Hotmail founder Sabeer Bhatia tells ALFRED SIEW that many dot.com ideas were not hot air - just ahead of the times

At the peak of his powers during the dot.com wave, Mr Sabeer Bhatia had only to utter a word of interest and venture capitalists would rush to hear the plans for his next online enterprise.

After all, he was the golden boy who founded a small Web-based e-mail service called Hotmail in 1995 and sold it to Microsoft within two years for US$400 million (S$630 million).

The story goes that he out-bargained the Microsoft executives, sticking to his guns and raising the asking price from US$160 million to a figure that made him an instant millionaire.

Today, despite a failed e-commerce online venture called Arzoo.com (which he has recently revived as a travel portal), he still commands an audience eager to learn lessons from the dot.com rush.

Speaking at the Tanglin Club earlier this month, he said many dot.com business plans were not just hot air - but ahead of their time.

'Some of the business models conceived in the mid-nineties that have failed by 2001 have returned because more reliable networks now have bandwidth that is 10 times faster,' he said at the talk organised by the India Club.

He pointed to PointCast, a technology that used push technology to send news and other information to peoples' desktops. But this clogged up the bandwidth on many a company's network and led to the service being banned in manyoffices.

Today, said Mr Bhatia, things have come full circle, with RSS or Really Simple Syndication feeds pushing customised news to subscribers. The difference, he said, is that networks now can support richer content.

'RSS is nothing but PointCast rebottled in a new protocol.'

Despite setbacks, the entrepreneurial spirit is alive in Silicon Valley for several reasons, pointed out Mr Bhatia, a former employee at Apple Computer.

Chief of which is a risk-taking culture that has been in the DNA of folks in the Valley, he said.

Every decade has seen great companies develop from startups - starting with Hewlett-Packard's expansion in the 1960s to Apple in the 1980s and now Google.

It helps, too, that the infrastructure - including the soft infrastructure - is excellent in California.

'The area is filled with talented people from the two famous universities there - Stanford and Berkeley,' he said.

And from the talent pool, companies can hire 'absolutely the best people'. Mr Bhatia said: 'A small team often has more impact than a large team of mediocre people.'

This view came from the Bangalore whiz kid who first turned up in the United States almost 20 years ago to study engineering.

Eager to make the millions that Yahoo had begun drawing in in the early dot.com days, he and former Apple colleague Jack Smith ventured out from their cushy jobs.

On striking out, they sold Apple clones for a while. Only when the idea came for an e-mail service that was easy to use and widely available did things start to move.

The idea came because firewalls prevented the two budding entrepreneurs from accessing their e-mail messages from work.

'One of the most basic things we have on our desktop was not even easily available on another computer,' recalled Mr Bhatia.

Within six months of its launch, Hotmail signed up a million users. The reason: e-mail messaging suddenly became so much easier - and it was free.

Mr Bhatia, who was 28 when he got the call from Microsoft, said he may have been lucky to have sold his business without having to prove his business case.

'Who knows, if we had hung on, we may not have survived the dot.com bust; but if we did, we would definitely have been bigger.'

Bhatia's basics to business

ON DOT.COM MODELS
'Many dot.com business models were viable, for example, streaming video overthe Net. But the bandwidth was not there, so people could not enjoy the richexperience they can get now with broadband, which is many times faster than theold dial-up modem.'

ON RISK-TAKING
'At the start, we hired 14 people but only three were on the payroll. The restwere working for stock. It's the whole risk-taking thing that has come out ofthe history of Silicon Valley that started with Hewlett-Packard, Fairchild,Apple, Intel, AMD, Yahoo and now Google. Even people providing furniture wouldtake your stock rather than take cash!'

ON DEVELOPING SOFTWARE
'Nine out of 10 software products fail. Other than search, Google has not taken everything with its Google Video, Google Talk and Gmail.'

ON TALENT
'You have to hire absolutely the best people. A small team often has moreimpact than a large team of mediocre people. Good software is written by fouror five people.'

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