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Why investing in bit.ly last week was a bad idea

26 points by acpigeon 16y ago

aresant 16y ago
Is it really a story that an Islamic nation would shut down a pornographer? That seems like that is a foregone conclusion, whereas bit.ly is an incredibly visible, legitimate service. Libya has had a tumultuous few decades, but today they're in the United Nations Security Council, have paid reparations for terrorism, and their president is the Chairman of the African Union. Why would they destroy a partnership with the most visible silicon valley company to have any association with their country?
- dualboot 16y ago
  No, the story is that they can shut down a domain name and there is no appeal that can be filed. You exist at the whim of the dictator. To further provide fuel for the fire the author cites and example of them shutting down another URL shortening service because it was being used to link pornography. Something I'm sure Bit.ly is often used for as well.
ryanwaggoner 16y ago
The author didn't really elaborate on what makes this really troubling: the tens (hundreds?) of millions of existing shortlinks out there in the wild right now that would be worthless (or worse, directed to spam or abusive sites). Generally, it's bad, but maybe not the end of the world if a startup loses their domain. But this seems like it would be an unmitigated disaster for a service like bit.ly. I hope they're aggressively working on some kind of strategy to get away from that domain name ASAP. And this, kids, is yet another example of why URL shortening services should be avoided. They've single-handedly put ability to break the functionality of a growing chunk of the internet into the hands of one demonstrably unstable dictator in a developing nation.
- Macha 16y ago
  Luckily all bit.ly links are the sane for j.mp. Telling people to change them will be harder though.
  - ryanwaggoner 16y ago
    Yeah, the difficult part is changing all those links all over the web; after all, bit.ly still has the metadata and could setup a new domain for it in a few hours. The problem is getting hundreds of thousands (or millions) of sites to change all those links. And what's worse is that Libya wouldn't even have to break the functionality; they could just introduce spam, ads, phishing, malware, etc. along the way. Bit.ly has effectively put billions of intentional clicks in the hands of the exact wrong person. The right way to fix this if it all goes to shit would probably be at the DNS or browser level. At least then you have fewer people that you have to convince to change.
    - bigiain 16y ago
      "all over the web?" Do people really use URL shorteners for anything other than Twitter? (and,perhaps Rickrolling?) I suspect you could delete every url shortener database right now, and after a week nobody would even notice. I'm pretty sure the majority of shortener uses are for Twitter (for obvious reasons, and who reads tweets more than a few days old?) and for intentional hiding of destination urls (Oh look, I'm pretending to provide useful information, instead I'm linking you to a funny cat picture!). I find it hard to believe any information or knowledge hidden behind bit.ly links is of any real value in improving the human condition... (but I've been seriously wrong about emergent behavior amongst the general public before... I fully expect to have someone point out phd research papers with all the citations done with bit.ly links now...)
    - bigiain 16y ago
      Oh, and "fixing it in the DNS or browser" is just wrong wrong wrong. Are you _really_ suggesting that IANA or Microsoft/Mozilla/Apple/Google ought to be allowed to "hijack" some of Libya's .ly domain space, just to prop up the flawed business model of some <soundfx accent='Arrington'>dipshit little company</soundfx> ??? That way lies madness...
- simonw 16y ago
  bit.ly have been running j.mp for quite a while - I've used that instead of bit.ly whenever I needed a short URL with statistics tracking.
  - ryanwaggoner 16y ago
    Doesn't matter if most of the links being generated are still at bit.ly. The issue isn't switching to a new domain after the fact; bit.ly has all the data for all those links and could setup a new domain right away, but all the old bit.ly links are still embedded all across the web. Getting those changed is the hard part.
    - tptacek 16y ago
      Or, Libya could go crazy, decide to fuck with the rest of the world, and have every bit.ly link redirect somewhere that will blow up IE, Firefox, Flash, Quicktime, and Reader. Crazy-er, I mean.
      - SkyMarshal 16y ago
        Out of curiosity, is there any kind of list the risks various TLDs pose to businesses? Something similar to the US State Department travel warning list, for example (but including the US too)? I ask b/c I recently bought a .co domain for a side project which will depend heavily on the domain similar to bit.ly, and my surface impression is that Columbia is stable enough for TLD risk not to be an issue. But there is the FARC, drug cartels, and probabaly some unknown unknowns as well, and this .ly issue is making me wonder if I should reconsider before irreversibly locking in this domain.
    - citricsquid 16y ago
