When coworkers Sabeer Bhatia and Jack Smith began working on their first
startup idea—a web-based personal database they called JavaSoft—they were
frustrated because their employer’s firewall prevented them from accessing
their personal email accounts.
To solve their problem, they came up with the idea of email accounts that
could be accessed anonymously through a web browser. This idea became the
startup. In 1996, the first web-based email was born, offering people free email
accounts that could be accessed from any computer with an Internet connection.
Less than 2 years later, they had...

with it and came up with the idea to do a simple-to-install database at the back
end. Then you’d use the browser as the front end. It could store any piece of
information at the back, but the browser would be used to display it. So people
could just look for it and be able to create a personal database of anything: contact
information, phone numbers, special files, or whatever it is that you would
do on a local PC.
So I wrote a business plan and didn’t know what to do with it....

a web browser. If we made email available through the web browser, that would
solve our problem.”
And then it occurred to us, “If that would solve our problem, it would solve
the problems of many others.” We didn’t know how many others, but email was
something that everyone used. To provide ubiquitous access to that email from
any web browser from anywhere in the world was the killer idea.
Livingston: This killer idea emerged because you guys were trying to solve the
personal email exchange problem for yourselves?
Bhatia: Absolutely. That...

plan floating around somewhere with the email idea. So we would go in with
the JavaSoft business plan.
If they passed the litmus test of not rejecting us for the wrong reasons and
said, “OK, we don’t mind that you’re young, we don’t mind that you don’t have
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management experience,” only when they would start poking holes in the
actual idea would we share the Hotmail idea with them. That was actually just
because we didn’t trust them.
Livingston: You finally pitched Draper Fisher Jurvetson (DFJ) and they passed...

round.
Livingston: They put you down to other VCs?
Bhatia: They did. Of course, that was very early on and now everything is all
fine and dandy, but at that point in time . . . we had a term sheet for a much
higher valuation. But when we would talk to any other VC, the other VC would
call the guys at DFJ and they’d say, “No, don’t invest in them.”
Livingston: Were they helpful at all?
Bhatia: Yes. Steve Jurvetson was very helpful; he introduced us to a lot of people...