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Evernote CEO Phil LibinOn the heels of raising money at $1 billion valuation, we talk with the Evernote CEO about building durable companies and dealing with a bubble economy.
I really welcome to reporters' roundtable clamoring middlemen in San Francisco today our guest is still living who's the CEO of Evernote now you guys who've been watching the show for awhile and -- -- podcast and my -- know that I am. And Evernote -- on just a huge fan of this product and for good reasons -- -- -- writing in it I just think it's a great app. I also greatly enjoyed talking to the live in the CEO because he has a unique perspective on. Running a business he talks about running the 100 -- start -- which despite extremely entertaining. To -- him about. Evernote is in the news courses as you probably knows the company just raised them I think it's an industry is a seventy million dollar funding round which puts it at -- one billion dollar valuation if you do the -- the -- start -- people do. The company -- -- he's joining the billion dollar club of -- there instantly -- billion dollar acquisition. The company itself has been on -- care it's been acquiring other smaller companies building an ecosystem of ways for people to get their notes and documents and pictures and stuff. Into Evernote. Implicated in. If you don't know what Evernote is it's it's this. Hate the -- an application it's a series of applications and -- -- platforms you can think of that. Want to be kind of your external memory system -- external brain as they say. You put your information in and it's really easy to find it later does a great job of organizing search data for you. -- -- -- wanna talk about filled out what it means to be in the billion dollar club. What it means to build a hundred -- start up. As a -- I think he has a unique perspective and very transparent and open way of running a growing rapidly growing start of business so with that I'd like to introduce -- live and who is CEO of -- -- thanks to -- the time I understand during your. During your office is there in Mountain View. I am never in the in the in the headquarters bunker here. And deep under the deep underground undisclosed location up first of all congratulations on raising what. May be your last funding round before you article public is that correct. Maybe not you know we never we never say never when when there's a good opportunity to -- took. Expand our our financial infrastructure so. I wouldn't be surprised if we took more funding at some point over the next two years but -- don't have to. Okay everybody out there has big checks -- or find -- -- and abide by way of warm up I wanna talk about that so you just raise this round you're now in the billion dollar valuation level what does that. Mean -- Evernote for -- -- users. -- -- It's pretty cool I'm I'm pretty happy with I I think what it really means is. That we have the resources to focus arm for the next. Many years and just focus on building the products -- -- wanna build and not really have to worry about anything else so we we did this because we didn't want any distractions -- Frankly don't care whether there's a bubble or not a bubble or what the economy's gonna do over the next few years are we would like to be isolated from that. And have the resources to just build awesome stuff and that's we can do now. -- isolated by from the economy and the bubble yet the economy in the bubble is what has given you this outstanding -- -- square those. Things up for me if you can. Sure well you know about whether there's a bubble or not -- kind of -- year way to think about -- there's a lot of talk about that but but they're always -- rate because I think people. Tend to be a bipolar about the threat everything -- either fantastically great and over inflated or Tola catastrophe -- disaster so. Stuff as either -- bubble Lori you know giant worldwide catastrophic depression. And it's those probably not the only model that makes sense right you can probably somewhere in the middle about so may be rid of bubble if you were not BB donations are. Slightly inflated -- slightly depressed. Really tough to say. Up but -- the important thing is is do you have a real business at the end of the day -- -- -- -- not. Now what's really gonna be valuable as the you have a real business to have a company that is durable. Making money DF could unit economics are making more money we -- get more customers. And that's really what we focus so as long as the fundamentals of the business good. Then that when the economy lets us take additional money in. In order to give us you know another five years or ten years or twenty years of them -- from -- so we don't have to worry about -- where voters are going then than we do it -- happy. While I wanna talk about that because as a as an -- on a big fan of the business and apparently. Of the model is working. You have community of thirty million users of which a little more than one million paying. But if I do the math on that that values each paying user each customer you have -- thousand dollars which is a pretty high per user valuation and I understand that that the free business the free Evernote business is. Well how's that that and other ads in -- but that's not your mainland of business are so this does strike me as a bubble -- as a per user valuation but. Well I think you -- you gotta think about was a valuation means. And and a lot of people -- -- pretty understandable state. Of comparing up you know public company valuations -- donations of a mature. Familiar public company with with start -- private company valuations and in those -- things really just mean different things. So you know when you when you take up a public company was worth a billion dollars. What it means is that you know investors -- a large number of buyers and sellers sort of their average consensus is the current business is worth you know roughly billion dollars. And and and future growth and future -- it's a really discount -- in that. That -- value of a little bit but it's really and a it is really a statement about the current state the business and the reason that that the future growth is discounted. Is because a well you know mature public companies to not to grow as quickly. Up but also because since they're they're they're they're public be tradable. They're fully liquid you have multiple opportunities by itself so if you take a you know and -- public company it's worth a billion dollars now. And it starts doing really well and you think that maybe go to ten billion dollar total you have all the time in the world to keep buying it on its way up from one billion and for quickly growing private company evaluation really mean something pretty different. It doesn't assuming mean that the people think that that -- -- business today a revenue today. If we were publicly traded in were growing is worth -- billion dollars and it does mean that at all people don't think that Evernote business is worth a billion dollars today. But they think there's a reasonable chance that it might be worth ten billion dollars -- -- hundred billion dollars. In five years or ten years. And an -- get evaluation from and so. On it and and that's that -- -- -- -- subtle difference between what a private company evaluation and public company valuation means but it but it's pretty important one I think it's that. I think it's confusing to to compare it to. Well yeah I'm in all you you don't have to answer to it -- the of shareholders just have a couple large institutions and venture funds. Well. There's there's always an infinite number of people you have to answer to you know we have to answer to -- two. All of our users a -- -- employees. All of our investors you know everyone in the media -- But what's this talk about doing business in Silicon Valley today low. I have been asking people because it's the mean these days are we in a bubble and something really distasteful I don't know why people are so afraid of topic Sony and -- do you think we are in a a bubble in Silicon Valley today. I think that we are in a world economy that's that's unlike anything -- existed before for technology. I think that that today is that the best time in the history of the universe -- try to make and meaningful. Consumer technology company. Because of you know because of companies like Apple and what they did with the iPhone and iPad and -- store and because of because of Android and other platforms because of premium economics I think that that there are. It is fundamentally better now to do consumer technology than it's ever been before and tons of new opportunities being created by it. And that's causing you know valuations and and and everything else to go up. Whether valuations it will go down -- -- -- next couple years before they go back up again you know I have no idea things are always cyclical so. I think that I think part of the problems the questioner when you when you say a bubble it means that you think that it's. Grossly overvalued and looked at it and and it'll burst yeah they'll stay deflated for you know hundreds of years and -- -- definitely don't think that's the case. But I'm a hundred is okay that's that's a little bit -- Extreme don't think I mean we've been through this before there was -- 1999. Bubble which popped and now you know. Only I -- do you know it. Isn't that when I was in the the first one I had my first company. First technology company that we started 97 and sold in January 2000 so -- They're pretty lucky -- that timing so. I wrote that -- all the way down -- -- -- red Herring and I was the last second to last Mandalay where the company went completely lack. And that's that's what happens but now here I am you know I survived that and and -- -- in business and kind of the nature of Silicon Valley it's it's boom and bust and the cycles are so incredibly fast so. I I guess what I what I. -- -- -- -- And this time rate without it it is different from from from the ninety ninth 2000 positive cycle because all these companies are making money. As a FaceBook FaceBook has -- is solid and scalable business model Zynga does you know Evernote does not Dropbox does so. It is it have been in my company and in 2000 which we sold. We don't really have -- aperture does a company that we sold it to do the actual business model and a lot of the other inflated valuations -- -- really businesses we were tracking things like. You know eyeballs you know so I noticed I noticed you left out -- -- Grammy in your list of companies only on -- program instead Graham actually racing authority phenomenal opportunity for a and -- -- a I'm a huge fan. -- bumblebee -- chemists and Kevin is a great guy. Actually got to go -- And I went on a glass blowing class of creeks before -- got -- -- I've got pictures of of us me you were blowing your own bubbles to blowing their -- -- is not does not awesome. We -- actually told you told everybody out there and -- is how bubbles start. It it's true it's true and in hot molten. Glass all right so FaceBook Alan and I think and -- thinks they're just so so that I am not American I think it's the Graham had a fantastic opportunity to build a sustainable business. And you know and and -- but you know they chose to go to direction which is which was you know obviously it is an apartment I think that could have been a -- company. Mean yeah I could -- -- not not a billion dollar company anytime soon but. Understandable position just seems like it a very large. Exit or accompaniment so young and a and then not -- the extent that there. That you know Dropbox -- or boxes for example. -- right you just have to look at what that at what it's worth of FaceBook yet so speak as a percentage of Facebook's value. -- -- -- Will -- and this is how. And this is how things trickle down I mean FaceBook is you know it is the darling right now we're -- for the IPO which I think -- -- it's -- -- may eighteenth. What effect is FaceBook having and will the FaceBook IPO have on newer technology companies do you think. Especially some accompanies -- you might be looking at to acquire. You know the market is fairly efficient so I think people have been you know have no in the -- -- was gonna IPO real soon now for. Enough for year -- -- also that's substance it was and priced at -- like -- a shock to anyone so. You know that that -- the the FaceBook IPOs gonna make. You know it's -- make a lot of people some some well -- money I think it'll it'll really establish the industry it'll put a lot more. Public company scrutiny on FaceBook button which will be -- -- -- think that the public markets we'll actually learn you know whether it's a real business which which I think it is. Or not. But ultimately you know this is this has been a long time coming and FaceBook is really innovated and in many ways and -- including you know Facebook's really innovating and how -- you know how date. Pursue the public markets you know they -- -- IP on their time. They eye -- it at a much locked later stage in the company than many technology companies would have later. They're really pretty Smart about how big dumb things and and -- -- in -- tussle. Are you are you taking pages from thereof playbook army told me that. While you want your company to be IPO scale by the end of 2013 you don't plan to actually go public for several years after that here is that -- -- the FaceBook model. Yeah I think so I think I think I am I think FaceBook was one of the first companies that figured out that you can decouple liquidity from exit. Which is a really Smart thing I think before then a lot of a lot of investors lot of BC's a lot of companies completed the quantity and exit the basically it would tell founders. You know -- it doesn't really matter if you being relatively successfully getting traction are you don't get any money until you're out. I -- -- star until you exit and that's stupid. Don't want the the growth of the secondary market's shares post -- second mark and things like that have. Really changed the dynamic for founders of of what are seen as successful pre public companies haven't. -- absolutely and and and I think in a very healthy weight because. Why whose benefit is it for founders to be incentive to get out just so they can you know buy houses and they're just college about -- why do. Who wins byte byte by saying that the only would actually realize value out of something is too -- is to destroy -- to exit distant it was -- -- Our two art I peel prematurely so I think up FaceBook as one of the first companies to have kind of said you know we don't need to go in that direction we can build something -- a great value. We can give some partial liquidity to early shareholders too early founders earlier investors and employees. We can go public and are trying yeah that's that's great they really innovated on that and -- we're very much -- hoping to do the same thing. We don't and and we have been at at a much smaller scale but but we we certainly have been following our -- policy. How should start up founders and founding -- navigate. The state of the market today not just financially and product wise but -- -- quickly because it there -- these gigantic aka acquisitions likens to Graham and then -- billion dollar valuation everybody thinks. I can get a piece of that -- and he and he. Manage effectively -- that. I'm not a leading authority and psychic navigation. -- not I don't know what kind of advice to give about baton. I guess I would say that the most important thing is probably -- it's always been which is that I am. Just build what you love build -- you wanna use. And then don't worry about anything else. Don't worry whether it's a good time -- about time just just do you know starting companies going to