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Summary:

Evernote is one of the more understated success stories in Silicon Valley. Almost four years old, the digital clipper-locker service is a poster child for freemium business model and much of the credit goes to its CEO Phil Libin, an underrated Silicon Valley star.

evernotetrunk

Evernote, the digital locker software, is an unlikely success story in Silicon Valley. Last week at the Evernote Trunk Conference, its annual developer lovefest in San Francisco, the company announced that it has around 40 million users. The company had about 25 million users when it announced a $70 million funding round in May 2012. That is some nifty growth.

It doesn’t have the sizzle of companies like Twitter and Instagram. It lacks the presence of Box.net. It makes up all that with a methodical approach to business that has made it a quiet success story. It has steadily grown its sales and it has boosted is user base. It has over 200 employees who are based out of its offices on Highway 101 in the heart of  Silicon Valley. Evernote has its legions of fans that continue to grow despite increased competition from others. And a lot has to do with the company’s CEO – Phil Libin.

Evernote CEO Phil Libin

Libin, at his conference this past Friday said that he wants to have a billion users. That momentary lapse of reason from Libin aside, I remain a fan of Evernote and Libin. The software (and the service) sits on my multitude of devices and browsers — a key reason for its success — and it benefits from what I call outsourcing-not-so-important data from your cortex. If I use Instapaper as my web DVR, then Evernote is my digital research repository.

The Freemium Story

It is the poster child of the post-mobile Freemium company: like MLB and Netflix, it is available on pretty much every platform, making using Evernote frictionless. What Libin and his crew have done right: they have understood that theirs is a service and the more people use it, the more they will pay for it. And in order for getting them to use Evernote more often, they had to create end points such as apps and browser extensions in order to keep growing.

Of course, in this quest for boosting usage, the company has worked hard on attracting developers and rolling out new applications on top of Evernote. I am not sure if I care much for these new add-ons: for me their basic functionality of clip-and-store is still the key. Even the applications on iOS have started to feel bloated. But that is just a minor quibble in what I find is a useful service. (I mean how else would I keep track of dozens of iPad covers I find on the web for a future story. ;-) )

I spent time with Libin when he took over as the CEO of the company – long before the company had raised millions of dollars and had found fawning fans on Sandhill Road. In his forties, Libin is a programmer-turned manager and has a long history in the software business. He came across as a thoughtful fellow with a clear and concise plan. At the Startupnomics conference over the weekend, he shared with the attendees that Evernote had a six year plan and they are focusing on one thing every year.

The Six Year Plan

For instance, the company focused on growth in 2009. In 2010 it was variable cost management. A year later, it was focus on getting people to come back regularly. For 2012 the focus is on getting people to engage more with the service. Next year, the Evernote focus is on converting people to paying customers and then ratcheting up the profit machine.

So far, Evernote is humming along according to plan. The latest engagement boosting technique: a partnership with paper notebook maker Moleskine and launching a Moleskine notebook. Scribble your notes in the note book and use the phone camera to snap pages and load them to Evernote. This is actually more fun than it sounds.

More than the products, Libin has developed a great culture at his company. When I was reading his interview with the New York Times, I was struck by the similarities in our two companies, including  our approach to technology. There is one little thing he said that to me is the sign of a great CEO

The most important baseline skill for any position is communication. We want you to be able to explain what you mean; we want you to be articulate. That cuts out a lot of people, because a lot of people are probably pretty good technically, but if you don’t have excellent communication skills it’s going to be very frustrating for you and for other people. Other than that, then there’s just a core set of skills for the position.

This little insight tells everything about the company – open, clear and concise communication means that you are always managing expectations, another one of Libin’s management philosophies. From those close to Libin say that those two qualities have earned him a lot of room from his investors who know that he is going to come through.

At end of 2012, the company is going to launch Evernote Business with focus on companies big and small. It would obviously allow the company to charge more money and offer more features including the all important: control to the administrators. The company desperately needs to grow its revenue base if it wants to go public. Evernote is rumored to have over a million premium customers. This corporate-market focused products can quickly add to the sales — Evernote for Business is going to be launched in December 2012 and will cost $10 per user per month. All that, is part of Libin’s plan.

  1. Carl Spackler Monday, August 27, 2012

    Great post Om, but the problem is, with all of Phil’s moves, he still can’t figure out how to stabilize their clients. Consistent lockups in Windows, mystical crashes on OSX, and no stability whatsoever on iOS mean this ‘external brain’ is about as stable as a D-list starlet off her medications.

    I’ve been a full time user of Evernote, even before it was ‘Evernote’…ribbon UI on Windows Tablets long time ago, so I’m not just dumping here. I speak from painful experience

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    1. I have to say I disagree. I’m a premium user (for close to 2 years) and access Evernote via OS X and iOS and have found it generally very stable. I had one issue that the support team helped with swiftly; otherwise, it’s been great and I am happy to let non-users know about it.

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    2. Carl

      Thanks for sharing your experience with Evernote. I have personally not had a problem beyond finding that the app is a little too bloated. Admittedly I am on OS X and mostly on iPhone.

      I think you should get in touch with the team and have them deal with this issue. I know they are pretty obsessive about taking care of customers.

