In 2007 Jessica Livingston, a founding partner at Y Combinator, released a book called Founders at Work: Stories of Startups’ Early Days in which she transcribed over thirty extensive interviews with some of Silicon Valleys most notable successes. Included in the book was an interview with Hotmail co-founder Sabeer Bhatia, who detailed the experiences he had raising money for the webmail startup and its subsequent acquisition by Microsoft for a tidy sum of $400 million.
In the interview, Bhatia made some strong accusations regarding early-stage venture fund Draper Fisher Jurvetson (DFJ), stating that DFJ had actively tried to dissuade other VCs from investing in the company (so that they could be the only ones to invest in Hotmail’s funding rounds). He also denied that DFJ’s Tim Draper had come up with the idea of including ‘viral’ taglines at the end of each message inviting new users to join Hotmail, instead attributing the idea to Hotmail co-founder Jack Smith. Today Livingston has written a blog post asserting that some of the statements made by Bhatia are incorrect:
I received evidence yesterday that some of the things Sabeer Bhatia said in his interview in Founders at Work were false. The evidence indicates that (a) Tim Draper rather than Jack Smith had the idea of putting a Hotmail ad at the bottom of emails sent by the service, and (b) that DFJ didn’t disparage Hotmail to other VCs interested in investing.
The corrections are notable for a number of reasons. While Founders At Work may not be a national bestseller, it has become very popular in the startup community (it currently ranks second on Amazon’s list of books in the ‘High-Tech’ category), so Bhatia’s claims may well have impacted DFJ. In the tight-knit Silicon Valley community, reputation is extremely important among VCs and such statements can be damaging, even if the events involved occurred well over a decade ago. The fact that Tim Draper was also apparently responsible for one of the elements that helped make Hotmail massively successful also serves to dispel the myth that most investors’ only contribution is money – clearly, the good ones have far more to offer.
Livingston isn’t at liberty to share the evidence that led her to believe that Bhatia’s statements were false, but the fact that she wrote the blog post indicates that it is extremely compelling (authors don’t take such corrections lightly). It also sounds like Bhatia had previously requested that the statements in question be removed from future editions of the book, though he didn’t indicate that they were untrue (it sounds like his burnt bridges were coming back to haunt him). In a post on a message board, Livingston writes:
Sabeer approved the interview before publication, but after the book was published he asked me to remove those parts if there was a second edition. He didn’t say specifically that the things he said were false, just that they hurt people’s feelings. (Many people in the book cut stuff out of their interviews, but usually because the material was controversial or confidential, not false.) But once I got evidence that what he said was actually false, it seemed appropriate to post a statement about it immediately.
None of the other things people said in interviews were false that I’m aware of.
Since leaving Hotmail, Bhatia has begun a number of other ventures, including Live Documents, an online Microsoft Office clone that doesn’t seem to be going anywhere fast.
You know what would have really sold that book?
If they would have gone into detail with Sabeer Bhatia about how Microsoft got him to dump the Apache hotmail servers for IIS.
They have done the same thing with EVERY company they have acquired at great expense to to each project simply to show people that IIS can be used in a real web success story.
They Bogarted Sea Dragon which was based on the Netscape APIs and made it into Photosynth and forced the developers to refactor all their OpenGL code into DirectX, and all the NS code into IE.
THAT would have been interesting. This is just boring.
There is an interesting story to what you mention – and the background is that Hotmail wasn’t moved to IIS until IIS 5.0 was ready.
For a good 3-4 years there were a large number of FreeBSD servers in Microsoft data centers used for hosting hotmail.
interesting for about .5% of the population
Make it 0.0005%
Either people have extremely short memories or they are blatantly lying. Why should one waste their time reading this – ‘He said, She said’ nonsense, when none of this can be proven?
You know what this reminds me of?
http://valleywa...span-is-a-loser
You know what kind of books I shell big money out for? (besides programming reference books)
Harry Potter. Books are supposed to be fun, entertaining, or at least educational.
This book is a must read. It has so many great stories, even if, like me, you are not a hacker/ geek, just amazing how these founders started and build up their companies. I can only recommend it.
I agree we need to move on and look for opportunities. Focus on mobile banking(in Asia)- yes, banks still run out here and they have been govt controlled for a hundred years and are profitable-intelligent gridding, overhaul of power infra and clean energy. Networks, networks, networks, in new ways. Those revolutions are behind us-new ones beckon and unlike before, we are fighting for our collect solvency.