      They can probably just do a find and replace for the entire internet :-) I remember seeing that bit.ly and maybe tr.im had an "open" approach to URLs and formed some sort of service where they allowed anyone to easily replicate their URL database? I can't find any trace if it though, so I might have the wrong services, but that might be a possible solution, companies like Twitter could utilise that to "rescue" a large number of links.
- acpigeon 16y ago
  The troubling fact from an investors perspective is that for a bit.ly, the domain is nearly essential. Investing in a company where such a valuable asset is vulnerable to the whims of a dictator or third-world bureaucrat is unwise, to say the least.
alain94040 16y ago
It's potentially extremely dangerous for bit.ly. Most other foo.ly startups can happily rename themselves fooly.com, but for bit.ly, there are so many existing links out there, and shortness is so important, that the transition would be much more painful. That being said, no serious investor would have put $10M on bit.ly just because it's 5 characters long. The analytics or something else is where the value is, and that doesn't depend on the domain name being in Lybia.
- sbov 16y ago
  This may be going out on a limb here, but investors invest assuming you aren't going to lose your domain name. Especially if its based upon traction.
- deleted 16y ago
  [deleted]
michaelchisari 16y ago
I wonder if, even if Libya were a stable country with no reason to cause worry, if it would still be a bad idea to invest $10 million into such a simple product. Unless there's a long term plan, I don't see where the monetization of this service can come from. I always thought after the last dot-com bust, we'd be sensitive and conservative in respect to questions of profitability and revenue, but this investment in bit.ly gave me a bit of a sense of deja-vu, and it wasn't a good feeling.
- michaelbuckbee 16y ago
  I think a common misconception is thinking that bit.ly is in the business of shortening URLs when in reality they're in the analytics business of tracking when, where and how often people use and share links. As to monetization, they already have a $1000/month enterprise level plan that gives you tons of analytics and that runs lots of the custom branded URL shorteners (4sq.com, yhoo.it, pep.si, cs.pn). If I were a bit.ly investor my number one concern would be Google linking up their goog.gl shortener with Google Analytics. Doing so would punch a huge hole in Bitly's value proposition.
dkasper 16y ago
What's the point in putting domain names under the control of a country these days anyway? I understand that Lybia or some organization therein collects a fee from people registering .ly domains, but it would certainly be possible to still pay them the fee without giving them the power to "turn off" domain names without cause. They could even retain the right to refuse to sell domains to people, but once you've bought the domain it needs to be yours in perpetuity, as it is with other property. This is a completely artificial problem based on archaic rules that has a straightforward solution.
- tptacek 16y ago
  The ISO country code domains aren't a public good; they're allocated to their respective countries, to use as they wish. Libya is within its rights not to allocate any domain names at all. Conceptually within the DNS, there is no difference between APPLE.COM. and LY. You wouldn't expect Apple to allow random people to set up names under APPLE.COM. John Postel oversaw a decision, multiple decades ago, to allocate countries their two-letter ISO code; if you want to blame someone, blame Postel. I personally think it's a reasonable policy, and that the fault lies in people willing to do business with a manifestly evil country for the sake of a vanity domain.
  - jrockway 16y ago
    Actually, APPLE.COM. and LY. are different. You get the address of the LY. server from a public root nameserver; servers set up solely to provide a starting point for "the Internet". You only find APPLE.COM. because you look in COM. first. When you choose to use the root nameserver, you are assuming they are making good decisions about who to delegate to. When COM. delegates to Apple's servers for APPLE.COM., that's a good decision. When the root nameserver delegates to the current LY. servers, that's a bad decision, because LY. does not hold up their end of the bargain and properly delegate. VB.LY. should delegate to VB.LY.'s servers. But for some reason, they refuse to do it. So the root server should simply not delegate to it. Incidentally, nobody is forcing anyone to use "the" root nameservers. If you want vb.ly back, just use a different root!
sjtgraham 16y ago
I remember reading that nic.ly or their agents made some effort to contact vb.ly's owners to discuss their concerns with vb.ly, but received no response. The author attempts to paint nic.ly et al as being capricious, but it seems to me there were some attempts made to resolve this amicably.
- tptacek 16y ago
  I think the analysis in this article stands even if you don't buy VB.LY's story about NIC.LY.
gallerytungsten 16y ago
This means that perhaps the big VC money will conspire to compromise or overthrow Quadaffi.
treitnauer 16y ago
Next year, they will simply apply for .BIT – http://www.circleid.com/posts/reduce_the_risk_of_url_shorteners_to_your_brand_with_your_own_tld/ http://www.circleid.com/posts/reduce_the_risk_of_url_shorten...

