Evernote, the multi-platform app that lets you capture notes, audio and images when you are on the go, and then access those mementos wherever you want to next, has carved out a position as one of the more consistently useful services out there for smartphone consumers. The growing number of users is a testament to that. In June, at the LeWeb conference in London, CEO Phil Libin noted that Evernote now has 34 million users, having reported 25 million as recently as May. And while paying users are a much smaller fraction, they are growing at a similarly strong rate: now they’re at 1.4 million versus 1 million in May.
When Libin was in London I sat down to talk to him about what we might see next from Evernote as the service continues to evolve. The topics ranged to new services in areas like photos and reading annotations; as well as the company’s philosophy on how to finance its service (it’s not about ads but about paying for things you love; a concept that’s come up more recently again, in Dalton Caldwell’s audacious proposal the other day). Evernote is currently at a $1 billion valuation and is one of the stronger candidates for a near-future IPO, and we’re not the only ones who think it’s one to watch.
TC: You mentioned on stage that you thought images were an important part of the kind of data you wanted to associate with Evernote (in your lifetime and beyond storage ambition), but you wouldn’t build the “next Instagram.” What’s your take on social media?
Libin: At Evernote we’re staying away from social in general because there are so many good apps out there already. But also, at Evernote, we’re only building it for you. Everyone is fundamentally private and personal, and only wants to share with a small group.
With photos we’re not interested doing something like Instagram, where you share and publish photos. We are interested in ways of capturing and being smart about information-rich areas in your life. Photos are a part of that.
TC: Chad Hurley made a point about social media on stage at LeWeb: he thinks people are getting tired being constantly proactive with information. Even if it’s not for a social end, is this trend something that you are thinking about at Evernote? Are you looking at how you can create more “automatic” services?
Libin: Yes, definitely. We’re redesigning all the user interfaces for Evernote between now and the end of the year. A whole bunch of stuff in Evernote will be about you but not authored by you. Right now pretty much everything is authored by you and it’s easy to put things into that automatically using our API, but we want to change the UI so that there are sections for content that isn’t typed in by you but is still relevant. We will have specialized areas for things like the quantified self. We think quantified self is something that is going to become mainstream over the next year. That is the kind of thing that should be in Evernote. It’s about you, it’s about your life.
I’d rather chew my own arm off before sharing exercise or other information like that with Facebook friends. In general I think there is a tension between what we want to make public and with whom. Evernote is here for [select] friends and you. There is an underserved market for that.
TC: A lot of startups don’t like talking numbers when they’re still growing. You do. What’s behind your transparency with that?
Libin: We started doing that because I have to know the numbers anyway, and I’m not going to just prepare these for the board; I’m going to get as much use out of them as possible. This could end up biting us in the ass but so far, it’s easier to be transparent than secretive.
Also, the longer term reason is that it’s part of the trust we are building up. We are asking the world to trust us with your memories, and I think it’s important to reciprocate it. We think it’s important to say, if you care about these things, you are not going into this blind. We’ll tell you how we are making a business out of your memories.
TC: Does this make you a Facebook competitor? They are also in the business of storing your memories.
Libin: All of our best partners are competitors. The companies we do the most work with are Apple, Amazon, Facebook, Google and Microsoft.
TC: Amazon? So what role will reading have in Evernote?
Libin: We do all sorts of stuff around the Kindle Fire and apps. As for reading, I think books are like food. Memories are formed while reading books, articles and periodicals, and that is not being adequately represented and captured at this point. I’d love to do something around that. I don’t want Evernote to become the place where you store media, but I do want it to be the place where you capture memories, annotations.
That’s especially important with ebooks. When you are done reading an ebook you cannot put it on your shelf. So your memory of the ebook fades. At least seeing the physical book keeps it fresher, but if it’s just on the ipad or kindle you don’t have that same kind of serendipitous discovery. We are trying to provide that, and it would be very cool. We have specific palns and ideas in this area. Reading is one of those areas where Evernote could be helpful.
TC: You are amassing a lot of data already — and potentially more. Do you have other plans for that beyond personal storage?
Libin: We’re clear about this: we are not a big data company. We may have 34 million users, but we don’t have a big data set; we have 34 million small data sets. Our goal is to be smarter about your data. Our biz model is not about trying to monetize your information. our goal is to build products that you use and fall in love with. Yes, we want to do intelligence around data related to itself but we have no plans for cross-pollination of that data.
The advantage of our business model is that we don’t have to think about money very much; our revenue comes from making great products; not anything else. Those who do have to think about advertising also think about making a great product but they have to look at the other side [the commercial side]. I don’t want to have big thoughts about the business model; just about the product.
TC: So what’s your plan to bring up the number of paying users? They’re currently at about 4 percent of all users.
Libin: We have a very well described plan for this: the longer you use Evernote the more likely you are to pay. The conversion comes with length of time. We don’t need to measure the percentage of paying to free users because we’re adding users quickly so the conversion rate right now goes down. What we really care about is how many people convert after one year, two years and four years. It’s supposed to be plummeting right now. That’s the plan, it’s what we’ve laid out and we’re sticking to it. Plus we haven’t tried to optimize conversions yet at all.
TC: But how do you know that’s what they’ll do? Is it a pattern?
Libin: We have 4.5 years of data that we base it on.
TC: But what drives take-up of a paid offer for someone who has been a free user for so long?
Libin: We’re trying not to have a paywall. In fact for the last couple of years we’ve been making the free version more similar to the premium version [features include more storage, collaboration/sharing options, and faster image processing and search]. We really just want people to keep using it, really focusing on engagement and retention.
We think you will want to pay for the things you like. We want the psychology to flip around because people hate being sold to. We want to flip it around and make you really like the service. What can I get if I buy something. It’s a deliberate process. We’re saying, it’s more important that you stay, than you pay. And the longer you stay the more likely it is that you start paying. Today, people don’t start paying for a particular feature, but because they just have so much of their life in Evernote, and they like it. They look for other stuff to do there. We do have some cool premium features, such as better collaboration, access to previous versions of notes, and better handling of larger documents. In the future we will be adding more.
How do we know people will convert? We don’t. We can predict based on previous behavior, but the big question for us is how are users that we’re getting now different from the users we were getting five years ago? As we get more people from mobile devices, or from Brazil and China, that’s where the unknown factor is from. So far it’s based on projections, and it’s possible that the users we added in 2012 will act differently from our older users.
TC: So later adopters sometimes tend to be slower to pick these things up, and may be lower value?
Libin: So far we haven’t seen that, but it’s entirely possible. But that’s also why we are trying so hard with releasing new apps and focused apps around particular user eperiences. We don’t have to rely on people always figuring out the best uses for Evernote. We can give them the whole experience, so that they know they can do this [record food, etc] with Evernote. If anything that should counteract the deterioration of quality of mainstream users versus early adopters, but it’s too early to tell.
TC: You’ve been making references to lots of new products. When will those be coming out?
Libin: First, we’re planning for a full redesign that will be out in a couple of months. We will be releasing updates, too, but no completely new apps have been finalised for this year. There will be another app announcement cycle before the holidays but they will be about big improvements to existing products.
[photo: LeWeb, flickr]