Arzoo fails to make it the ‘hot’mail way

Anshuman Daga

BANGALORE: Indian-born Sabeer Bhatia, co-founder of the hugely popular

Internet e-mail service Hotmail, has joined the ranks of high-tech entrepreneurs

hit by the ‘dotcom’ bust.

In a quiet online burial, Bhatia has announced the closure of Arzoo.com, his

nine-month-old venture that aimed to be a global platform for piecemeal software

projects, matching corporate buyers with moonlighters, part-timers and freelance

experts. Arzoo, named after an Urdu word for "heart's desire",

apparently turned into an unfulfilled wish for the 32-year-old Bhatia.

"Even though our blue-chip beta customers liked our service, they have

postponed their purchasing decision to either later this year or sometime next

year," Bhatia said in a note posted on the Web site. "For a small

company like ours, we cannot survive on promises of future purchase,"

Bhatia said.

Bhatia and co-founder Jack Smith sold Hotmail to Microsoft Corp for $400

million in 1997, triggering entrepreneurial ambitions among Indian knowledge

workers worldwide. Fremont, California-based Arzoo, was partially funded by

Japanese Internet investor Softbank Corp, and its clients included several

global corporations.

Cult figure



The son of an army officer, Bhatia, who did his early schooling in Bangalore,
became a cult figure among Indian entrepreneurs after selling Hotmail to

Microsoft. The balding, bespectacled bachelor turned into a television guide for

would-be entrepreneurs and figured as a judge in a beauty pageant. The

government also put him in an advisory panel on venture capital.

In an interview with Asiaweek last month, Bhatia, generally known for

his enthusiasm, said Arzoo was struggling hard in a market as corporate

customers tightened their purses. Arzoo had more than 2,000 enlisted experts, of

which 30 per cent were based in India.

Bhatia said his new firm had a strong business model but had got the timing

wrong. "Once again, we strongly believe in this model but, unfortunately,

this is just not the right time to introduce such a service to our corporate

partners - all of whom are engaged in what some call a 'ruthless cost-cutting'

exercise", Bhatia said.

Arzoo, which started out as a venture linked to consumer shopping, later

turned to an exchange for software projects, putting experts in a call-centre

like interface for clients. It charged its clients a flat monthly fee linked to

usage and number of questions asked. The technical experts placed rival bids for

their services.

At the firm's launch in Mumbai in September, Bhatia said he hoped to float

the company when it became profitable in two years. Arzoo had competition from

Internet sites like Hellobrain.com, in which experts bid for software projects

and based elance.com, a broader marketplace for freelance services. Apart from

Arzoo, Bhatia also invested in Televoice, an Internet-based messaging service.

(C) Reuters Limited 2001.