TWO million users in less than two years. The brainchild of a twentysomething Indian in the US. Success. Where could this be? On the Internet, of course.
Meet Sabeer Bhatia, CEO of Hotmail, the world's first Web-based e-mail service. Launched soon after his 26th birthday, Bhatia, in less than 24 months, had an expansive office with more than 30 rooms in Sunnyvale—the heart of Silicon Valley. "We were very secretive about it when we star
Says Steve T. Jurvetson, managing director, Draper Fisher and Associates (DFA): "Sabeer is very smart and visionary about his company, almost like Steve Jobs." DFA was the 26th company Bhatia visited in search of funds. "He's a very astute negotiator, and is driven by an infectious enthusiasm." So, just what does Hotmail do? In a line, it gives you an e-mail address—free. Signing up for a Hotmail address is simple: go to http://www.hotmail.com. And within minutes you have an e-mail address. What the company offers is a personal, fully-functional e-mail on the Web. Being on the Web makes the service available to people the world over, and Bhatia hopes India will be a major market. "It's an ideal product for the Indian market as a lot of people don't own computers." These people can get an address from Hotmail, and could go to cyber cafes and check their mail.
Along with his technical skills, Bhatia has a few other natural advantages. He is a skilled communicator. And is deeply passionate about what he does. After spending two years in the Birla Institute of Technology and Science, he took a transfer to Caltech in Pasadena, California. He finis-hed his Masters in Science from Stanford in 1992, worked at Apple Computers for a year, and then joined Firepower—a young start-up—as one of its original employees.
That's perhaps where the seeds of entrepreneurship were planted. Along with Jack Smith, a colleague at Firepower, he worked out plans for a database product on the Internet. Later, the idea of Hotmail put everything else on the backburner.
The product conceptualised, financing was the next step. Bhatia took his idea to venture capitalists. "I spoke to 25 venture capitalists," he says. What moved the moneybags was Bhatia's belief in the product, and that, "we were the right ones to do it." With $300,000 (Rs 1.05 crore) in the pocket, it wasn't long before Hotmail moved its offices from Bhatia's car in a parking lot to the spanking office. With it also came several employees. And the all-important ads. And even though the money was a "very small amount for what we wanted to do", says Bhatia, the company perfected the technical development. In less than six months after launch, they hit a million users.
The final objective, of course, is to be funded by advertisers. A quarter of all Hotmail users log in every day to check their mail; half of them at least once in a week. That's a captive audience. And this audience would find it rather hard to miss the brightly-coloured, big rectangular box on the top of the screen. That's the advertiser's spot.
One question dogging his 2 million clients, however, is: will Hotmail always be free or is there a small charge lurking around for addicted users? Quelling all doubts, Bhatia says: "It will always be free. " But for new facilities—faxes, web courier services and mail retrieval on phone—there'll be a charge.
Many of the original Hotmail users loved the easy availability of the service, but had other complaints. "It's like reaching for mail on a tortoise," says Shaloo Kshetrapal of Tata Unisys, who was one of the first to take advantage of the free address, but was disturbed by the time it took for messages to arrive.
Bhatia acknowledges that as one of their problems, but attributes it to the pangs of growth. The company aims to have messages delivered within five minutes. But that might not be as easy as it sounds. "We've worked very hard to introduce a new architecture. It's been like trying to replace the engine of a car while driving at 70 miles per hour." Meanwhile, competition is nipping at Hotmail's heels. Companies like Bigfoot and Juno have entered the business in recent months. Since there is no way to stop them from replicating Hotmail's success, what do they intend to do to stay ahead? "Competition doesn't scare me," says Smith who is chief technology officer of Hotmail. "It's a validation of the marketplace." Bhatia is upbeat about their industry position. "We're too far ahead already, and we're going to stay that way," he says.
Well, good luck. But remember, the Net is a very, very shifty business: current leadership need not mean permanent lead.