Jack Dorsey’s backed Twitter competitor Bluesky said on Wednesday that it has raised $8 million in seed funding. The news of the funding follows its conversion from a public benefit LLC to a public benefit C Corp “in order to gain more independence from the legacy of the past,” the startup said in a statement.
The round was led by Neo, with participation from a cast of additional investors including Joe Beda who co-created Kubernetes, and Bob Young of Red Hat. Other backers include Amjad Masad of Replit, Amir Shevat, Heather Meeker, Jeromy Johnson, Automattic, Protocol Labs, Sarah Drasner, Katelyn Donnelly, Ali Evans, Stav Erez, Kris Nóva, Brad Fitzpatrick, Abdul Ly, and many others.
In conjunction with the funding, Bluesky also announced that it’s pivoting its business model to selling custom domains in a bid to keep its service ad-free for millions of its users. The company also launched a paid custom domain service in partnership with Namecheap “for easy domain purchasing and management.”
In a blog post discussing its plans to remain sustainable, Bluesky said, “In the business of advertising, where social media companies exchange user data to serve ads to specific audiences, users become the product. Bluesky’s business model must be fundamentally different — we are a public social network and our code is all open source, so we have no “moat” when it comes to data.”
Bluesky added that since it’s “set out to build a protocol where users can own their data and always have the freedom to leave, and this approach means that advertising couldn’t be our dominant business model.” Instead, Bluesky said it’s been “exploring other avenues of monetization.”
“We believe that there must be better strategies to sustain social networks that don’t require selling user data for ads. Our first step in another direction is paid services, and we’re starting with custom domains.”
As per the announcement, the integration of domains is just the beginning of potential paid services that could be offered on the platform. To supplement the recently secured funding, Bluesky said that it is actively exploring additional services that can be bundled together to create a more seamless experience for its users.
“We’ll be experimenting with different strategies and services to see what provides real value to our users, and will continue to share what we learn as we build a sustainable social network.
Meanwhile, it’s important to note that Bluesky is currently in a private beta phase, and individuals who are interested will need to join a waitlist before gaining access to the platform.
Backed by Twitter founder Jack Dorsey, Bluesky is a decentralized social media platform that has generated significant buzz on Twitter and on mainstream media (video below) after it released a limited number of invites.
Bluesky was first introduced by Jack Dorsey in 2019 as an internal project aimed at developing a decentralized social network protocol. Twitter’s then-CTO (now CEO), Parag Agrawal, was in charge of the project at the time. In late 2021, Bluesky was transformed into a public benefit LLC separate from Twitter.
Meanwhile, Bluesky finds itself in a highly competitive microblogging internet landscape, with numerous contenders vying for attention. Alongside established platforms like Twitter and the upcoming release of Threads, Bluesky also faces competition from Mastodon, another rapidly growing and popular app. The market is becoming increasingly crowded, presenting Bluesky with the challenge of differentiating itself and capturing its own share of users in this competitive space.
Below is a video of how the new custom domain works.