The growth, furthermore, allowed the team to raise additional rounds of funding. In order to keep up with the ever-increasing demand (the product suffered multiple outages as well), CTO Smith implemented a completely new architecture. A month after reaching one million registered members, Hotmail already doubled its user count. This ultimately allowed the company to grow at an exponential rate. The more users began sending out emails, the more would encounter the product for the first time. This essentially acted as a quasi-marketing channel for the product. One of the major reasons for its instant popularity was the fact that members would use as their email registrar.

By early January 1997, Hotmail had already amassed over one million registered users, less than six months after being launched. The product, being essentially the first of its kind, spread like a literal wildfire. On July 4th, 1996, after months of hard work, they finally unveiled Hotmail to the public. The funding allowed the two to quit their jobs and focus on building out Hotmail on a full-time basis. After some intense negotiations, the founding team managed to raise a seed round of $300,000 at a $2 million valuation. However, after dozens of rejections, they finally let the cat out of the bag.ĭuring one of his presentations at Draper Fisher Associates, Bhatia finally revealed his idea for what would eventually become Hotmail. In fact, the two thought that their idea was so powerful that they wouldn’t even present it in front of investors over fears of the product being copied. However, they soon pivoted towards creating an email client for the web, the first of its kind. The first idea that the two were working on was JavaSoft, an internet-based personal database. Bhatia and Smith became immediate friends over their shared desire of wanting to start a business. Bhatia, an Indian native, had immigrated into the United States in 1988 after Caltech had offered him a very rare transfer scholarship.Īfter his graduation, he went on to work for Apple as a chip designer until eventually joining Firepower Systems. The two met a few months prior when they joined Firepower Systems to design Power PCs.

Hotmail, formerly headquartered in San Francisco, California, was founded in 1995 by Sabeer Bhatia and Jack Smith.

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