The Rise and Fall of Evernote

The Failed Growth Strategies that led to a Death Spiral

Founded in 2004, Evernote was one of the first companies to ride the wave of smartphone adoption, however with a disappointing IPO, cycling through 4 CEO’s, many rounds of playoffs, 3 office closings - tech blogs in 2019 declared the company was in a “death spiral.”

Evernote’s biggest struggles (from 2011-2015) demonstrated a harsher truth - for many startups, failure rarely happens abruptly. After early momentum dies, the missteps and bad press accumulate until a company enters a slow and difficult stretch.

Learning from failure is one of the best ways to learn. In this thread, we’ll take a look at some of Evernote’s most costly growth mistakes to ensure you avoid making them yourself.

Failure #1: Product Stagnation

Evernote tried to build a product for everyone, providing experiences core users didn’t want or care about, leading to a brand identity crisis. They launched standalone products in 2011 including Evernote food, Evernote hello, and even branded notebooks and backpacks.

Early focus on niche products failed and gave the market a clear understanding of what not to do when building a note-taking app.

It pulled the focus away from their core value proposition - syncing seamlessly across devices. This drove down user engagement because their efforts weren’t focussed. Instead of constantly improving the core features of their app that users cared about the most, they spent too much time launching products with little impact. While this helped them increase revenues and growth in the short term, the choice to not heavily focus on product development later came back to haunt them.

Their unfocussed efforts led to stagnated development and unfocused features. Suddenly their core product wasn’t a priority, leading to many errors/bugs and poor user experiences.

With a surplus of VC money, they felt pressured to perform and thought the best thing to do was to focus on building new revenue streams.

Failure 2: Loss of Vision

The company expanded too quickly and in the wrong direction. Everything became a distraction from their core mission - to help people remember everything. The distractions damaged their brand and made no sense to core users who didn’t want these products.

The more the company steered away from their mission, the worse their core product became and the more confused their users and VC investors became as well.

Failure #3: Freemium Acquisition Gone Wrong

Their biggest mistake was waiting too long in the product lifecycle to adjust their pricing model, giving free users a long time to get used to/rely on many free features only to later limit or remove them in their free plan.

They added limits to the number of devices a user can sync to their free plan, increased the price by 40% and added a 60MB upload limit. Users now had their experience drastically hindered after they were long adjusted.

It felt like a slap in the face for Evernotes’ users.

Evernote relied heavily on freemium acquisition instead of product development early on. While their strong freemium acquisition strategy netted them 225M users, they quickly became unhappy and unengaged.

Had Evernote made these changes earlier in their lifecycle, customers would have been trained to expect more changes in their plans.

They chose to push for growth and scale when the quality and state of their product wasn't ready.

Failure #4: Product Market Fit

The biggest problem Evernote has is a lack of product-market fit. In a 2019 survey asking “How disappointed would you be if you could no longer use Evernote?” They received a product-market fit score of 23%, meaning only 64/277 said they would be disappointed.

Evernote was meant to be a daily use product, but daily use only accounted for 21.38% of responses. About once per month is the biggest percentage by far, with just over 75 responses. This means that Evernote is not providing the type of value that customers expect from a note-taking app.

There was a clear disconnect between the value they intended to offer and the value users experienced.

A lot of this can be traced back to their freemium acquisition strategy. While freemium was effective in acquisition, it brought in users who were all over the map with their usage habits. So when Evernote built features to appeal to their non ideal customers, they didn’t capitalize on the diehard fans who really care + are more willing to pay. In fact, they didn’t even have a true understanding of their ICP (ideal customer profile).

Evernote experienced high growth in the beginning and was able to recover from their failures, however their costly mistakes lead the company to many tough years and almost failure.

The company would be in a far better position today had they avoided these costly mistakes

TLDR

  • Early experimentation with niche products failed and dragged the focus away from their core value proposition

  • Lost sight of their mission and core value proposition

  • Relied too heavily on freemium acquisition instead of product development early on, leaving them with unengaged users

  • Tried to build a product that could please everyone instead of building for their ideal customer profile

  • Lacked true product market fit before attempting to scale

Key Learnings

  • Invest the majority of your time and resources into developing/growing your core product/features that your customers care the most about. Only consider building other revenue channels once your core product has product market fit and has been scaled

  • Stay true to your companies mission. All products and initiatives should align with your core mission and the specific value you aim to bring. Steering away from this will lead to lower quality product and an unengaged/confused user base

  • When offering freemium plans, collecting user data/insights is crucial. Ensure you understand how users are using your product, what is most important to them to develop your ideal customer profile to then build around.

  • Actively communicate with your users to ensure your product currently has product market fit, and continuously run surveys to make sure you don’t lose it.

If you enjoyed this thread:

1. Subscribe to my SubStack for a more in depth growth breakdowns

https://thegrowthplaybook.substack.com/welcome

2. Follow me on Twitter @growth_student for a new growth thread like this every week!