(2019-06-28) A Unicorn Lost In The Valley Evernote Blows Up The Fail Fast Gospel
Once venture capital investors have sunk in considerable sums, they’re willing to let struggling companies flounder for years on the off chance they hit on something big. “They’re not in it for a break-even or a slight loss or a slight gain,” said Jeffrey Cohen, a bankruptcy lawyer at Lowenstein Sandler. “They’re willing to let it ride a little longer to see whether it explodes.”
It seemed natural for Evernote the Lifestyle Brand to use its hundreds of millions in venture capital to expand in every direction.
When Evernote’s growth began to slow in 2015, though, the company replaced Mr. Libin with Chris O’Neill.
His strategy was to focus Evernote on business software, and compete with more robust enterprise offerings. But Evernote’s product lacked essential features, and the distinct versions of its apps on Windows, iOS and Android systems made collaboration across devices and teams difficult, former employees say. Sales of Evernote’s business product never exceeded 15 percent of revenue, according to two people familiar with the company.
Within a few months of replacing him, Mr. Small calculated that he could not ignore the swell of angry message board posts and “death spiral” headlines. He published an unusually frank blog post aimed at Evernote’s users in January. The company’s foundation was not strong, he wrote, and its products had developed a “unique collection of bugs and undesirable behaviors.”
Evernote has a different, more mature goal. It expects to reach positive cash flow this year, with annual revenue of nearly $100 million. “We used to be a movement,” Mr. Small said. “When we were a movement, we weren’t a business.”
Having survived the “snark phase,” Mr. Small said, Evernote is now poised for a comeback narrative. In his view, tech industry insiders are rooting for the company to pull it off: “People kind of want the elephant to ride again.”