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Evernote, one of the biggest and most ambitious products in tech history. 225 million users, hundreds of millions in funding, and a goal to pass 1 billion users and become a 100year startup. But now, no one uses it or even remembers it. What happened to Evernote? Think about how you take notes. You open your phone, write it down or take a picture. Before the smartphone, it was pretty chaotic. Everything you wanted to remember, shopping, errands, and address, you wrote it down or just had to remember. Some people would bring a physical notebook to do so. And if you had to keep receipts for reimbursement, like gas, you literally had to hold on to those receipts. Then you'd lose them or couldn't find which notebook they
were in. That's the problem Steven Pachikov wanted to solve. Patchikov had spent years building handwriting recognition software technology that ended up in pretty much every tablet and stylus device. If software could recognize handwriting, why stop there? Why not build something that could recognize everything? Then in 2008, after 6 years of building and prototyping, he had Evernote. Evernote was designed as a kind of brain backup. Once installed, you could store anything. Business cards, receipts, handwritten notes, name tags, and the software would make them searchable. You could even take photos without text, and Evernote would tag them by context and
location. Your phone can do this today, but this was 2008. Being able to search receipts, handwritten notes, even photos. This was unbelievable. This was a gamecher. Patchikov understood another quiet fear in business. forgetting names. If you didn't grab someone's business card, networking was extremely difficult. So, just scribble down their name and number and search for it with Evernote. I really like the concept of endless tape. And for many years, I was looking for some suitable database to conveniently record all sorts of memos, jokes, notes, tasks, whatever. This quest has become one of the prerequisites for the birth of the Evernote concept. Even though Evernote was invite only at the time, demand was
growing quickly. So on June 24th, 2008, Evernote officially launched as a public cloud-based application. And oh boy, was it growing. By the end of that year, it had over 500,000 users, 14 million notes, and multiple platforms, including a strong mobile version. But there's another reason Evernote was taking off. To find out, we need to briefly step back to the most important change in Evernote's history. In May 2007, Pachikov stepped down and handed control to Phil Lieben, believing he would be the better CEO. Lieben pushed for the premium model. He wanted everyone using Evernote, and this gave them the best chance of that. We don't care if you pay. We just want you to stay around and
keep using it and get all your friends to use it. The longer you use the product, the more likely you are to fall in love with it. and sooner or later you'll be happy to pay for it. And he was right. Within a year of launch, Evernote had been downloaded 1.7 million times on desktop alone with over 1 million active users. Evernote was exploding, but Liven had much bigger plans for Evernote. In the meantime, Evernote raised $9 million from angel investors and began preparing for its first major venture round, something that was far from easy at the time. But there was one other factor driving this growth, timing. Evernote launched alongside the rise of the iPhone, the best device to showcase Evernote's
power. By 2010, Evernote was available on Windows, Mac, iPhone, and Blackberry with over 3 million users. And by the end of 2011, Evernote was even profitable. Annual sales were 16 million. It was the 2011 company of the year. It then rose to 80 million users and raised $250 million. Evernote was now worth 1 billion. Everything was going great. But here's where things get a bit weird. Phil Iben had a massive vision for this company. So much ambition, in fact, that it would eventually cause Evernote's downfall. If you're any kind of busy professional or freelancer, you know the to-do list never gets shorter. There's always another report, another presentation, and the bigger stuff keeps getting delayed because you're buried in everything else. What if you could
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description below. Thank you to Gens Park for sponsoring this video. Evernote wasn't the first startup Phil Libin had run. It was his third, but this time he was determined to make it his last. Not just as a successful company, but as a lifelong startup. Our goal is to build a 100year startup. We're about 4 and 1/2 years into that. 4 1/2% done. He also said the team had no exit strategy, meaning no plans to sell to a bigger company as many startups do. They had big plans for an IPO and a vision of a billion users. Lebanon had a lot of vision for the world of tech as well. The line between consumer and business is completely fading. In fact, I think that five years from now, there will be
no such thing as a successful enterprise uh software company that's not also a successful consumer software company or even product company because I think like modern knowledge workers are going to demand the same quality experience everywhere in their lives and so it's the same people who use Evernote in their personal lives and who use it at work. Keep these claims in mind because they'll be important later. With Liban's ambition, Evernote began to expand a lot. Being a 100-year startup meant constantly launching or acquiring new productivity software. And launch they did. First Evernote Sketch, a visual note app. Then Pen Ultimate, a popular handwriting app. Then came Evernote
trunk, an ecosystem connecting over 200 third party apps. So what's the problem? Well, Evernote was expanding out wide, but not deep. Soon, it felt like anything you can imagine had an Evernote version. From Evernote food to Evernote Hello to Evernote work chat to Evernote Business, Evernote was no longer just a note-taking app. Somehow it was trying to become a lifestyle brand. Even though Evernote had over a million paying customers at the time, the cracks were forming. Every expansion and every acquisition meant more hiring, more scaling, more expenses, more need for revenue. a hungrier Evernote. Which brings us to a flaw in Liven's plan.
