Online note sharing service Evernote’s latest product, Evernote Business, has officially landed in Australia and we talk to the company's new COO, Ken Gullicksen about what the new app offers to businesses, why platform experience always trumps consistency and Evernote's unique freemium model.
Supratim Adhikari: With 70 per cent of Evernote users in countries outside of the United States, how big a factor is that when it comes to designing and rolling out a new product like Evernote Business?
Ken Gullicksen: That’s right a lot of our business is outside the US but Evernote and Evernote Business are both very horizontal. There are certainly differences in use cases and how we help make it relevant to people in their business environment but the actual technical features don’t tend to have different demands.
We are rolling out Evernote Business differently than we typically roll out products. Usually we just turn it on, it’s instant and with a worldwide availability.
SA: It’s been a far more graduated process with Evernote Business hasn’t it?
KG: It has been a graduated process and that’s really because we are setting an expectation of business class support. Because when we go to a country we want to have support during their business hours and also have language support available.
SA: Targeting the Australian SME market is a no brainer for you guys but why would people want to pay for Evernote Business when they are happy with the existing product?
KG: That’s the reason why we hold events where we get to talk to our users and I guess in a way we are our own best competition. I mean, Evernote is quite good and used heavily in business but some of the things we have brought forward with Evernote Business are very important to a lot of business. Some will stick with Evernote as is and we are okay with that but there are some challenges that Evernote Business is built to tackle.
For example, the issue of data continuity and ownership is an important one. In every organisation, big or small, people leave and there is a flow of employees in and out and you want continuity of that data and you want to make it easily accessible and relevant to everybody in the organisation. Those are the features that we have built into Evernote Business. So there’s a lot of power in that and it makes Evernote Business very useful in the enterprise context. Most business will appreciate that, however, there will always be some who will have a relatively simple use case and will continue to use Evernote but that’s great too.
SA: So is Evernote Business designed to give some control back into the hands of the IT admin?
KG: We don’t necessarily see it through that lens but the direction of innovation has certainly been reversed. It used to be that businesses would be the adopters for expensive technology and then over time it would get cheaper and move into the consumer space. Now innovation is happening in the consumer space and the inspiration that we draw for our products often comes from consumer companies and we then bring it into the enterprise space.
Why should business software be ugly? Why shouldn’t it be beautiful and usable like consumer software?
We very much focus on the individual user and delivering a great experience for them but we are also mindful that we answer the needs of the organisation as well. In many cases, the IT guys do want to have some controls, custody of data, some user administration and the ability to reassign things. So it’s important to address these needs but you have to do it in the right order. First you have to start with a great user experience and great value for the end user and then once you have figured that out, then you have to give the IT guys or the owner the tools that they need as well.
Where enterprise software went wrong was that in the beginning all the focus was on the requirements on the IT side and the end user was just an afterthought and that led to a lot less usable and beautiful software.
SA: Evernote is a great collaborative tool but there is no functionality for simultaneous editing. Is that a deliberate move on your part?
KG: Yes, we don’t address the use case directly inside Evernote. There is a need for that but what we do internally is that we use other products that we link into Evernote. For example, we might have a group of product managers who come back from an event and have all these ideas. Naturally, they want to share their ideas, make their lists, prioritise and have an interactive discussion. In this case a simple Google spreadsheet is pretty handy for that but what we can also do is put the link to it in an Evernote note and with it keep all the valuable context as well. The interaction is great in the spreadsheet format but there is a lot of valuable context that stays in Evernote. The Google doc link stays on Evernote as well so we can always revisit that.
The other thing to keep in mind is that when it comes to conferencing features, where we are sharing in real-time, Evernote integrates well with a number of available products. For example, UberConference and Liveminutes are two conferencing services that will integrate with Evernote soon. So, we think the real-time use case is best done in co-operation with services that are really built for the job, with Evernote providing the context and serving as a long-term repository.
SA: What about platforms? How do you deal with users who might want to use the service on devices on different platforms (iOS, Windows, Android)?
KG: Well we made a very clear decision to reject consistency as a requirement, the requirement is excellence on platform.
SA: Is that seen as a negative by some?
KG: It does come up sometime but it’s pretty uncommon. In environments where you don’t control the devices individual employees are using there every one of them is getting a fully optimised Evernote experience for the platform and the IT guys don’t need to worry about that.
SA: Speaking of platforms, are you happy with Windows 8?
KG: We have a great Windows 8 version and it’s always been our strategy to optimise around a platform and embrace their features and do so early. We like Windows 8 as a platform and I think Microsoft has done some very innovative things and we have tried hard to take advantage if that and this is something we have done many, many times. We were the first to move when Chrome came out with an extension framework, we were early to embrace Android and it really all started with the iPhone back in 2008 and when the App Store opened Evernote was one of the first high quality app of any kind and that helped us a lot with users.
SA: Let’s talk a little bit about your freemium model on the consumer side of things.
KG: The model is driven by user trust, we always like to say that it’s more important that the user “stay rather than pay”. When you are putting stuff into Evernote it is by definition important to you and the longer it stays there the more valuable it gets and we don’t want the Evernote experience to feel like a teaser. We certainly don’t want to give users a crippled product and then expect them to pay us to use the real thing. We want the free product to be a great one. We do have some premium features, which are nice, and as a dedicated user you will over time come to appreciate those and eventually upgrade.
This is very different from the typical freemium trial model where you will try a service and then either you will convert or you won't within the first two months. With Evernote, every month you continue to use it a few more people who started to use it that same month will upgrade and that pattern has existed since the start
So, March 2008 saw the first cohort of Evernote users and this month there will be a set of those users (who first started Evernote in 2008) who will start paying. And every month from March 2008 to today this pattern has held true. So it's a slow and steady increase in the number of people who pay, that builds a lot of long term trust and loyalty and that's what we care about the most.
SA: Are those numbers available? How many of your users are paying for the premium model?
KG: What's more interesting than the number is the pattern. We have had very fast growth and the growth rate determines what the current percentage is but it's the pattern that is interesting. So in the first month it's only a third of the per cent of the first cohort that will end up paying, so quite low. Then every month this has gone up in an almost linear pattern and the oldest cohort (March 2008) now stands at around 26 per cent. Every month between one month and that month you can draw an almost straight line.
SA: You are valued at just over a billion dollars, is that valuation based on existing revenue or expected future revenue?
KG: It's based on two things, first there is the pattern of long and slow conversion which means that there is a lot of existing revenue from users that are paying and there is also the user base that will end up paying. Then there is the growth, we have been growing between two or three times in every metric you can think off.
SA: Is Evernote Business a push to derive more revenue from your users?
KG: No, from a strategic perspective we realised that people were already using Evernote for business and we realised that if we didn't do a great business offering then eventually someone else would come in and take the business side of the opportunity and maybe make Evernote less relevant on the personal side as well. It's going where the market is telling you to go.
This is an edited transcript of an interview with Evernote's COO Ken Gullicksen on his recent visit to Australia to launch Evernote Business.