The Unknown Story of How Hotmail Grew to 12 Million Users in 1.5 Years
By Daniel Murray
|Let’s go wayyyyy back. |
Back to the birth of viral marketing… 1996.
I was busy building Star Wars lego sets, Titanic was running the box office, and Hotmail invented what it means to “go viral”. Yes, Hotmail.
|Today’s lesson is all about how Hotmail grew to 12 million users in 18 months, thanks to their ingenious use of viral loops. |
(Add that to your notes, there will be a vocab quiz on Thursday.)
In 1996, email was as cutting edge as AI is in 2023. But, there were limitations.
|Email was only used by university students, corporate employees, and anyone else with an ISP-provided email ID. (ISP = Internet service provider, ex: Gmail) |
Hotmail gave the general public access to email with 2MB of storage FOR FREE. Completely revolutionizing what email was.
You now could send an email from any computer in the world.
But, you aren’t here to send emails (unless you reply back to this to say hi), you’re here to learn about how they marketed to the masses, for FREE.
Within 20 days of launching, there were 20,000 users. A great start. But, that’s all it was.
|Founders, Jack Smith (left) and Sabeer Bhatia (right) met with investors and were challenged with acquiring new users with absolutely no budget. |
You know what they say, pressure bursts pipes or it creates a new way to market.
So Hotmail added 10 words to the end of EVERY email sent that read, “PS: I love you. Get your free email at Hotmail.”
And the first ever viral loop in business was created.
|WTF is a viral loop? |
It’s a phenomenon (big word) when a business provides a product that is valuable in the eyes of users, that they go out of their way to share it with others.
A successful viral loop is word of mouth marketing at scale.
Hotmail indirectly turned all of their users into brand advocates. Who each time they sent an email were advertising Hotmail’s product for them.
|They even made it a step easier. |
Users didn’t have to go out of their way to share the product. Instead they just had to use the product and the message was spread.
Each PS was linked back to Hotmail’s website where you could sign up for a free account and clearly communicated their value prop:
1) Hotmail is free
2) Anyone can have an account
3) The brand is more approachable than other products
Within 1.5 years, Hotmail reached 12 million users and Microsoft came knocking on the door with a duffle bag with $400 million in it.
|Ok, not literally but it sounded cooler when I wrote it like that. “Microsoft bought Hotmail for $400 million after their rapid ascent.” |
See, not as dramatic.
Hotmail’s PS altered the course of Hotmail and the course of marketing in the United States, but didn’t alter the fact that I only use my Hotmail for junk mail now .