In the late 90's, two 27 year olds built and sold Hotmail for $400 million.

The craziest part?

They raised only $300k and were acquired in under 18 months.

Here’s how they did it

1/ Sabeer Bhatia and Jack Smith met while working at Apple in the early 90's.

Both smart engineers, the two immediately hit it off.

A few years later, they decided to start a company together.

2/ Their first idea was not that exciting.

Even so, they landed a meeting with Tim Draper and Steve Jurvetson, two of the top VCs in The Valley.

Unimpressed with their original pitch, Jurvetson asked if they had any other ideas.

3/ The two founders then proposed a web-based email service that would be free to users.

They would call it HoTMaiL (the uppercase letters spelling out HTML).

Draper and Jurvetson loved it.

The concept was novel and had huge potential.

They decided to put in $150k.

4/ One big question though - how would they market it?

Sabeer wanted to run billboards on Highway 101 and get TV ads.

The problem?

Way too expensive.

5/ Draper then threw out the idea of emailing everyone on the internet.

Jack thought that was spammy.

After going back and forth, Draper made a suggestion that changed the entire trajectory of the company.

6/ He asked, what if you put a message below each user’s email signature that says:

“P.S. I love you. Get your free email at Hotmail.”

This would make every user a part of their salesforce and turn each email into an advertisement for their product.

7/ At first, the two founders were reluctant.

But Draper persisted.

He had studied Tupperware in business school and knew how effective customers could be in selling your own products for you.

Eventually the founders said they'd give it a try.

8/ Shortly after, Hotmail's growth exploded.

Within 6 months, they had 1 million users.

5 weeks after that, users doubled again.

Sabeer sent an email to his friend in India, and in less than 3 weeks, they had over 100k users in the country.

9/ Hotmail became the fastest growing consumer product of all time.

In December 1997, just 18 months after launch, Hotmail sold to Microsoft for $400 million.

Jack Smith and Sabeer Bhatia, only 28 years old at the time, ended up making hundreds of millions of dollars.

10/ And that one little idea by Tim Draper changed everything for Silicon Valley.

Even today, you can see that same strategy still being used.

11/ Superhuman automatically adds "Sent with Superhuman" at the bottom of all of their emails.

Apple inserts "Sent from my iPhone".

And services like Calendly, Typeform, LinkedIn, and Zoom all use similar viral loops in their product marketing.

12/ So what are the lessons behind all of this?

1) Your customers can be your best salespeople.

2) Referrals are an incredibly powerful marketing tool.

3) Don't be afraid to test new marketing tactics.

4) Make a great product people love and want to share.

This thread was inspired by @JoePompliano who somehow pumps one of these out each day.

Definitely worth a follow if you're interested in sports & business!