Founders at Work.pdf

22 Founders at Work
Livingston: You had a tagline in the body of the email encouraging email recipients
to set up their own free Hotmail accounts. How did you come up with
this?
Bhatia: It was actually Jack’s idea to do that. We ran it by our VCs just to make
sure it was OK. When you alter somebody’s email, you’ve got to be very careful.
You’re sending an email to a friend of yours, and we are kind of violating the
sanctity of that email by putting in a tagline at the end of it that says “This message
has been sent from Hotmail. Get your free email at hotmail.com.”
So we asked Tim if it was OK that we did this. We said, “We don’t want to be
perceived as the evil company by altering their email.” And he said, “Absolutely,
you should do it.”
And the next thing we know, he claims that this idea was his. He’s given a
number of interviews literally claiming that he was the father of web-based
email—without him it would not have happened. I can’t believe he’s just taken
credit for everything—including the tagline (which later became known as the
classic example of viral marketing). He blatantly claims this at conferences,
which I don’t think is right.
Livingston: He claimed that web-based email was his idea?
Bhatia: That it was our idea, but without them, it would not have happened and
that we would have done JavaSoft. Their version is that “we told them to do
web-based email at that [first] meeting.” Why would they tell us to do webbased
email?
Livingston: You grew Hotmail’s user base faster than any other company in history
at that time. Do you believe it was more because you had a great product
or you had a good PR campaign?
Bhatia: That’s one thing about the Internet: if you have something that’s good,
it spreads by word of mouth and like wildfire. You just have to hire a small PR
firm and do it.
Livingston: Had you always planned for Hotmail to be free for users?
Bhatia: Yes.
Livingston: How did you convince people you could make money from targeted
advertising? That was so novel at the time.
Bhatia: It was novel, but at the same time it wasn’t novel, because Yahoo had
gotten funding (and later went public) on that basis. Their whole concept was
to grow by advertising, even though it was a directory, because people would
pay for advertising.
Our whole idea was that, if page impressions are a commodity that can be
sold, can be monetized, then we would generate far greater page impression
than they were able to because you interact a lot more when you do email. You
click on something and a page comes up and you click on something and
another page comes up. So we were thinking of the number of pages and the
number of page impressions as the monetizable quantity. In our estimate, we