How Hotmail founder Sabeer Bhatia plans to start a new online revolution

The man who launched and sold Hotmail during the dotcom years might have another transformative idea up his sleeve. Arabian Business spoke to Sabeer Bhatia about the power of networks
How Hotmail founder Sabeer Bhatia plans to start a new online revolution
By Eddie Taylor
Sat 23 Jun 2018 01:26 PM

A conversation with Sabeer Bhatia is a study in both optimism and enthusiasm.

A 30-minute slot soon turns into 45, which then, just as it is about to reach a conclusion, offers another 15-minute postscript which necessitates the record button being pressed again.

The 49-year-old from Chandigarh in India, who famously founded and then sold dotcom success story Hotmail in the late 1990s, still embodies the irrepressible entrepreneur, with ideas, applications, use cases and predictions of revolution tumbling out of his mouth at breathless speed.

He has plenty to talk about. After his Hotmail successes and the subsequent development of an SMS platform called Jaxtr, he is still trying to harness the latest technologies to unlock human potential.

He has two new projects, in varying degrees of completion, that he is ready to unleash on the MENASA region and which he believes can offer more transformation than even his globe-spanning e-mail server.

The first focuses on one of the latest tech trends, the so-called Internet of Things (IoT), the interconnected network of devices and machines that exchange data of various complexities with each other.

And it’s the more rudimentary end of the information spectrum Bhatia has honed in on, particularly the deployment of devices able to transmit binary, yes-no, on-off, full-empty data to applications that will enable simple but potentially revolutionary processes - like the irrigation needs of farmers in his native India.

“We’re building a new network, like the cellular telephone network only operating at a much lower scale,” he says.

“The problem with smartphones is that they use so much power to access data. Cellular networks consume a lot of power; they are built for speed and bandwidth, not low-power communication.

“Imagine instead,” he continues, “a battery-powered device put into the ground that does a simple job – a parking sensor, say. All it needs to do is to communicate which spots are available. Occupied, not occupied. Yes, no. That’s it.

"We don’t care about the batteries in our phones because we charge them all the time. But a battery in that kind of device has to last 10 years to keep sending that small snippet of data day in, day out. We need a low power, wide area network. And that’s what we’re building.”

He is currently piloting a scheme by which farmers place such smart devices in their fields to tell them when they need to add water – and when they don’t.

Like all transformative ideas, it’s blissfully simple. In his research, he discovered that farmers visit their fields once every two days – so around 180 times a year – and on average walk around four kilometres per round trip.

It’s usually just to check whether the crops need water. An application that uses all the available data for appropriate water use for a select crop and soil conditions will not only help a farmer optimise his yield by as much as 10 percent, but also save him countless days of wasted labour a year.

“Think about it,” he continues, “around 60 percent of the population in India is employed in agriculture. All of the gains in yields from water and fertiliser have already been delivered, so now it’s no longer about more water or more fertiliser but about the right amount delivered at the right time.

"With our network, we will have taken the first step to bringing technology into this field – improving yields, conserving water and reducing chemicals all at the same time.”


India’s farmers could experience yield growth with smart devices, Bhatia says

This isn’t mere altruism, either. This is economics that works for all concerned. There are, for instance, 140 million farms in India and they need to sell two devices to each – that’s a potential for 280 million units. He is already working with an Indian farming cooperative to target more than 55 million farmers, and selling just 14 million devices will make the project profitable.

“That’s five percent of the market,” he says. “That’s real scale… and that’s just India. That’s before we even get to the possibilities of neighbouring countries and the wider region, where there is also a need.

“In terms of the network,” he says, “we need to put in no more than 6,000 base stations to cover the whole of India, and they’re no bigger than the size of a laptop, and three or four antennae. I’m now waiting for adequate levels of funding to roll this out to the whole country.

"I’m talking to investors who are not just interested in a return on their investment but also in sustainability and economic development.”

That’s not the limit of his IOT ambitions, either. It is, he says, just one of 300 possible applications that are ready for deployment – including an RFID, bluetooth-enabled smart safety device for campuses that he is trialling right now at the University of California at San Diego. He also mentions fire detection, gas leaks and smart locks.

“There are these devices collecting data and there needs to be a network that talks to them all to collect it,” he says, hinting at the broadest possible scope for the Internet of Things.

Unlocking the future

Bhatia is a clear believer in the possibilities of technology and how it can help address some of the region’s most pressing challenges.

