Yahoo alum Marissa Mayer shuts down $20M AI startup Sunshine after 7 rocky years

Marissa Mayer is shutting down her AI startup Sunshine after seven rocky years and transferring its assets to Dazzle, a new AI company she recently incorporated. The move signals Mayer’s pivot toward developing a new kind of AI personal assistant, with 99% of shareholders approving the acquisition deal as of late September.

What you should know: Sunshine, originally called Lumi Labs, struggled to gain traction despite raising $20 million in venture funding plus Mayer’s personal investment since its 2018 founding.

• The startup’s roughly 15 employees are expected to transition to new roles at Dazzle, according to sources close to the situation.
• Mayer serves as Sunshine’s largest shareholder and investor, making the acquisition decision largely within her control.

The big picture: This marks another chapter in Mayer’s post-Yahoo career as she attempts to find her footing in the AI landscape after her high-profile tenure leading the struggling internet giant from 2012 to 2017.

• Before Yahoo, Mayer was Google employee number 20, where she designed the interface for Google Search and helped develop Google Maps and Google AdWords.
• Her Silicon Valley network proved instrumental in launching Sunshine, with the idea for the first product stemming from her own experience managing extensive industry contacts.

Product struggles: Sunshine’s consumer-facing apps failed to resonate with users and faced significant criticism.

• Sunshine Contacts, launched in 2020, used AI to identify and merge duplicate contacts but drew complaints about privacy violations after automatically pulling home addresses from Whitepages, a public directory service.
• The company’s 2024 photo sharing app called Shine was “widely viewed as a flop,” according to the report.

What they’re saying: Mayer emphasized continuity despite the company transition in her statement to shareholders.

• “After careful consideration, Sunshine’s management, and 99.99% of its shareholders, determined the strongest path forward for the company was to sell to Dazzle AI, a new company already incorporated and with committed funding,” Mayer said through a spokesperson.
• “As Sunshine’s largest investor, shareholder, and CEO, Marissa is proud of what the team built and looks forward to carrying that momentum into new opportunities around Dazzle.”

Who else is involved: The shareholder approval process included several notable Silicon Valley investors and firms.

• Key stakeholders include Sunshine cofounder Enrique Muñoz Torres, Norwest Venture Partners, Felicis Partners, Ron Conway’s SV Angel, and PR firm Archetype Agency.