Sunshine, the AI startup founded by ex-Yahoo CEO Marissa Mayer, shuts down after 7 turbulent years

Marissa Mayer’s comeback bet in consumer AI has officially run out of light. Sunshine, the startup incubator she founded in 2018 after stepping down as Yahoo’s CEO, is shutting down after seven years marked by underwhelming products, privacy concerns, and failed attempts to find a hit app.

According to Wired, Mayer notified shareholders in mid-September that Sunshine’s assets will be sold to Dazzle, a newly incorporated entity she has created. In the email viewed by Wired, Mayer wrote that Dazzle is ready to acquire Sunshine’s holdings, with nearly all shareholders already signing off. Sunshine cofounder Enrique Muñoz Torres, along with backers including Norwest Venture Partners, Felicis Ventures, Ron Conway’s SV Angel, and PR firm Archetype Agency, are among those who approved the deal. Sources say 99 percent had already signed by last Sunday.

The purpose of Dazzle remains unclear, though people close to the company told Wired that Mayer is setting her sights on a new kind of AI personal assistant. Sunshine’s roughly 15 employees are expected to transition to the new venture, Wired reported.

“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.”

Mayer launched the company under the name Lumi Labs in 2018 with Muñoz Torres, her longtime colleague. After five turbulent years leading Yahoo, she returned to her entrepreneurial roots with the idea of building consumer AI apps. Mayer wasn’t a newcomer to Silicon Valley—she had been employee number 20 at Google, designing the look of Google Search and working on early versions of Google Maps and AdWords.

Sunshine’s first product, Sunshine Contacts, arrived in 2020. It aimed to help users organize their messy contact lists by using AI to merge duplicates and add missing details. But it quickly drew criticism over privacy after it was discovered the app was pulling data from Whitepages and adding home addresses to users’ contacts without permission.

In 2024, the company launched Shine, a photo-sharing app that fared no better. Like its predecessor, Shine was dismissed by many as another flop, failing to gain traction in a market already dominated by social media giants.

Despite raising $20 million in venture capital and Mayer’s own money, Sunshine never delivered the breakout success Mayer had once enjoyed earlier in her career. What began with high expectations—an ex-Yahoo chief betting on the next wave of consumer AI—ended with a quiet shutdown and a pivot to yet another new project.

Now, with Sunshine’s chapter closed, Mayer is betting that Dazzle will be the one to finally live up to the promise.

Sunshine Founders: Marissa Mayer and Enrique Muñoz Torres (Credit: Sunshine)