Success Story #1:
Hotmail – From 0 to 30,000,000 in 30 months

MSN Hotmail’s viral marketing success story is practically in the realm of folk lore… actually I guess it is in the realm of Internet folk lore.

Back in 1995, when Sabeer Bhatia and Jack Smith approached the venture capital firm of Draper Fisher & Jervetson with their idea for a free email service, the firm liked the idea but wondered how they would attract members and build a company around it. Today there are more than 30 million active members.

The Hotmail user base grew faster than any media company in history faster than CNN, faster than AOL, even faster than Seinfeld’s audience. Hotmail tripled its size in one year. The current sign-up rate for new memberships often exceeds a million per week.

Tom Draper is the one who actually suggested that they should append an advertising message to every outbound email: “P.S. Get your free email at Hotmail” and called it viral marketing. It was a very bold move at the time. Would users balk at having this automatic addition to the content of their private messages? Hotmail tempered the idea by clearly marking the promotional plug and removing the “P.S.”.

Still, every outbound message conveyed an advertisement and a subtle implied endorsement by the sender. The recipient knew that the sender was a Hotmail user and that this new free email thing seemed to work for them. Each new user became a salesman and the message spread like…well….an extremely contagious virus.

Of course, if Hotmail had been only mediocre and not provided a terrific free email service, no amount of advertising, paid or free, would have turned it into the wildly successful thing it is today. Hotmail’s recipe for success is pretty simple. It delivers the qualities consumers really want in an e-mail service: speed, reliability, ease of use and a rich set of features

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