26 points by acpigeon 16y ago

Is it really a story that an Islamic nation would shut down a pornographer? That seems like that is a foregone conclusion, whereas bit.ly is an incredibly visible, legitimate service. Libya has had a tumultuous few decades, but today they're in the United Nations Security Council, have paid reparations for terrorism, and their president is the Chairman of the African Union. Why would they destroy a partnership with the most visible silicon valley company to have any association with their country?

dualboot 16y ago
No, the story is that they can shut down a domain name and there is no appeal that can be filed. You exist at the whim of the dictator. To further provide fuel for the fire the author cites and example of them shutting down another URL shortening service because it was being used to link pornography. Something I'm sure Bit.ly is often used for as well.

ryanwaggoner 16y ago

The author didn't really elaborate on what makes this really troubling: the tens (hundreds?) of millions of existing shortlinks out there in the wild right now that would be worthless (or worse, directed to spam or abusive sites). Generally, it's bad, but maybe not the end of the world if a startup loses their domain. But this seems like it would be an unmitigated disaster for a service like bit.ly. I hope they're aggressively working on some kind of strategy to get away from that domain name ASAP. And this, kids, is yet another example of why URL shortening services should be avoided. They've single-handedly put ability to break the functionality of a growing chunk of the internet into the hands of one demonstrably unstable dictator in a developing nation.

Macha 16y ago
Luckily all bit.ly links are the sane for j.mp. Telling people to change them will be harder though.
- ryanwaggoner 16y ago
  Yeah, the difficult part is changing all those links all over the web; after all, bit.ly still has the metadata and could setup a new domain for it in a few hours. The problem is getting hundreds of thousands (or millions) of sites to change all those links. And what's worse is that Libya wouldn't even have to break the functionality; they could just introduce spam, ads, phishing, malware, etc. along the way. Bit.ly has effectively put billions of intentional clicks in the hands of the exact wrong person. The right way to fix this if it all goes to shit would probably be at the DNS or browser level. At least then you have fewer people that you have to convince to change.
  - bigiain 16y ago
    "all over the web?" Do people really use URL shorteners for anything other than Twitter? (and,perhaps Rickrolling?) I suspect you could delete every url shortener database right now, and after a week nobody would even notice. I'm pretty sure the majority of shortener uses are for Twitter (for obvious reasons, and who reads tweets more than a few days old?) and for intentional hiding of destination urls (Oh look, I'm pretending to provide useful information, instead I'm linking you to a funny cat picture!). I find it hard to believe any information or knowledge hidden behind bit.ly links is of any real value in improving the human condition... (but I've been seriously wrong about emergent behavior amongst the general public before... I fully expect to have someone point out phd research papers with all the citations done with bit.ly links now...)
  - bigiain 16y ago
    Oh, and "fixing it in the DNS or browser" is just wrong wrong wrong. Are you _really_ suggesting that IANA or Microsoft/Mozilla/Apple/Google ought to be allowed to "hijack" some of Libya's .ly domain space, just to prop up the flawed business model of some <soundfx accent='Arrington'>dipshit little company</soundfx> ??? That way lies madness...
simonw 16y ago
bit.ly have been running j.mp for quite a while - I've used that instead of bit.ly whenever I needed a short URL with statistics tracking.
- ryanwaggoner 16y ago
  Doesn't matter if most of the links being generated are still at bit.ly. The issue isn't switching to a new domain after the fact; bit.ly has all the data for all those links and could setup a new domain right away, but all the old bit.ly links are still embedded all across the web. Getting those changed is the hard part.
  - tptacek 16y ago
    Or, Libya could go crazy, decide to fuck with the rest of the world, and have every bit.ly link redirect somewhere that will blow up IE, Firefox, Flash, Quicktime, and Reader. Crazy-er, I mean.
    - SkyMarshal 16y ago
      Out of curiosity, is there any kind of list the risks various TLDs pose to businesses? Something similar to the US State Department travel warning list, for example (but including the US too)? I ask b/c I recently bought a .co domain for a side project which will depend heavily on the domain similar to bit.ly, and my surface impression is that Columbia is stable enough for TLD risk not to be an issue. But there is the FARC, drug cartels, and probabaly some unknown unknowns as well, and this .ly issue is making me wonder if I should reconsider before irreversibly locking in this domain.
  - citricsquid 16y ago
    They can probably just do a find and replace for the entire internet :-) I remember seeing that bit.ly and maybe tr.im had an "open" approach to URLs and formed some sort of service where they allowed anyone to easily replicate their URL database? I can't find any trace if it though, so I might have the wrong services, but that might be a possible solution, companies like Twitter could utilise that to "rescue" a large number of links.
acpigeon 16y ago
The troubling fact from an investors perspective is that for a bit.ly, the domain is nearly essential. Investing in a company where such a valuable asset is vulnerable to the whims of a dictator or third-world bureaucrat is unwise, to say the least.