Chutiya Alert!
Damn man… now I have coffee all over my keyboard
***eyebrows shooting up***
Looks like a good read. We’ll see!
From a Wired article in Dec. 1998. Bhatia was rejected from a lot of other firms, but fortunate for them, DFJ came along.
“One might have presumed that since Sabeer had been rejected by 20 previous VCs and was virtually a nobody, he was grateful to accept Draper Fisher Jurvetson’s $300K on their terms. ‘He’s the most interesting negotiator I’ve ever met,’ Jurvetson says. Tim Draper made the perfectly reasonable offer of retaining 30 percent ownership on a $1 million valuation. Sabeer held out for double that valuation – their cut, 15 percent. The negotiations got nowhere, so Sabeer shrugged and stood up and walked out the door. His only other available option was a $100,000 family-and-friends round that Jack Smith had arranged as a backup – not nearly enough money. ‘If we’d gone that route, Hotmail wouldn’t exist today,’ says Jack.”
“Draper and Jurvetson relented; they called back two days later to accept their 15 percent. And Sabeer and Jack stretched that initial $300,000 all the way to launching the service before needing a second round. On the day they launched, July 4, 1996, the pair wore beepers on their hips to flash the number of subscribers every hour.”
Another indian doing what an indian does.
Let me guess. Abhishek Shrestha is an Indian
actually ’shrestha’ is a nepali name.
i am a nepali.
Who gets the right to typecast here.
Even more tech gossip. Is TC now trying to imitate Valleywag???
MA leaves for few days and all hell breaks loose…
I gather the TC Crew are siding with Draper on “part (a)” of the Hotmail-He-said-She-said…
From Draper’s CB profile:
“His original suggestion to use “viral marketing” in web-based e-mail to geometrically spread an Internet product to its market was instrumental to the successes of Hotmail and YahooMail…“
This is the story I heard about how Hotmail as email came about, from Tim Draper himself at the DFJ offices in the late nineties: never had any reason to question it.
Hotmail came to DFJ with a startup around some Java tools or similar. Pitched to DFJ but didn’t get much interest. As they were leaving, VC says: not really interested in the tools, but we’d be quite interested in looking at the email thing you’ve built to promote them.
And from that insight came Hotmail.
Now, no idea if this is true or apocryphal, but it would answer the ‘who invented Hotmail’ quite nicely.
http://www.wire...&topic_set=
“So in August 1995, Sabeer began shopping around a business plan for a Net-based personal database called JavaSoft.”
They were trying to sell javasoft, a java based DBM clone to VC. The VC said no and wanted the email demo they built with it.
“In order to keep the Hotmail idea under wraps, he and Jack Smith even put the JavaSoft name on the front door of their first tiny office in Fremont, California. ”
They were trying to hide web based email because they thought people would “steal it”.
Today everybody steals everything, and the only way to make it is to have a bigger badder development team than the other guys.
>>his burnt bridges were coming back to haunt him
[Shiver] …curse those ghoulish burnt bridges.
Nobody cares about burnt bridges. Had he come up with a half way decent piece of software instead of Live Documents trying to play catch up with half a dozen top name web office suites, nobody would care.
You could burn the worst bridges and as long as you have the goods, people will buy your crap. Look at Bill Gates.
Its a mixed metaphor. Clearly you missed my point by going off on a tangent with a red herring.
Good of Jessica Livingstone to offer a correction to a statement that was untrue in her work.
Jason – I’m assuming TC will be doing the same regarding the blatant fabrication published about Last.fm ?
See:
http://blog.las...re-full-of-shit
PR BLURB #### Book promo!
Taking a leaf out of Apples PR book, a little controversey is good copy..
100% BS
“While Founders At Work may not be a national bestseller, it has become very popular in the startup community (it currently ranks second on Amazon’s list of books in the ‘High-Tech’ category)…”
Second to the paperback version of the book.
Why is this news two years after the book came out?
adding an ad to an email is not rocket science. inevitable evolution. also the book industry is in dire straits. dee-f-jay does not have an eye for talent. wouldnt know a game changer idea if it slapped them in the face.
http://vator.tv...ion-dollar-idea
StoryLocator.com – tell it
Perhaps Bhatia, thought that no one was going to read Livingston’s book and notice…or maybe he’s just not that smart.
Bad form.
