1) Facebook has proved the importance of the “social graph” in Internet usage and as a business model, but it’s not necessarily going to remain the main social graph;
2) Photo sharing and tagging is one of the features driving Facebook usage;
3) One strategy for entrepreneurs is to make compelling apps around the social plus photo business model on the theory that ultimately such a product will be useful for someone else who wants to go social or Facebook itself. These are perhaps smaller bets.
4) But if you also believe Facebook is not inevitable as the main social graph, you also make some big bets to dislodge it or create an alternative to it. You do that by leading with one of the features (photos) that are driving it, to demonstrate larger ideas of how the social graph can be more useful, e.g., see Fred Wilson’s post and some of the comments in the discussion following his post about elastic and/or temporary and/or implicitly formed social graphs.
I have no idea if this is the logic behind the investment, and it’s probably not. One issue if you’re going for the Facebook replacement is how you place such a bet before the service is launched when it’s not clear people will take to it (perhaps there were compelling smaller focus group trials). At least some of the comments I have read suggest that it’s not obvious to people what is the point, although in all fairness other social apps such as Twitter have taken a while to sprout as well. Whatever you think of Color specifically, I think you have to applaud the appetite to make big bets in overcoming the social networking Goliath.
As an aside, there has been an absurd amount of PR at Color’s launch. I saw a story in Forbes where a number of its editorial staff wandered through MOMA using the app, and wrote up short pieces in the magazine about the experience. I didn’t find these pieces very helpful in “getting” the app.