"I came up with Hotmail’s viral marketing idea." – Tim Draper
Tim Draper is an extraordinary character by any measure.
Recent photos are almost certain to show him harboring his bright-yellow bitcoin tie. Another famous cliché is a drenched Draper high-fiving students of his Draper University in a swimming pool.
In tech conferences, where we’ve often seen him speak, he’s bound to swashbuckle his way through any debate, flamboyantly defending decentralized finance or enthusiastically taking a non-conformist stance.
His bravado approach to life is perhaps why Draper made the early bets that made his reputation as a shrewd Venture Capitalist with an eye for the disruptive idea.
Draper is credited with investments in Hotmail, Baidu, Skype, Tesla, Bitcoin, and Twitch, among his largest successes. All these companies defied the odds to change an industry or create a new one.
Draper relates in a podcast recorded a couple of years ago that when the Skype Founders told him they would go after the telcos, and cautiously enquired whether he was on board, he told them that it was an even better business proposition.
On the not-so-shiny side, this character trait also led Draper to keep defending Theranos’s Elizabeth Holmes even after her wrongdoing became clear.
The Textbook Case for Viral Marketing
The Hotmail case study is probably the most studied example of a successful viral marketing campaign. Therefore, it’s only fitting that there should be some contention about who came up with it.
We also picked this quote for another reason: add more material to the “Do VCs really add value?” debate.
Hotmail’s viral move – adding a line at the end of every message touting the email service’s free nature – undeniably contributed to its success and Microsoft’s acquisition for $500 million in 1997.
Tim Draper has often said that he came up with the idea, even having to “pound the table to get [the Founders] to do it”.
Other accounts, including one by Hotmail’s Sabeer Bhatia, confirm Draper was supportive of the idea, but that it originated with Bhatia’s co-Founder Jack Smith.
The truth probably lies in the middle: an association of disruptive characters who jointly develop the idea that has huge consequences for their businesses and beyond.
As a result of the Hotmail experience, Draper’s VC firm DFJ is now widely credited as the earliest promoter of “viral marketing”, a Holy Graal most startups are trying to find in their run-up to the Product/Market Fit stage.
🗣 Are there any examples of Viral Marketing that come to mind? What do they have in common?
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