Should investors be gambling their investment dollars on fast-growing, but revenue-free startups?
If the recent $2 million investment into Betaworks’ in-house project bit.ly is any indication, maybe. Bit.ly is like some of Vancouver’s very own url-shorteners, like Invoke Media’s ow.ly (related to Hootsuite) and tr.im, all of which do the same thing. They take a convoluted Web address and make it shorter. Great! But as Peter Kafka points out in this post, where is the money?
Kafka says many of bit.ly’s competitors like tinyurl generate revenue by running Google ads. But bit.ly won’t sell ads and it’s free to users. As well,
…it plans on distinguishing itself by tracking all the clicks and streams that come through the service and using the data to provide interesting analytics and insights into who’s looking at what on the Web, in real time.
Bit.ly’s people also say that:
…revenue will come sometime down the road, from something else–when they figure out what that is.
So, what are investors really investing in? Kafka says it’s the possibilities of Twitter’s real-time search capabilities. What do you think?