Apple Is Only Spending A Few Million Dollars To Buy A Handful Of colour Employees

colour CEO Bill Nguyen

More mystery around the fate of colour, the ill-fated social-mobile-photo startup that became a laughingstock of Silicon Valley after raising $41 million to launch an app that proved to be a dud.

The Next Web had reported that the failed startup was getting bought outright by Apple for “double-digit millions.”

Not so, says AllThingsD’s Liz Gannes: Apple is paying colour a token amount, between $2 million and $5 million, to hire away 20 or so members of colour’s engineering team.

They’re likely going to shore up Apple’s Internet efforts, bolstering its iCloud products as it competes with Google and Microsoft.

The irony: colour was founded by Bill Nguyen, an Internet entrepreneur who had previously sold Lala, an online-music startup, to Apple.

The Lala team worked at Apple for a time, mostly on iTunes. When Nguyen started colour, he took a lot of the former Lala team with him.

Since Apple shut down Lala after buying it, it was really after Lala’s engineering talent. So now it’s having to pay twice for some of the same people.

It may be paying more richly than Gannes suggests. The token amount suggests that Apple is paying colour for an agreement not to sue it for hiring those employees—a common arrangement in these so-called “acquire-hire” deals.

Apple may be spending much more on the compensation packages of its boomerang employees—possibly a figure in the double-digit millions.

Of course, none of that will go to colour’s shareholders, but sometimes investors and founders like to cite that money as part of the total deal, to inflate its apparent value.

What’s left of the company, and will it get shut down? While colour’s VP of finance, Andrew Urushima—himself a Lala veteran—reportedly sent an email to a colleague saying investors were winding down the company, it’s not clear that any decision has actually been made yet.

What colour’s shareholders, a group that includes Sequoia Capital and Bain Capital Ventures, will likely get, and will have to figure out what to do with:

  • The money colour has left in the bank, a figure reported to be around $25 million
  • colour’s intellectual property, including a bunch of patents and the URL
  • A deal with Verizon to include colour’s newer video-sharing app on Android smartphones—minus the engineers who built that app

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