World Of Entrepreneurs: Sabeer Bhatia...The Hotmail

Few are such courageous and creative people who build up an enterprise and rise up the ladder of success. Very few amongst them are such who do not succumb to the pressures of a buyout by the stalwarts in their fields. Others are those who make a smart deal to turn their hard work of few years into a negotiating tool before the big players. 

Mr. Sabeer Bhatia belongs to the latter group of Entrepreneurs. His two year old enterprise, Hotmail.com, was bought by IT giant, Microsoft, for a whooping $400 million in 1997 and thus, his hard work and negotiating capabilities earned him a lot of respect in the Silicon Valley. Companies across the valley were shocked about the deal and were curious to know about the man who made Microsoft empty its wallet on a two year old company. Let’s figure out how he made this task possible.

A product of Stanford University and BITS, Pilani, Mr. Sabeer Bhatia is a confident and innovative personality. At Stanford he got inspired by the likes of Steve Jobs and other entrepreneurs and after completing his MS he joined Apple Inc. After few years of work experience in Apple, he along with a colleague at Apple joined a startup company named Firepower Systems Inc. This was the place where he was truly exposed to the entrepreneurial environment. He learned a lot about Internet applications and new techniques coming up on the Internet.

While working in Apple he and his colleague, who were very much interested in entering into the entrepreneurial world, were not able to communicate to each other about their ideas on the official mail. This left them frustrated and from here came an idea of free e-mail accounts over the internet. Thus, in 1996, Sabeer broke into a niche business concept on the Internet, a web-based database named Javasoft. Then came the concept of Hotmail.com. Initially the HoTMaiL (capital letters representing HTML, language on which the web pages were designed) was funded by venture capitalists. Hotmail.com was an explosive concept and had a historic start. American magazines termed the growth of Hotmail as the fastest – 1,25,000 users signing up every day – faster than the growth of renowned companies like CNN or AmericaOnline.

Sabeer was very accurate in his evaluation of the company’s prospects. 

He estimated a venture of $3Million as 15% stake of the company and walked out when a venture capitalist estimated the same as 30%. His confidence made the venture capitalist repent and accept the deal as offered by Sabeer. Sabeer admits that his greatest achievement was not to build a company but to convince people related to the company. He convinced the first 15 employees of the company to take the stock options instead of salaries. “I convinced them that this is their company”, he recalls.

The company flourished faster than expected and attracted the big fish, Microsoft. In the next post I will look into how Sabeer’s witiness made him negotiate with a smartest businessman till date, Mr. Bill Gates. Sabeer’s confidence and ability to estimate conditions in future has brought him glory and wealt which many say was a sheer luck. But, was it luck or was it a will to do something great?? I’ll go with the second one.

Thanks.

Photo Courtesy: Rediff.com, msn.com, miportal.edu