Many users just weren't upgrading to premium because they didn't have to. So, in 2016, the company restricted the free version while raising prices for paid plans. The economics of Evernote didn't make sense until this point, as most users had no real incentive to move to premium subscription. Users weren't too happy, especially those who had years of memories now heavily restricted. Though, there were many more problems. With Evernote growing wider, execution quality was lagging. Bugs piled up, updates stagnated, and marketing seemed to outweigh product development. Users flooded Evernote's forms with complaints. Editing notes on the web is painful. If I paste text, the screen jumps back to the top. If I paste a
list, it gets indented with a blank top line. If I try to delete the blank line, it deletes what's before it. If you have a developer at Evernote tried to write a simple article in the editor, they will find how subpar the editor is. And it's so obvious the editor is so behind in functionality. They could fix it if they wanted to. Heck, even the editor in this form is way better than in the app. But it gets worse. One change pushed users from annoyed to angry. To improve its machine learning, Evernote changed its privacy policy. It granted select employees access to users own notes. And to make it worse, you could not opt out. Loved using Evernote.
Sorry, their new privacy policy means I'll be moving my notes somewhere else. They ain't for engineers to pick through. Evernote went into damage control. After receiving a lot of customer feedback expressing concerns about our upcoming privacy policy changes over the past few days, Evernote is reaffirming its commitment to keep privacy at the center of what we do. But the damage was done. The 100-year startup was looking a bit shaky. And unfortunately, it was about to get worse. While Evernote had been stumbling, their competitors had been working hard to make them obsolete. Evernote might have faded away, but we're still growing. We're trying to reach 1 million subscribers. So, if you could help us out, it would mean a lot.
You've probably been thinking something throughout this video. Evernote basically does what Google Keep or Apple Photos does, and you're right. Search for a word like dog or grandma in your photos and it should be pretty accurate. Even receipts or texts, most apps can handle that. It's not just photos either. Pretty much everything Evernote does has a better competitor. Simple note, Apple Notes, Notion, Microsoft OneNote, Joplin, Obsidian, the list goes on and on. Also, most had little constraint on users who don't pay a subscription. Microsoft's OneNote went as far as introducing a data migration tool for Windows users wanting to make the switch. Were these apps better?
Maybe. They lacked some features Evernote had, but they were better in the ways that mattered. Most of them were simpler, cheaper, easier to use, and more reliable. And this was a huge problem for Evernote, which was still having all kinds of issues. By the mid to late 2010s, Evernote was openly restructuring, laying off staff, and replacing leadership. Liven, the architect of the 100-year startup vision, stepped down as CEO in 2015 and left the company entirely in 2016. 2 years later, it was even more dramatic. The CTO, CFO, CPO, and head of HR all exited within 2 weeks. And this was right as Evernote was trying to secure more funding. Then in 2018 they changed CEOs again. Evernote was collapsing and there were multiple
reasons. The new CEO Chris O'Neal said, "We committed too many resources too quickly. We built up areas of our business in ways that have proven to be inefficient going forward. We are streamlining certain functions like sales so we can continue to speed up and scale others like product development and engineering." He was right, but it was too late. Evernote laid off 15% of its staff, which brings us back to Libin's grand vision for tech. He believed the line between business and consumer products would disappear, but he was only half right. Evernote's business model was focused on consumer first growth, relying heavily on popularity and a strong public image. It
worked, but big tech companies like Google and Microsoft sold directly to businesses and made much more money, better margins, and a better conversion rate. In a 2019 survey asking how disappointed would you be if you could no longer use Evernote, the product scored just 23% with only 64 out of 277 respondents saying they would be very disappointed. Only 21% reported using it every day while over 75 respondents used it just once per month. Evernote was supposed to be a daily product. This was bad. Yet by this point, Evernote had reached 225 million users. a lot, but the highest it would ever go. Evernote began to fade into irrelevance. Users left, downloads declined, then it was acquired. The app is still around. Some
people use it, but it's now just a shell of its former self. Things haven't improved much either. Evernote wasn't killed by any one single app. They had just lost focus. They pivoted left and right, adding new features and new toys that most people didn't care about. They went wide and shallow instead of narrow and deep. While they were distracted, they neglected their core product and customers. So, those customers went elsewhere. Not only that, they bet on consumer revenue and thought they could win both the business and consumer markets. And they didn't. The lines were blurred, but not as much as Liven thought. Instead of building a product that's secure, reliable, and fast, Evernote has spread itself too thin,
trying to build out its install base across as many platforms as possible in an attempt to fend off its inevitable competition. It doesn't matter if your product is first or even the best. Dominance is temporary. You have to keep winning a customer over and over with less friction than anyone else. Another company which exploded then seemingly disappeared was Wish.com. Their ads were everywhere and they even got an offer from Bezos himself. The story of Wish is even wilder. Click here to learn the rest of the story. But until then, I'm Hari and I'll see you guys on the next one.
