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'Mr Hotmail' seeks new challenges

By Simon Hooper for CNN

Sabeer Bhatia
Bhatia: "I think the soul of an entrepreneur is to keep trying until you find the successful idea."
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Technology (general)

(CNN) -- As the inventor of Hotmail, Sabeer Bhatia is the pin-up of India's IT revolution; the boy from Bangalore who went to Silicon Valley and made his fortune.

Bhatia was in his mid-20s when he developed the idea of web-based email accounts in 1995, raising $300,000 in investment to launch the revolutionary service the following year.

Within 12 months Hotmail had 10 million users and Bhatia had sold his creation to Microsoft for $400 million.

It was the sort of deal that fueled the new technologies boom, but, while Hotmail went from strength to strength as the Web email address of choice for an estimated 200 million users worldwide, Bhatia went back to basics.

Launching his new company in 1999, a one click e-commerce venture called Arzoo.com, Bhatia claimed it had the potential to be twice as big as Hotmail. By mid-2001 the dotcom bubble had burst and Arzoo had folded.

Yet Arzoo was the product of exactly the same entrepreneurial thinking that had led Bhatia to Hotmail -- the name is derived from html, the code with which web pages are constructed.

"I was always inquisitive as a child," recalls Bhatia, now 35. "I always knocked on doors to find out what could be possible."

Bhatia had been working for Apple as a hardware engineer after graduating from the California Institute of Technology in Pasadena, when he and Apple colleague Jack Smith hit upon the concept of web-based email out of frustration at being unable to check their company email away from the office.

"It solved a real world problem: The killer idea was to make email available on the web," Bhatia tells CNN.

"That was brand new in 1995 when we had the idea. In July 1996 we launched the service and then just hit a fantastic curve. When I started it was hard. Every dollar that was spent had to be accounted for. We were willing to go the next five or six years to make that successful. We were very fortunate that within a span of two years we saw personal reward from that experience."

That was also due in part to Bhatia's faith in his product. When Microsoft came calling with an offer of $200 million, Bhatia told them Hotmail would be bigger than McDonald's, finally selling for double the original offer.

Huge opportunity

"I knew this was a huge, huge opportunity," he says. "I knew we had identified a tiger we were riding on. That optimism propelled me to negotiate on the basis of real numbers."

After Hotmail's success, Bhatia says he launched Arzoo partly due to the restlessness of financial and professional security and partly to see if he could do it again.

"People were asking me what's next," he explains. "It was partly peer pressure too. I didn't want to say 'I'm retired.' Arzoo went through a lot of ups and downs. And then I had to shut it down. The primary reason really was that I could not hire good quality people. It was the toughest time and the wrong time to start a company.

But Bhatia says Arzoo's failure has made him a better entrepreneur.

"I've re-visited it and re-evaluated it a number of times. What mistakes I've made, where I went wrong, what would I do differently. I was successful the first time around, but I also got extremely lucky.

"The last couple of years I was quite depressed because I didn't have an idea or a vision or a goal that would be world-beating like Hotmail. I often wondered if that would be the only success that I would have at the end of my life.

"There are good ideas and there are bad ideas. Some times you might pursue a bad idea and if you find out it's bad, so what, move onto the next one. That's the life of an entrepreneur.

"What gives me satisfaction is that I now know I will do many more Hotmail-like companies. That was just the first one. I can't tell you when it will be, whether it's this year, next year or in 10 years. I think the soul of an entrepreneur is to keep trying until you find the successful idea."

In keeping with that spirit, Bhatia has already moved on from Arzoo, returning home to India to develop a voicemail system for cell phones.

"I would rather not be known as Mr Hotmail anymore," he says. "What is in the past is over. Now I'm looking for the next big thing."


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