alain94040 16y ago

It's potentially extremely dangerous for bit.ly. Most other foo.ly startups can happily rename themselves fooly.com, but for bit.ly, there are so many existing links out there, and shortness is so important, that the transition would be much more painful. That being said, no serious investor would have put $10M on bit.ly just because it's 5 characters long. The analytics or something else is where the value is, and that doesn't depend on the domain name being in Lybia.

sbov 16y ago
This may be going out on a limb here, but investors invest assuming you aren't going to lose your domain name. Especially if its based upon traction.
deleted 16y ago
[deleted]

michaelchisari 16y ago

I wonder if, even if Libya were a stable country with no reason to cause worry, if it would still be a bad idea to invest $10 million into such a simple product. Unless there's a long term plan, I don't see where the monetization of this service can come from. I always thought after the last dot-com bust, we'd be sensitive and conservative in respect to questions of profitability and revenue, but this investment in bit.ly gave me a bit of a sense of deja-vu, and it wasn't a good feeling.

michaelbuckbee 16y ago
I think a common misconception is thinking that bit.ly is in the business of shortening URLs when in reality they're in the analytics business of tracking when, where and how often people use and share links. As to monetization, they already have a $1000/month enterprise level plan that gives you tons of analytics and that runs lots of the custom branded URL shorteners (4sq.com, yhoo.it, pep.si, cs.pn). If I were a bit.ly investor my number one concern would be Google linking up their goog.gl shortener with Google Analytics. Doing so would punch a huge hole in Bitly's value proposition.

dkasper 16y ago

What's the point in putting domain names under the control of a country these days anyway? I understand that Lybia or some organization therein collects a fee from people registering .ly domains, but it would certainly be possible to still pay them the fee without giving them the power to "turn off" domain names without cause. They could even retain the right to refuse to sell domains to people, but once you've bought the domain it needs to be yours in perpetuity, as it is with other property. This is a completely artificial problem based on archaic rules that has a straightforward solution.

tptacek 16y ago
The ISO country code domains aren't a public good; they're allocated to their respective countries, to use as they wish. Libya is within its rights not to allocate any domain names at all. Conceptually within the DNS, there is no difference between APPLE.COM. and LY. You wouldn't expect Apple to allow random people to set up names under APPLE.COM. John Postel oversaw a decision, multiple decades ago, to allocate countries their two-letter ISO code; if you want to blame someone, blame Postel. I personally think it's a reasonable policy, and that the fault lies in people willing to do business with a manifestly evil country for the sake of a vanity domain.
- jrockway 16y ago
  Actually, APPLE.COM. and LY. are different. You get the address of the LY. server from a public root nameserver; servers set up solely to provide a starting point for "the Internet". You only find APPLE.COM. because you look in COM. first. When you choose to use the root nameserver, you are assuming they are making good decisions about who to delegate to. When COM. delegates to Apple's servers for APPLE.COM., that's a good decision. When the root nameserver delegates to the current LY. servers, that's a bad decision, because LY. does not hold up their end of the bargain and properly delegate. VB.LY. should delegate to VB.LY.'s servers. But for some reason, they refuse to do it. So the root server should simply not delegate to it. Incidentally, nobody is forcing anyone to use "the" root nameservers. If you want vb.ly back, just use a different root!

sjtgraham 16y ago

I remember reading that nic.ly or their agents made some effort to contact vb.ly's owners to discuss their concerns with vb.ly, but received no response. The author attempts to paint nic.ly et al as being capricious, but it seems to me there were some attempts made to resolve this amicably.

tptacek 16y ago
I think the analysis in this article stands even if you don't buy VB.LY's story about NIC.LY.

gallerytungsten 16y ago

This means that perhaps the big VC money will conspire to compromise or overthrow Quadaffi.

treitnauer 16y ago

Next year, they will simply apply for .BIT – http://www.circleid.com/posts/reduce_the_risk_of_url_shorteners_to_your_brand_with_your_own_tld/ http://www.circleid.com/posts/reduce_the_risk_of_url_shorten...