I’ve only read a couple chapters in my copy of this book and this was one of them. When I was reading it, I remember thinking “that’s quite the accusation, he better be able to back it up.” I guess he couldn’t.
http://www.twit...r.com/dankalmar
Agree – that chapter was compelling – I know from writing a book and interviewing CEOs that most give you pablum. The part about putting the link into email was not as interesting. It was surprising to read such virtiol about a venture capital firm’s behavior, from a successful deal outcome. Kudos to the author for setting the record straight, even 2 years late.
Heck,
They both are wrong.
Marty Schoffstall PSINet (early net founder) along with a couple of InterCon folks Gaige Paulsen and Kurt Baumann had the idea of putting links to a mail service call NetShark way back in 91-92. They also kicked around the idea of targeting advertising to email readers by having them setup preferences regarding their interests.
OH YEAH that was done on the East Coast that’s why it’s not considered ground breaking. One other thing… It is also true that it never really took off even though there was the opportunity to have Apple take the project as it’s own email on the net. Such things turn on small things.
But in anycase you can’t claim to have invented something that was already done.
So how about going and interviewing those three guys to see how the whole email as viral was really started.
Often the settlers take the arrows and the farmers make the money, but you have to give the settlers their due.
Wake up and Smell the Coffee…
“had the idea of putting links to a mail service call NetShark way back in 91-92.”
Yeah but they didn’t go anywhere did they? Who cares if they came up with it. I’m sure when Tim Draper suggested it, Tim didn’t go searching for “how to make email viral” on Google and come up with that reference.
It was his insistence on the idea that made Hotmail viral hence Tim Draper should get the credit.
Actually Google wasn’t around in either instance, Tim’s or Marty’s…
So the fact that the first real flight was made somewhere other than in the US shouldn’t count?
Anyway, wasn’t arguing about who should get what, but I wasn’t the one originating that argument. This whole article and the book are responsible for that. So give them credit for that. Not me.
Enjoy… Oh..
Wake up and Smell the Coffee.
If something doesn’t take off then it is not by definition viral. So they can’t make any claims to have invented “viral” email. Maybe they can claim to have invented some sort of hosted email but that is the extent of it.
Agreed.
You know. Someone should do an idea graph. ie; like that silly connection graph widget. But with who wrote down what or said what first and influenced whom.
Wouldn’t surprise me if Tim had conversations with Marty and it got mentioned.
My point is that ideas are dime a dozen and who implements them not who says what should get the credit for DOING it, not for “coming up with it first”. Maybe I am arguing a small point. But I think you and I agree. Success is the measure. Not who said what first.
My point is that every idea out there, with VERY few exceptions, has already been thought of written about etc… That the only REAL credit anyone can take is WHO implements. In this case Tim may have force them to implement it, but they did the work. And their blood and sweat went into it. He just saw value, and was willing to toss dollars at it. That’s talent in and of itself. But don’t confuse money and insight with creativity. That still goes to the guys who sat their butts down and created hotmail…
Though I still believe that MicroSoft WAY over paid for what was supposedly 300K users at the time. I know I personally accounted for 7 of those users, how many other individuals accounted for multiple users? The real total number of users in my opinion was closer to 50K…. So they paid 300M for 50K users. PLEASE oh PLEASE bring those wild and woolly days back. Now you would be lucky to get 1M for 1M users on a site.
Wake up and Smell the Coffee…
Excellent Read .. !
Valencio
http://www.ePostMailer.com
Consider the scenario that it transpired just as Bhatia said it did. But not that Livinston is with Y Combinator having bad blood with VCs is not in her best interest. Hence the ‘correction’ without any supporting evidence.
*I did read the book and it is excellent. Very inspirational and informative book. Great read!
Not read the book yet but looking forward to the bhatia chapter if ANY good!
You can read the book on google books:
http://books.go...result#PPT51,M1
The whole chapter on Levchin and Bhatia are there in their entirety, probably others too.
I think it is very shallow of the author to bring this up after so long just to get some pr. I have read the book and it does not give Draper any bad name, which she is trying to portray now.
I think DFJ needs to come out and at least state a denial. Showing whatever evidence there is would also help.
Really, after reading this before, DFJ was largely blacklisted as a VC source in my mind after reading that chapter, and probably still will be a bit unless something more tangible comes out.
Hello,
I am an entrepreneur and was just about to send DFJ my business plan.
I will now refrain from sending it to them, until they come forward with an official statement about the truth.
I don’t want them to claim they have invented what in fact I have created.
There are plenty of other VCs on Sandhill Road who can look at my plan.
John Q.
Lol.