Bitly CEO Peter Stern, who once told Betabeat he’s been in the process of raising funds ever since he joined the company, finally has a milestone to announce. The company has raised a $15 million Series C led by Vinod Khosla at Khosla Ventures.
“[Mr. Kholsa] has been fascinated with the growth of Bitly all along,” Mr. Stern said by phone this afternoon. “Fascinated with this kind of invisible glue that enables people to share in social media and the insight that you can extract from doing that at scale and thinking about what kind of services and products you can offer consumers to grow that set even more.”
Mr. Stern said he has been in contact with Mr. Kholsa for a while. A Series C has been expected since Bitly raised a $1.4 million convertible note in March. Previous investors RRE and OATV also participated in this round.
The round is focused exclusively on Bitly’s consumer offerings, Mr. Stern said. “On the business-side we continue to have record month over record month, but this raise is not about the B2B side. This raise is about giving us the runway to grow Bitly as a consumer service much faster than cash flow would allow.”
In May, Bitly released a major redesign–transforming its utilitarian link-sharing and tracking service into more of a consumer-focused curation and discovery platform. (Some kind of expansion was expected after Twitter announced automatic link shortening with t.co last year.) The Internet lashed back–as it is wont to do–with a hair-trigger criticism; Bitly swiftly responded, reinstating its one-click link shortening.
It seems the redesign gamble has paid off. Since the end of May, daily consumer registrations have increased by 300 percent. “I think we made Bitly more relevant for a wider set of people,” Mr. Stern said.
But don’t expect him to gloat with vindication, at least not to a reporter. “The backlash was very regrettable because we love our customers and we changed a lot on them on a Tuesday morning after Memorial Day,” he said. “But if you look at the tweets you’ll see a lot of the people who originally tweeted [their disapproval] a few seconds later tweeted that they actually liked what Bitly was doing.” Hmm, we must’ve missed those ones!
Bitly monetizes exclusively with a paid option for business customers, not advertising. The long-term plan, said Mr. Stern, has stayed the same: “Grow Bitly as a consumer service where people use it to collect and share and organize content–and from that massive set of interactions, find actual insights that we can package and sell to business who understand what audiences are interacting with.”
Even with just two product people and a few sales people dedicated to the enterprise side, the B2B front has still managed record record sales for the past three or four months, “with its very exciting and interesting, but not rapidly growing product,” he said.
The Series C will be spent on hiring to help Bitly build more consumer products. “And we’re gonna buy a giant statute of me!” said Mr. Stern. “No, just kidding. Total joke.”