be a 510 your investment is gonna be. The hardest thing that you'll be doing to be the most important part of your life for the next five or ten years. Make sure that that's about something that you want to give the next five or ten years of your life to. -- and don't worry about -- you gonna make money just just do something district cared deeply about for that time period. And I think what happens if you do that is that you probably not gonna make any money because the vast majority of businesses fail. And so if you set your expectations where I'm just gonna give -- you know I'm gonna give. My entire life for the next decade working on something and it won't make a single dime out of a ten years later. Out but I'm still gonna do it because it's still the right thing to do it's still what a passion about a slew witnessing that that the change the world that's your expectation. Then. That I think you can be. Because of app stores because of Smartphones because of tablets because of open source infrastructure because of social media. If you make something great that's pretty much all you need to do if you make something great. Everything else comes for free and you can be successful and if you really start worrying about all the other stuff and -- to get distracted to -- the best possible product. You make a crappy product evil win anyway and so you're kind of guaranteed to fail so my advice about bubble about property are starting out as to ignore whether or not. Just do it. But only do something -- passion about not something that you think you know happens to be a good way to make money. A top that -- have my advice ranch owners with the ways to pay to follow fills advice for entrepreneurs here you need to meditate like every day and push these thoughts out of your head. The lottery -- are not holding the golden moderate. That is super important and already it's like if you think that if you're gonna be an -- for -- -- because you think it's a good way of making money. -- -- -- -- We invite you kind of need to be good at math to big announcement are so like you're making that mistake and that two strikes against. I think it's a good -- -- -- here's a good way to it to change the world to -- and examined light to do something meaningful. You know to be excited every morning when you wake up and a he can make money doing that that that's great but -- thought -- certainly not -- -- And we'll be right back with more from the living right after this. -- -- Don't talk about technology at -- -- -- we had about the software aero which Microsoft dominated in then we moved into the web era. Google. The social -- FaceBook the mobile era. Will see. How do we navigate these rapidly. Concentrate our partner these these errors are getting shorter and shorter right now we're moving into the mobile -- which. Upsets completely -- models of certainly Microsoft. Google to a large extent -- to have Android looks like FaceBook does not have the world's best mobile strategy and since two -- You geysers are ever -- And since the -- -- -- billion dollars being you know fairly Smart I think back. Fact I think my opinion that FaceBook increased significantly when -- -- program I think that. The fact that he did it shows a level of maturity and -- in their in their thinking that that's really quite impressive it shows. -- you -- -- shows a level of resisting the not invented here syndrome. And that's that's really impressive and and and and that -- the quake merchants like I I feel better about FaceBook stock and ignited before. On. And an exhibitionist who got to -- was a big sign that they're thinking -- -- -- So you're trying to build a durable a business around. Helping people organize remember store palm and -- information into this. That this system for doing all that you know YouTube acquired. Skit she acquired the business that it clearly -- -- food and hello and most recently just the -- you're your talking about announcing. Acquisition of ultimate and ultimate which is the company with cocoa by a local box looks great -- beautifully -- -- to -- But how do you. What's the -- next Epoch I mean your obviously making a big push into mobile you can see -- in the applications pupil what you think could be next and how. Do businesses like yours -- adapt from these. These shifts in -- of technology. I'm -- -- just statement. On the current Epoch -- -- a bit I think and ultimate. Is actually this fantastic example of why this is the best time in the history of the universe. For. For entrepreneurs actually start something to do a meaningful. Consumer technology copy -- -- -- to read it's it's basically a one man -- basically bad and units and very talented people to help them. But it's basically you know one guy with some help for couple of years making a really great app. Without really worrying too much about all the stuff the -- have to worry about before without worrying too much about that. The channels and the logistics in the marketing in the sales and and and and and the business development. Just making great app which is something that one -- two people can do. And just by itself without without without you know a lot of funding -- without any funding. Becoming I think up and ultimate was the fourth best selling -- an