Peter Rothenberg Β· Β· 5 min read

Evernote’s new CEO and the elephant in the room

Evernote CEO Chris O'Neill.

Evernote CEO Chris O’Neill. Photo credit: Evernote.

Evernote’s new CEO Chris O’Neill celebrated his one-year work anniversary last month. He’s a Valley veteran who drove by the Evernote offices on his way to work at Google and still keeps a bottle of wine in his cellar from a summer internship at Wine.com.

Evernote was one of the first so-called unicorns before US$1 billion valuations were being thrown around like confetti. Always one to enjoy a challenge, Chris is stepping into stride as he prepares the elephant – once the champion of the freemium model – for its next stage: profitability.

Tough road

Chris says it has been difficult to see people with passion for Evernote move on or let go of old team members who were no longer a good fit. He wants to reembed a quality obsessed culture and has brought on new management to guide the company to maturity as well as make self-sustainability the top priority.

β€œWorking through transitions is never easy,” he remarks.

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Users talk to Evernote CEO Chris O'Neill

Words of encouragement from users to Chris at an investor conference earlier this year.

β€œThere is also a tension between some of our power users versus the challenge of getting people to engage with the product on a regular basis.” The new focus is less on features and more on Evernote’s core strengths. β€œCompetition is too ferocious in this world to be mediocre at any one thing.”

β€œThe big things are in place,” highlights Chris. β€œBuilding a brand, a company with 200 million registered users – that’s hard.”

Updated playbook

β€œI think Phil’s and the company’s overall strategy was really anchored on remembering things,” says Chris, referencing Phil Libin, Evernote’s CEO from the app’s launch to 2015. β€œAnd there were early attempts to branch into a workspace. Our strategy is a continuation of really delivering on that potential.”

35 percent of Evernote’s users are in Asia.

Future app updates may look to remove distractions and create an environment to get work done. The team has been working on AI, or augmented intelligence as it is referred to internally. β€œAI will hopefully enable Evernote to become a workspace β€˜hub’ – the single place knowledge workers can go to get things done,” explains Ken Inoue, general manager of Asia-Pacific and Japan operations.

This all connects to a larger concept of β€œdeep work” which Evernote is exploring – although Ken and Chris admit it’s not a huge part of strategy yet.

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β€œWhat we do is cool,” says Chris. β€œBut what people do with us is even cooler. It’s far more epic than what we do.” He would like to see more users pass the β€œtoothbrush test” – have people use the app two or more times a day.

β€œThat’s a real struggle. We have a slice that does, but it’s still growing.” Chris looks disappointed. β€œI would love to see companies created, breakthroughs solved, billions of dollars saved because workflows are more creative, less sucky.”

A new billion

Asia will play a growing role in Evernote’s new strategy. Partnerships and device pre-installs in Japan have pushed Evernote to nine million users in the country, or what Ken estimates to be 12 percent of the smartphone population.

β€œWe’d obviously like to penetrate more, but a narrower focus for us is β€˜knowledge workers,’” he says. β€œWe think there is huge growth opportunity in the corporate market.”

That’s why the company will focus more on gaining ground among Japanese companies by using resellers. Those are needed because, as Ken interjects, β€œcorporations in Asia tend to be much more risk averse and conservative in terms of switching to the cloud.”

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With the discontinuation of the Evernote Market and line of physical goods, revenue is now split 80 percent from individual subscriptions and 20 percent from businesses. Ken would like that to be better balanced out.

At the moment, 35 percent of Evernote’s users are from Asia-Pacific, with 10 percent in China and 5 percent in Japan. Half of the company’s top ten money making countries are from the region.

The team has been working on β€˜augmented intelligence,’ as it is referred to internally.

The strategy appears to be working as the company is on its way to being consistently cash-flow positive.

Phil Libin used to famously say that, β€œthe easiest way to get one million people paying is to get one billion people using.” Evernote was supposedly designed to be successful with only one percent of the users converting to premium. Yet, the company has been pinned as the first dead unicorn – and with that title, the dreams of other freemium companies have fallen with it.

Chris doesn’t believe freemium is dead. β€œI think it has a role when you are building and removing friction, especially in the early days,” he says. β€œBut you do need to figure out how to monetize.”

β€œWe worked really hard on this; we should charge for it,” he emphasizes. β€œWe will always have a free layer to our product, but we are always experimenting with how to monetize that is really tied with what users value.”

His billion comes in the form of time. Chris would like to see the collective amount of time spent in the app over a 12-month period to be over one billion hours. The company hit 600 million this June.

I… I feel so alive

If you look at App Annie or Google trends, interest in Evernote has been steadily declining these past few years. New users may be decreasing, but Evernote has ranked around 250 as one of the top grossing apps on the iOS store since 2013.

If Evernote is dying, it has great health care.

It has raised nearly US$300 million. Assuming that user costs have not significantly increased and we use the US$0.25 gross revenue per user revealed in this old Fast Company article, then Evernote is pulling in at least US$50 million per year. If conversation rates are still around three to five percent and we take US$40 per premium user, that number jumps to between US$240 million and US$400 million per year.

The company did lay off 47 people and close three offices at the end of last year, but even at US$50 million in yearly revenue, using a believable 20 times multiple, Evernote still keeps its unicorn status with plenty of runway left. Elephants have been known to live for well over 80 years – so don’t give up on them yet.

β€œNow it’s an executing game,” says Chris. β€œI’ll take that all day long.”

Evernote

Evernote is the place you write free from distraction, collect information, find what you need, and present your ideas to the world.

Location
United States
Founded
2007
Employees
201 – 500
Website
evernote.com
Latest Funding
US$20M / Series E
Hiring
0 positions
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Community Writer

Peter Rothenberg

Peter is the Japan correspondent at Tech in Asia. Before his time at Tech in Asia he ran an EdTech company in Tokyo. He is a fan of the Japanese ecosystem, sports, all types music, and learning.

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