Bhatia: Once you’ve got a lead in terms of a subscriber base, that is unassailable.
It can’t be replicated easily. So I knew even if they started developing the
product—I have no doubt in my mind that they could have developed it, so
many engineers and smart people in Microsoft. At that time they had something
like 16,000 engineers, and I had a total of 60 people in the company, only
14 engineers, so it would have been easy to pick 15 guys from 16,000 and build
this product. But I knew we had...

business development people, lawyers, accountants, all of them.
They gave a presentation about how much they liked the company and this
and that, and they said they wanted to buy us and placed an offer of $160 million.
I knew that that was the opening shot and I said, “Thank you very much
for making an offer. We really, really like your company and like the fact that
you like us so much. We’ll go back to our board and discuss this and get back to
you.”
And the CFO said, “C’mon, is...

saw our growth from hundreds to thousands to tens of thousands, and that’s
when they said, “Even we ourselves cannot get these kinds of registrations on
our website. We should do email.” So they decided to do email and that’s how
they came up with Rocketmail.
Livingston: Were you pissed?
Bhatia: They are also funded by Draper Fisher Jurvetson. So Draper was seeing
two of its own companies create two different email systems.
We felt bad that they had done it, but we couldn’t go to Draper and say anything.
It was...

have a very large user base.
Livingston: Web-based email was so new to the world. What did consumers
misunderstand?
Bhatia: We had a sales guy who signed up his mom, and his mom said, “Yes, I
can see that there’s an email from you, but how do I read it?” And he said,
“Mom, go and click on it.” She didn’t know you had to click on it!
I heard another story from a man who said his sister would get into the
Hotmail account not directly by going to http://hotmail.com, but by...

about the major turning points.
Bhatia: Before we launched, I think the first major turning point was getting
the $300,000 in funding. That was huge for us—two young kids to get that
much money. The second turning point really was when I started using it and I
told my friends and family about it and everybody who used the product (50 or
100 or so people) loved it.
Sabeer Bhatia 23
And then of course, the interesting thing was that when we finally did
launch, each of us had pagers that would...