iPad of -- time. And so actually being able to make a significant amount of money independently from the beginning be profitable right away. I do that for a couple years. And then you know sell your company Evernote and and and join us and and and make the next chapter in that together like that's a pretty great story arc. -- storage that is not possible three years ago. But you couldn't have done it three years ago because like what do you mean one -- making an app -- -- gonna do it are people gonna know about it you know where you -- distribute it. Time and that's what's different and and and that repeated 101000 times over is what adds up to two values being hired valuations being higher and you know you wanna characterize -- as a bubble okay well maybe it's a bubble but it's it's it's pretty great it's a bubble of awesome -- what it is the it is. So think that's the current up operatives that is the best time. In the history of the world. To be announced New York now still really that way to make money -- -- you know for everyone like bend there's going to be a thousand people who try it have a great time. But don't actually make any money yet. But it still the best thing to do it. -- -- -- -- -- -- -- -- -- -- Not so what's next what -- think the next time I era could be. Not so I'm really psyched about. Their whole life user experience. I think -- you know I think Apple is taught us this this fantastic -- not that. Easiest -- is the single most important thing and they are the kings of single device user experience kind of device family's experience like going to be super partnering to make a tablet. That has -- -- more wonderful user experience. As a tablet than the iPad very difficult glad to see about people trying -- -- -- very tough to do. The the next stage I think is -- user experience across your whole life that's gonna get 360 degrees -- -- everything that you interact with. Knowing about who you are knowing about or else you're interacting with being Smart about it -- your phone in your tablet and your car in your refrigerator and computer. Everything in -- working together being intelligent. It's all the quantum -- self stuff that's all you know that the the the opera are bracelets in the Nike bracelets in the Smart scales. -- its its its. Everything that you interact with in your life. Working together in a in a hole like user experience. Does this. Correlated with the rise of -- data where you you know that's a super interest in question. And the short answer to that is no. And the slightly longer answer to that is we actually think of ourselves Evernote as being the opposite of -- data but. And Evernote we don't have a -- -- a problem we have thirty million small data problems. -- everything you wouldn't have noticed pride that for you it's -- we have about thirty million users -- -- about thirty million you know medium sized data sets. But we don't try to do anything clever with your data we're gonna monetize your data try to car related to cross reference that -- -- -- other users. But we do try to make the data that's in your -- head as a virtual personal life smarter -- more intelligent just for you. So it is about being more touch with -- data but -- -- these data challenge in the sense of how do we look at the behavior of -- hundred million people to try to figure out. How to target ask them. War you know how -- which ones are most likely to apply for mortgage and house so we can get you know beat -- them into leads for -- direction here. Like that's the data that's that's kind of boring to me. -- -- much -- -- -- what can we do for you for your own benefit with your information but keeping it private keeping it -- for your own benefit. Not for the benefit off you know all of us -- over the partners so its its sides -- -- more about small data for us than the big. Up -- always great talking to give us a hint what's -- next for Evernote for -- media aren't users out there. Well we've got tons of stuff coming out we've been working really hard on making -- sharing and collaboration stuff much better. It's stuff that I personally think it's kind of clunky right now and and then we have they have lots of up lots of stuff to make a lot better. And got major versions of just about all of our apps out -- over the next couple of months. Including we're gonna be coming up on -- one year anniversary of the sketch acquisition. In a few months and a we're hoping to be appropriately dramatic. And have something cool about to announce for scheduling happens. We will look for. Coming from salmon in a million around them forget -- like we don't have the time yeah your right -- ever -- signed the -- when IOS. Two versions Android Blackberry or your windows or windows porch windows windows Mac Windows Phone around -- eight. You know -- nerds anything that anything that's gonna give a great user experience we want to be on it for you know the Prius has a screen. You know we're talking to -- -- -- manufacturers. And we'll -- leave it at that filled live -- is the CEO of Evernote. The company just raise another seven million dollars and as is announcing they that is wired and ultimate -- with an older app and a -- to Evernote for -- and writing. Notes on. This. Phil thanks very much experience.