The rise, fall, and rise of Bitly

Over the previous three years, we had developed the internet’s definitive link shortening tool, shortening millions of links a month and processing millions more in clicks. We were growing like crazy.

We had raised $1.5 million in seed funding in 2008 and another $2 million in Series A in 2009. In 2010, we had ambitious growth plans, raising debt financing in the first half of the year and then $10 million in Series B funding in October, largely to support our scaling infrastructure during the hypergrowth of our free product.

One problem. While we had created a tool that nearly everybody used, we hadn’t actually built a sustainable business. In fact, we hadn’t built much of a business at all. We got stuck in the all-too-common trap of building a user-base and worrying about revenue later. But that’s a dangerous game to play, and the money dries up quickly. In addition to that, Twitter introduced t.co, their own link shortener, and the market flooded with competitors.

(Incidentally, one of the strategies we employed to hedge against potential obsolescence — hosting branded short domains for free, i.e. nyti.ms or pep.si — has become one of the most important parts of our business today. We now host more than 60,000)

In that limbo, there were shake-ups within the company, replacing our founding team and executives several times as we sought to define the future of Bitly. We wanted to create a world where we could serve our millions of users around the globe while also building a sustainable business, a difficult thing to balance. With little venture capital left, we were forced to evaluate our options.

We tried several things that didn’t get traction: Bitly Pro for bloggers and publishers, Bitly TV (yes, really), a social news app called news.me, which is now part of Digg.com, Bitly for Feelings, and an experiment to become a data platform that plugged into paid advertising platforms. But nothing quite clicked (pun intended). We were all over the place.

Finding direction

By the time I joined in late 2013, we had already raised another $15 million in venture capital. Expenses were still running high, but we were beginning to show some of the right signs.

As we worked through our next steps, with a few false starts along the way, it was imperative that we make a clear decision about what business we were in. Were we going to build innovative consumer products? There was no shortage of very cool ideas. But when we looked at what we had, we realized that the answer had been right in front of us all along. We had some of the largest brands and publishers using our product to help make their links perform better. Having spent the past twenty years of my career building businesses that helped marketers succeed, I knew how rare it was to have such a strong base of direct-to-brand relationships.

The link isn’t merely a way to get consumers from Point A to Point B; it’s the common bridge within and between every marketing channel. Marketers around the world were already using Bitly to brand and shorten their links, but the more advanced marketers were using our analytics to help understand their performance across an increasingly large and complex array of channels; SMS to paid acquisition, email marketing to social.

We knew we were in a unique position to solve the omnichannel challenge that marketers were wrestling with. We had some of the most powerful analytics that existed when it came to links and content consumption, and a killer team with the technical acumen to build something remarkable. So we set out to create that solution.

In 2012, we introduced our premium version of Bitly, today called Bitly Enterprise. However, it wasn’t until late 2013 that we truly committed to that premium offering, as the core of our business.

The business we’ve built

By the end of 2014, we had built a real freemium SaaS business. Revenue was running at a $10 million run rate and our customer base passed 700, with our free user base continuing to grow month over month.

What’s ahead

TL;DR