How New York Startups Like Bitly Are Taking On Bigger Platforms

For Madison Avenue advertising agencies, giant platforms like Facebook and Google are natural partners. But smaller tech companies that gather user data are rising in value and could disrupt the giants.

“The $1 billion opportunity is to take ownership of customer experience away from the [competing] platform,” says Bitly CEO Mark Josephson. “Marketers have all the money, that’s why it’ll happen in New York and not [Silicon] Valley.” Josephson was being interviewed by Bloomberg Television’s Vonnie Quinn at the Cornell Tech @ Bloomberg series in New York.

Bitly is a link-shortening service spun out of Betaworks, the New York accelerator and seed stage investor. In 2008, Bitly was first aimed at helping Twitter users to share links that met the service’s 140-character limit, but its links now span far beyond social media and see about 12 billion clicks per month.

When Josephson was hired as CEO in 2013, Bitly had gained traction with some publishers. Customers like the New York Times were paying for Bitly’s premium link-shortening service that branded links.

But Bitly’s business model was still immature and those customers weren’t paying nearly enough for value they were getting, he said. Josephson’s goal as CEO was to add a layer of insight on top of its trove of data, and sell the analytics to big brands, not just the media. Josephson’s focus on building value for marketers helped Bitly reach profitability last year.

Bitly’s value comes from the way it collects data across the Internet on PCs and mobile devices. Its technology drops cookies onto a user’s computer or phone as customers click each link. The clicks result in a longer URL linking to a publisher or marketer-owned property. By hop-scotching through Bitly servers, users leave behind crumbs of important behavioral information that its cookies collect.

“At Bitly, every time you click, tap or swipe, it’s a link,” he says. “We own that space and that experience.”

Bitly ties that information together in an anonymous user profile that shows its brand clients how and where people are consuming their Web and mobile content.

“All [marketers] really wanted was direct brand relationships and we had that,” says Josephson.

That kind of focus on a specific B2B problem is just the sort of approach venture capitalists like Karin Klein, a founder of Bloomberg Beta, is looking for. (Bloomberg Beta is not an investor in Bitly.)

Speaking alongside Josephson, Klein said “we’d much rather see a demo than a pitch book” when assessing companies seeking seed funding. “We look at the founder focusing on something achievable,” she said.

A 20-year New York technology exec who’s worked at About.com, Outside.in and Patch.com, Josephson worries that the shift to mobile devices gives Apple, Google and Facebook too much control over content and user data.

As those three big platforms build walled gardens of content, it is becoming increasingly difficult for marketers to get a holistic view of how people are consuming their content. Josephson sees an opportunity for Bitly and other smaller platforms that are providing cross-platform analytics to help marketers tailor campaigns with data and insights.

“There are such interesting platform evolutions,” said Klein. “If your founder is too caught up in day to day, it’s a problem.”

You can view the entire interview here.