Evernote CEO Phil Libin

The tech industry as a whole has had a pretty strong year. Mobile devices are everywhere, the apps that run on them are flourishing, and the experience of using the web is becoming more personalized to individual tastes than ever before. And as it turns out, all of these trends have been especially beneficial to Evernote, the company that makes note-taking and personal archiving software.

In terms of user growth alone, 2011 has been a red-letter year for Evernote. The company started the year with 6 million users, and ended it with 20 million users, CEO Phil Libin told me in an interview last week. That’s impressive in itself, but Libin says such growth has only whetted the company’s appetite for more:

“On one hand, I’m really proud of that, and I’m really proud of our team. But on the other hand, 20 million users is a tiny fraction of what our overall goal is. There are still about 7 billion people out there on the planet who aren’t using Evernote. We want to improve everyone’s life, and we won’t be satisfied until we’ve gotten there.”

It seems that Evernote’s success is tied to the fact that its management is concerned with longevity above all else, rather than a near-term sale or IPO. Libin often says that he is building Evernote to be a 100-year company, and according to him this mentality affects everything:

“It really impacts how we approach our pricing, our business model, who we want on our board, who we hire as employees. For a lot of us at Evernote, this is our second or third or fourth company we’ve built in our careers. Those first few companies, maybe, we were in the mindset of doing something for a few years to flip it — sell the business and move on. That mentality is not that interesting to us anymore.”

Evernote is not the only web company that is thinking longer term. According to Libin, this is largely attributable to a recent shift in the venture capital industry (Evernote itself has taken on nearly $100 million in funding, its most recent outside investment being a $50 million Series D round led by Sequoia Capital this past summer). The impact of recent changes in how VC funding rounds are structured that allow early investors and founders to cash out parts of their company holdings before a larger “exit” cannot be understated, Libin says:

“The conventional wisdom used to be that there was no money for early investors or founders until either you sold or went public. That meant that people at startups were strongly discouraged from long-term planning and long-term thinking, because no one had any liquidity until the very end.

What Yuri Milner and Sequoia and other people have done recently is conduct investment rounds that break that model. Now, people can buy and sell their shares: Early investors can get out, founders can make a little bit of money but still stay with the company. I think this separation of liquidity and exit is maybe the most important thing to happen in business in the past decade. It’s what’s made the growth of companies like Facebook and Evernote and Twitter possible.”

However, despite the fact that it plans to be around for more than a century, Evernote still wants to retain the energy of its early startup days. That’s going to be a big focus in 2012, since the company has grown significantly in the past 12 months: Evernote began 2011 with 40 employees, and is closing the year with a staff of 130. Libin says he will direct a lot of his personal attention to fighting off the negative side effects of such growth:

“I have to go on a really active battle against encroaching corporate bureaucracy, and the stupidity that inevitably seeps into companies when they get past 100 people. I need to be on a mission to make sure that we don’t get to the point where we have stupid looking corporate clip art hanging in our offices, that we don’t have unnecessary procedures, that we don’t adopt passive-aggressive policies.

Naturally I’m very hands-off as a CEO — I’m not normally one of those people that obsesses about corporate culture. But now that we’ve hit that 100-person threshold, I feel that I have to be much more conscious of it going into 2012.”

That seems like a worthy goal — albeit a challenging one. But then again, New Year’s resolutions are not meant to be easy.

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It is important to understand that our work takes place in a system. In this case, the system is shifting quickly and is not well understood. Individuals, organizations, states and countries (recall the recent e-G8 meeting in Paris) are all trying to both understand and create reality in the Internet-enabled world.  To be an effective web worker, it is vital that you think about the whole system that you work in, not just the critical dimension of the moment. Here are five dimensions to consider as you think about your own work in this system:

• People. Who are the people that you must engage with? Knowledge, skills, abilities, preferences.
• Organizational process. This includes policies, procedures, workflows, and standard ways of operating.
• Organizational structure. The organization chart/reporting structure that you work within, which is often a good indicator of what an organization thinks is important.
• Technology. Both electronic and physical, on-hand or available.
• Context. The legal environment, your organization’s strategy (early mover, follower, growth, etc.), whether your organization is local/global, etc.

