Mahkameh Yaghmaie
Tannaz Alinaghi
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HistoryThe foundersThe conceptThe capital
The beginning The growth The competitors Options Solution
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Founders (colleague)Sabeer Bhatia Jack smith
Initial goalWeb-based DB: JavaSoft
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Full time workers The need to set aside some extra hours
outside the workday Difficulties in communication Web was just a directory of information The idea of a web-based communication
tool
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No ISP or email provider subscription Free service Revenue model based on marketing
Provide access to subscribersTrack subscribers’ surfing habitsAllow advertisers to customize advertising
information
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December 1995 Venture capital firm of Draper Fisher
Jurvetson (DFJ) For the purpose of selling a web-based
DB DFJ happened to like the email idea
more DFJ granted $300,000 for 15% of the
company
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DFJ started viral marketing for HotMail Viral marketing happens when users of
a service or product advertise the service or product by simply using it
In hotmail, a message ends with an advertisement directing the recipients to the hotmail registration site
This is not junk-email It is not very different from a banner ad
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Initial marketplacesConsumer marketCorporate marketPackaged web email product with Hotmail’s
software Bhatia decided to focus on the first
marketplace
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Salaries and stock options were used to attract employees
“My greatest accomplishment was not to build the company, but to convince people that this is their company. I showed people how this would ultimately benefit them. . . . We initiated the avalanche.”
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Launch100 subscribers in the first hour100,000 subscribers in a month1 million in less than six months
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Growth issues: Intermittent service outages Junk mails
Solutions Never restricted number of users unlike Juno Implemented a new, highly scalable and
redundant architecture Able to sustain more than 50,000 new users
a day Provided filters for users Automatic control on the mailing behavior of
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“We’re particularly excited about the load balancing design of this architecture, When [users log] on to Hotmail, they get the least busy path to their e-mail, which dramatically enhances their online experience.
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In 1997 over 5 million subscribersSecond largest email provider after AOL
Competitive advantagesNo need to subscribe for a special internet
accessRevenue model based on advertisingGeographic expansionNo limit on the number of new subscribersEasy to subscribe
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Hotmail optionsMerge with a large portal like MSN
Microsoft lacked a free web-based email serviceGo public
Huge competitors like AOL and CompuServe with a huge capital
Remain private Juno and USA.net continued to thrive
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For company survivalDevelop partnership
OrRisk giving away potential profits to the
competitors Accept Microsoft Offer for partnership
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