Pretend, for a brief moment, that you are the dictator of a third-world backwater. Picture this secenario:

A profitable company has set up shop discretely in a little corner of your desert country to take advantage of, say… the local sand. Millions of dollars have been invested in the company, yet It pays no taxes and you have no ownership stake in the company whatsoever. They're just squatting there, hoping no one will notice.

Its product, say... artsy glass panes, is entirely dependent on a particular type of sand only found in your country, no other kind will do. As a dictator, you have complete authority over any economic activity in the country, and in general you require a little extra off the top as the price of doing business. What are you going to do when you find out about this company?

Actually, this isn't really a thought experiment. The company involved is not an artsy glass company however, but one of Silicon Valley's hottest startups. It's not squatting in the middle of the country's desert, it has taken up residence on its online turf.

The country is Libya, and the company is bit.ly, the online world's most popular internet link shortener. Here's the catch: '.ly' is the country code domain of Libya, which has become the trendy new place to register new startup domains.

You heard that right. Some of the smartest venture capital people in the world invested $10 million last week into a startup that only exists because the eccentric dictator who runs the country probably doesn't know its there. It's not just bit.ly, there's a host of venture backed companies registered there. Think they won't shut any of them down? The day before bit.ly's funding was announced, Libya shut down a similar link shortening service that specialized in adult links. No warning, they just pulled the plug.

This is guaranteed to have a roomful of investors somewhere sweating bullets.

Bonus: The Guardian is reporting that some of the investors didn't even know that the domain was registered in Libya.

Bonus Bonus: The dictator in question tried to sleep in a Bedouin-style tent on Donald Trump's property when he visited the US in 2009. Oh yeah, and he was also behind a little debacle called the Lockerbie Bombing.