To make effective decisions about your work, understand that you can never change just one thing. There is no such thing as a single silver bullet that will solve a problem. Fredrick Brooks, summarizing the issues in a classic 1986 article, writes, “There is no single development, in either technology or in management technique, that by itself promises even one order of magnitude improvement in productivity, in reliability, in simplicity” (pdf). Even just changing from one email client to another has a human learning curve and may also affect your workflow.

Do a quick mental scan of the five dimensions in your situation. Focus on the two or three that you expect to have the greatest initial impact (this keeps you in tune with another piece of advice: go for small wins rather than stretch goals) and will help you understand how things are working. If you change everything at once it is difficult to track the causes and outcomes.

For California residents, our context has just shifted. The most effective web workers had this possibility on their radar well before receiving the letter from Amazon and were proactive about their options and how the different dimensions were part of those options. For example, they have been lobbying their legislators, hopefully considering multiple dimensions as they thought about how to persuade them: Understanding their particular legislators’ priorities and the organizational process to reach them. For some, moving to a different state may be an option, and again, multiple dimensions should be considered: The human costs of moving, supplier costs of moving, whether the new locale is next in line for a tax change. There will be no one right answer for the web workers affected by this change. The only “right answer” is that for this adjustment, and any other organizational decisions that you must make, you need to consider the entire system as you come to your understanding and choices. You can never change just one thing.

How are you preparing for changes in your working environment, regardless of whether or not you live in California and/or were a member of the Amazon Associate program? What were the dimensions you considered as you thought about the future?

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Over past few months, Yahoo’s destiny has become fodder for headlines and cheap shots including some by myself. What hasn’t really been discussed is the systematic rot that has set into the once proud company. What hasn’t been discussed is that the company isn’t really facing up to the fact that its layers of management have resulted in a state of masterful inactivity, masked perhaps as a culture of consensus. This starts at the top - from the company’s board and senior management down to VP level where people are prone to organizing and attending twenty meetings before deciding the fate of a project.

Some senior managers including the ones who are deserting the company are skillful players in this game of hiding ennui behind grandiose plans and a great future that never happens. Others who have been wishing upon a change had realized the hard way about the futility of it all. Look at some of the public statements by those who have left recently and you will realize that the rot is very deep seated in this company. In past few weeks that has emerged as the single issue many Yahoo employees have discussed with me.

Instead of addressing these issues – Yahoo is finding itself releasing memos to the media, writing letters and announcing yet another reorganization. They should have read the writing on the wall when the vice president exodus began two years ago. But instead, the company played executive version of musical chairs. Sort of how Rome’s rulers were busy reading tarot cards when the empire was collapsing.

Earlier today, Kara Swisher broke the news that Zimbra co-founder Scott Dietzen will become the new Senior VP of communications and community properties. Dietzen is a very capable executive, smart, adroit and understated. He is the right man of the job, and can crack some heads if needed be. But can he succeed in an environment that rewards medocrity. Can he bring about change, or will he leave frustrated (but rich) like some of the other founders such as Stewart Butterfield, co-founder of Flickr who sold their companies to Yahoo.

As part of changes announced today:

Yahoo! is making changes to its technology organization, led by Chief Technology Officer Ari Balogh, to better position the company to execute on its strategic priorities. Principal changes are developing a world-class cloud computing and storage infrastructure; rewiring Yahoo! onto common platforms; and creating a stronger partnership between product and engineering teams.
In order to expand its cloud computing capabilities, the Company will form a Cloud Computing & Data Infrastructure Group, charged with developing a computing infrastructure that balances scalability with cost effectiveness. It will move all consumer-facing platform teams to the Audience Technology Group, led by Venkat Panchapakesan. In addition, it is putting new leadership in place behind Yahoo!’s search group, naming Prabhakar Raghavan to direct search strategy and Tuoc Luong as the interim leader of the search product team. Both Prabhakar and Tuoc will also continue in their roles as the leaders of Yahoo! Research and Search Engineering respectively. In addition, David Ku will lead the Advertising Technology Group within Search.

New CTO Ari Balogh is jazzed about cloud computing and storage. He should be – Yahoo is a big champion of Hadoop, an open source effort that can be immensely disruptive in years to come. Despite that, I don’t buy the spin Yahoo’s PR department put out today. At our Structure 08 event yesterday, Yahoo had very little representation.

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