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    3. I have also found Evernote and the add-on’s to be very stable. I also go back before it is the product it is today and I absolutely think it is the best – this from a power OneNote user starting in 2003. I am totally over to Evernote.

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    4. I use Evernote every day and rarely have a problem. IPhone occasionally has issues, but I generally think that it’s an iPhone problem rather than an Evernote problem.

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  2. evernote is a great concept, but @ $120 per year I expect apps designed by gods their execution is sadly lacking.

    Yeah I know you don’t have to pay, unless you want offline access on your phone. But no offline data is a deal breaker. I mean what good is that shopping list you just wrote at home when there is no data reception at the store? I’m sure you always have coverage when you want to look or add a note.

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    1. I think you’ll find it’s $45 per year!

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    2. RighteousDork Tuesday, August 28, 2012

      It’s not $120 a year. That sounds like the business plan pricing meant to be used by businesses. A regular user pays $45 a year. I think it’s a steal personally, but that all comes down to individuals and whether they think a service is valuable to them or not.

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    3. $5 a month or $45 a year for individual premium user account. Or it continues to be free for those who don’t want/need more storage space or search capabilities. Totally your choice and a value regardless of what option you select.

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  3. Ouriel Ohayon Monday, August 27, 2012

    I love evernote but i have 2 problems with the service and the business

    1. the iOS app is way to slow. latest improvements are not at the level of such a high rated app2
    2. the free service is so good that i don t even feel the need to pay. Not enough friction points in my view..

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  4. Rajagopalan C * Monday, August 27, 2012

    Both the free and paid versions have worked out fine for me (android and desktop, sans iOS). I have listened to Phil’s Stanford podcast many a times now and completely agree with Om on the “communication” insight. This trait of Phil could take Evernote where it is destined.

    An yes, there is too much juice already in the FREE version to prompt an upgrade. That will have to be another topic altogether.

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  5. I use Evernote on iOS, OSX, Windows, and Android and find it to be a reliable and stable product; it is my primary tool for taking notes in conferences and meetings and for capturing and cataloging my thoughts and general facts about my world.

    I agree with the article that Phil Libin is a great spokesman for his company. I have listened to several recent interviews with Phil Libin (Le Web and TWiT/Triangulation) and find his ideas for running a business and for providing value to customers very compelling and it is this that has as much to do with why I chose to support the company as with the quality and utility of the product.

    I don’t find that their business model fits into the freemium mold very well. They omit very little from the free product (versioning might be about it) and the difference between free and premium shrinks with every new release. Instead, it seems more or less to be the value-for-value model. This might explain why their subscriber percentages rise significantly for customers who have been using the product for three years or more – about the time where the value proposition becomes significant.

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  6. Steve Schofield Tuesday, August 28, 2012

    I was an advocate and keen early adopter of Evernote for exactly the reasons mentioned above. I don’t the company or Phil Libin, which is the crux of the article’s point, but I do have a lot of respect for the way they’ve gone about their business and their products. I also enjoyed listening to Phil’s story on This Week in Startups among appearances elsewhere.

    The problem I found is that after a while, Evernote is just a bucket of nothing or something. The way stuff is stored suffers the same fate as opaque desktop folders – they serve the tendency to file and forget. How often do we really re-visit those clips? I prefer to store information visually – by proximity, colour, shape, size, explicit / implied relationships, groups, clusters. It should be tactile and easy to manipulate.

    What if the content I stored has actually been updated by the source? or if the content creator has new and pertinent information to share? The content is static and thus immediately devalued after I store it. I prefer my information to tell me when there’s updates, to feed my new information and make it easy for me to use and share that information too.

    We started building (a web app initially) to counter these issues – called mysparebrain. I’m not going to pitch it here, wrong time/wrong place, but will say that if any of the issues above annoy you like they do me, then it’s worth giving mysparebrain a look, where we have a very non-minimal MVP… all I’m saying…

    That aside, I do wish Evernote all the best. Great brand, good company, awesome team as far as I can tell.

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    1. Steve

      Thanks for sharing your thoughts about Phil and the company. Hopefully we shall see you back with more of your thoughts on them in the near future.

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  7. Evernote works beautifully with Chrome & Android. I use it all the time now.

    The web clipper with Chrome that captures web pages is incredibly smart.

    I used the free version until my provider (Orange, France) offered me a one year business version.

    Pay for the app? Maybe,

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  8. William James Heathershaw Tuesday, August 28, 2012

    Phil also shined when I met and listened to him speak in Beijing. He is leading one of the very few Silicon Valley based mobile companies that are succeeding in China. Largely, it seems due to his focus on building a global company from onset, not building a company, and later trying to change it to gain users internationally. I’m looking forward to hearing him again at Global Mobile Internet Conference in San Jose.

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  9. I think the biggest challenge to Evernote is the proxy server at work that blocks Evernote. How does it help people at work who are behind the firewalls of paranoid, security-challenged IT departments?

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  10. I have interacted briefly with Phil Libin and I agree wholeheartedly with this article. He is definitely one of the most underrated CEOs in the Valley: his approach is unique but seems to be working really well for the company. Moreover, he epitomizes what I would describe as “a nice guy”, which is surprisingly rare in the Valley. His vision of creating a 100-year company is a very refreshing break from the many serial entrepreneurs.

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    1. Angad

      Many in the valley have similar opinion of him. We need more guys like him.

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