Tuesday, December 27, 2011

Review: Evernote Business Model

Founder Showcase - Phil Libin Keynote

The Best Product Doesn't Always Win is a total BS. People who tell you this don't want you to succeed. It is true that some great product doesn't win, but given the choice to invest in product vs marketing/logistic/crm, you should put more emphasis on product and could potentially get the other stuff for free.

2 step plan in making revenue

  1. Make an amazingly great product
  2. Charge money for it

Stick with 1 revenue model for startup

  • Premium Subscription (90%). Not because it's biggest, but because it had the most salable growth.
  • Advertising (little money, promote partner product)
  • Technology licensing
  • Schwag (T-shirt, stickers)
  • Giant novelty checks


  • 3 Million Users in 2 years, 8,000 per day
  • Free users grow by 10% per month, paid users grow by 15% ($5/month, $45/year)
  • Lose 50% users on the 1st month, then the rest stays month after month
  • Conversion Rate: 1% (1st Month), 2% (1st Year), 8% (2nd Year)
  • Cost per User: 9 cents, Revenue per User: 25 cents
  • If you haven't reach break (gross margin profitability), the more users you add (scaling) means the faster you run out of money; after break even, the more users you add means more revenue

Freemium Model

  • A great long-term retention rate (don't have to spend money to re-attract users again)
  • Product that increases in value over time
  • Low variable costs

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