Sabeer Bhatia co-founded Hotmail, which Microsoft acquired for $400 million, marking a major milestone in email history.
Email has transformed the way we communicate, and for many, Google's Gmail is the go-to platform. However, other major players like Yahoo and Outlook.com have also shaped the email landscape. Interestingly, Outlook.com has roots in a platform that was once known as Hotmail, which has a unique backstory involving an Indian entrepreneur named Sabeer Bhatia. Along with his partner Jack Smith, Bhatia co-founded Hotmail in 1996. Just 18 months later, in 1997, Microsoft acquired Hotmail for a remarkable $400 million. For Bhatia, this acquisition marked a dream come true.
From a $140 Million Offer to a $400 Million Deal
Recently, Sabeer Bhatia shared some intriguing insights about Hotmail’s journey during a podcast. He recalled how, as a small startup, receiving a buyout offer from a giant like Microsoft was a significant milestone. At the time, Hotmail had scraped together funds from various sources to build the platform, but despite its potential, the company wasn't generating any revenue. Bhatia and his team recognized that if they turned down Microsoft's offer, they might face serious challenges, as Microsoft could easily create a similar product on its own. Initially, Microsoft offered $140 million for Hotmail, but after several months of negotiations, the deal was finalized at $400 million. This massive leap in value underscored the potential that both parties saw in Hotmail.
The Launch of Hotmail in 1996
Hotmail was officially launched on July 4, 1996, by Sabeer Bhatia and Jack Smith. Coincidentally, another email service called RocketMail was launched around the same time, which eventually became Yahoo! Mail. In those early days, free email services like Hotmail offered users only 2 MB of storage space. Hotmail received its initial funding from venture capital firm Draper Fisher Jurvetson, which played a key role in its early growth. By December 1997, Hotmail had amassed 8.5 million users, reflecting its rapid rise in popularity. Before venturing into Hotmail, Sabeer Bhatia had a brief stint working with Apple Computers, where he gained valuable experience.
Post-Hotmail Ventures
After selling Hotmail to Microsoft, Bhatia continued working at the company for almost a year before moving on to new ventures. He founded an e-commerce company called Arzoo Inc. and later started JaxtrSMS, a messaging service. However, despite his efforts, none of these ventures matched the immense success of Hotmail. Meanwhile, Jack Smith, Bhatia’s co-founder, went on to become the CEO of Proximex, a software company, in 2007.
In summary, Sabeer Bhatia's journey with Hotmail is a classic example of a startup success story, where a visionary idea grew into a global phenomenon, eventually leading to one of the most notable acquisitions in tech history. While Bhatia’s subsequent ventures didn’t replicate Hotmail’s success, his role in shaping the early days of email remains significant.
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