergers and acquisitions.
All I know is that when Apple starts making these massive acquisitions, it’s gonna be clear that Tim Cook turned Steve Jobs’s creation into a Soviet style bureaucracy.
I can think of one company that paid dearly for this bureaucratic corporate culture and sure hope Apple doesn’t go down that road. Steve Jobs once referred to Apple as the biggest startup on the planet.
Let’s keep it that way.
By the way: the investors who funded Color Labs…
They did flush $41 million down the toilet, didn’t they?