How 3 years in I finally paid to Evernote

Why Evernote’s most valuable asset is users’ attention

My experience using Evernote is an illustration of something more fundamental than a single use case. I registered back in Sep 16 2010, but only started actively using it about a year and a half ago. At the moment Evernote is my lightweight text editor, a project management tool, a planning tool, the place where I store the ideas for startups or future essays, insightful realizations and quotes, scans of business cards, and just about anything textual.

Despite being an active Evernote user, I haven’t paid a single dime to the Redwood City based 5.5-year startup [1]. There were no reasons for me to become a Premium user. The free version of Evernote on Mac, iPad and iPhone perfectly fulfilled 100% of my needs. In fact, Evernote is one of those great examples of software products whose free version is not a crippled one. They are not forcing you to pay with some clever, but unfaithful tactics from behavioral economics. They are just providing a great product [2].

The first time I paid to Evernote was last December when following my friend’s recommendation I got $428.10 worth of goods [3] from Evernote Market. Serendipitously, several days later I watched Phil Libin’s interview at LeWeb Paris 2013 where he announced that 51% of all revenue on Evernote Market comes from the users who never paid before [4]. There are millions of people who have been using Evernote for years, but never had a practical reason to subscribe to Evernote Premium. In fact, quite a few users paid just out of gratitude, not because they needed more space or searching inside PDFs. Investors told Phil Libin that he should forget about the users who haven’t gone premium after using Evernote for 2-3 years. But Phil strongly believed that it was nothing to do with the users. They as the company were not delivering the services worth paying for. However, most importantly, Evernote had something way more valuable — users’ attention. And users’ attention is one step upstream from revenues [5]. Evernote users were pouring their souls into these notes, becoming more and more dependent on the product.

Looks like by introducing their third source [5.5] of revenue Evernote is finally starting to figure out how to convert this attention into something more liquid. It took Evernote Premium 16 months to get $1M in revenue, it took 5 months to get there for Evernote Business whereas Evernote Market reached the same milestone in just a month [6].

It’s awesome if you have money in the bank as well as investors’ support to afford this long-term Jeff Bezos style approach. I’m all for ‘velocity to $1’ [7], but if you can afford the long game, don’t hurry to monetize using some cheap tactics. Build a great product which captures human imagination and attention. Everything else will follow.

Notes
[1] They are on their 5.5% mark to become the 100 year startup, as Phil Libin likes to say.
[2] For some approximation of ‘great’ at least. Syncing my notes across devices rarely worked seamlessly. It’s getting better though.
[3] Two dark gray fellows to be precise: abrAsus triangle commuter bag and Côte&Ciel rhine flat backpack.
[4] 41% from free users of Evernote and 11% from people who just signed up.
[5] Using Paul Graham’s phrase from ‘Cities and and Ambition’ here.
[5.5] Where these sources are mutually reenforcing: the success in one (say, Premium) beautifully benefits the other two (Business and Market).
[6] Margins here are obviously different, but that’s beyond our discussion.
[7] One of Noah Kagan’s techniques when validating your business is focusing on how to get that first dollar.

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