Liz Gannes

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Bitly Raises $15M Led by Khosla Ventures

Bitly, the link-shortening and tracking service, has raised $15 million in a funding round led by Vinod Khosla at Khosla Ventures.

The round is aimed to help Bitly hire and grow. “We make many millions of dollars per year, but not appropriate for the growth that Bitly is trying to do,” said Bitly CEO Peter Stern in a phone interview this morning.

Bitly had recently redesigned its site to be more of a consumer experience (see screenshot), where users can curate collections of sites and discover content shared by their friends and other users.

That launch had been poorly received by some longtime users, who relied on the service as a simple utility to share and track their links.

Stern said that Bitly’s growth plans are to expand its existing products, and that it will continue with its model of charging business users to make money. Don’t expect the site to put up ads, he said.

“The enterprise stuff works because Bitly is a consumer brand,” Stern said. “We get a sense of what the Internet cares about. An analog would be Nielsen.”

While the relaunch of Bitly as a social bookmarking destination may have upset some existing users, Stern downplayed the drama. “It was a fast-twitch response by semiprofessional users because we changed their workflow.”

There’s been no dropoff in Bitly traffic, and 200,000 new people have registered in the past month, which is a big jump, Stern said. “We gave mainstream users no reason to create a Bitly account before.”

New York City-based Bitly has now raised a total of $28.5 million. Existing investors O’Reilly AlphaTech Ventures and RRE Ventures also participated in the round.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik