Development on Gmail began in 2001 by Googler Paul Buchheit, who dabbled in webmail as a college student prior to the existence of Hotmail. Released to the public on April Fool's Day, 2004, the service was initially mistaken as a joke, not least because it launched with a whole gigabyte of storage, which was over 100 times what you would get for free from Hotmail or Yahoo.
The catch at the time was that you could only get in with an invite, which promptly flooded eBay and commanded a premium of more than $100 at one point.
Gmail remained in beta until 2009 when it exited the pre-release phase alongside Google Docs, Calendar and Talk. Today, Gmail provides 15GB of storage to more than a billion users.