difference, but I just think that hardware designers would be pretty good software
designers as well.
Livingston:Were you at all worried about intellectual property issues when you
left the company to start Hotmail?
Bhatia: No, they were totally different. We were designing chips, which had
nothing to do with the Internet.
Livingston: So you now have $300,000 and you’re working full-time on
Hotmail. What happened in the 6 months before you launched?
Bhatia: We got funded on February 14, 1996, and the site launched on the
Fourth of July. We had...

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...

believed we would overtake Yahoo in the number of page impressions that we
would deliver, which was what Yahoo was touting.
What has happened in the last 10 years is that advertising has grown even
more. It’s not just page impressions, but the number of click-throughs. The
most monetizable part of advertising (at least online advertising today) is the
click-through to another advertiser, which is search. When people search,
they’re most likely to click through because that’s when they’re looking for
something.
Google has proven remarkably well that click-through is a monetizable...

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...

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...