He is also aware that ensuring the region’s youngsters are full participants in that technology is perhaps just as vital; the MENASA region needs people to develop skillsets in blockchain, artificial intelligence and coding just as much as it needs the technologies themselves.

The second project up his sleeve intends to achieve just that – even if it’s just at the whiteboard stage for now. He’s hoping to tap into the courses and content that are being created in universities in the US – he sits on the board of one, CalTech – and bring them to this part of the world in the form of what he calls “nano-degrees”, two- or three-month courses delivered in partnership with universities or colleges here.


Blockchain, not Bitcoin, is where the crypto revolution lies, Bhatia says

“Everyone wants to learn the best and the latest from Silicon Valley but the educational institutions of today are simply ill-equipped to embrace these new things in real time. I believe that if we come up with smaller versions of a four-year degree with a relevant skillset then we can create an education revolution.

“The majority of the population in India and the Middle East is under 35. The number one issue is employability and even the very best schools are failing their students, failing to find them the relevant jobs. All of the new jobs require retraining.”

The number one issue is employability and even the very best schools are failing their students”

Alongside a group of investors who believe the Bhatia name has considerable equity, he is hoping to launch a programme in India and the UAE.

By tying up companies, he will select the skillsets in which they are most in need and then tailor training courses – in physical locations although webinars are also a possibility – to create workplace-ready employees.

“We can go right down to the basic stuff, too,” he says. “Even to people in rural communities; how to use Excel and Word… how to use Photoshop, how to create a website. Things that make young people employable. That’s the goal.”

Dotcom and crypto craze

One area of new, potentially revolutionary technology that Bhatia is steering clear of – at least for now – is cryptocurrencies.

The decentralised, computer-generated, algorithm-certified means of exchange has dominated headlines in both the financial and tech worlds for the better part of two years now – not least towards the end of 2017 when prices spiked, volumes surged and everyone suddenly thought buying a few Bitcoin or Ripple was a fast-track to early retirement.

For Bhatia, though, it’s a field that practically defines the phrase “too good to be true” and has urged caution from the beginning.

There are these devices collecting data and there needs to be a network that talks to them all to collect it”

“It has certainly caught people’s imagination,” he says, “and it’s become a movement. People are fascinated with anything that is successful and, financially, it has been very rewarding for anyone who has touched them remotely in the last two years. But now we’re getting down to the nitty-gritty. What are they?

“The underlying business model of every cryptocurrency that I have looked at is fraudulent,” he says.

“Cryptocurrencies are nothing more than white papers, a hope for the way the world might be. There is a token called IOTA, which is based on the Internet of Things. But they haven’t sold a single device to anyone. The whole idea is: ‘Oh, in the future, one device will be able to talk to another device and settle a financial transaction between them using blockchain’. That’s the idea. And although it’s never been implemented, it’s worth $15bn? Really? The values are entirely speculative.”

While he is certainly supportive of the potential of blockchain as a means of cheap, instant and democratic cross-border financial settlements, he sides with Warren Buffet in the belief that it will end badly for a lot of investors when they realise there is, in many of these cryptocurrencies, nothing actually there.


The Internet of Things can power smart solutions in the home and across entire communities

He also rejects the oft-cited parallels with the dotcom bubble – of which he was famously a part – in the late 1990s, when billions were ploughed into websites that had no underlying business and ultimately folded, causing a huge sell-off on the markets and wiping out many investors.

“It’s worse,” he says. “The likes of Pets.com and the Books.com were at least versions of e-commerce platforms that are only growing today.  There were missteps back then but, guess what, we’re doing everything online today.

"So, they were right but they were too early, ran out of cash and didn’t have the staying power of an Amazon. Those failures tried to pick a vertical and wanted to be the solution for that segment. Nothing wrong with that.”

In fact, his rejection of cryptocurrencies is, in many ways, based on both his first big idea, Hotmail, and the ones he’s pushing forwards today – and hints at how his plans for his Internet of Things network in India might evolve.


Bhatia wants to educate the MENASA region in the latest ideas from Silicon Valley

“The most successful companies of the last 10-15 years have been networks,” he says. “Facebook, WhatsApp, Instagram, and even Uber is kind of a network. It seems that cryptocurrencies are trying to grow a network and so people buy tokens and try to participate in the growth of that network. But what is the network really doing? The fundamental question of creating value for society is one they carefully dodge.”

From agriculture, development, education and personal safety, that isn’t a question Bhatia is dodging with his new projects. It seems that his defining idea might still be ahead of him.

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