Last month new Nozbe finally got Evernote integration (v.2013.19), similar to the one we’ve had for years for Nozbe Personal. While we were working on this, Evernote was aqcuired which to me was kind of an end of an era. You see, I used to be a great Evernote fan and supporter, I have a long history with them - from integrating in 2009, through a failed acquisition in 2011 and later usage until I dropped it altogether. Today I decided to write this blog post where I’m sharing my history with them and where I see them headed:
- Love for Evernote back in 2009
- Evernote and Nozbe - both big in Japan!
- Acquisition offer from Evernote!
- Pros and Cons of getting acquired by Evernote
- Consultation with mentors and decision NOT to go for it!
- What happened to Evernote afterwards? Not a unicorn!
- Acquisition by Bending Spoons?
Love for Evernote back in 2009
The Evernote I knew launched its mobile note-taking app back in 2008 and I signed up in… October of that year. Evernote was the early iPhone darling. It was one of the first apps that I downloaded from the newly-launched App Store.
In 2009 just as my Nozbe Personal app was taking off, my second most used app on the iPhone was in fact Evernote. Especially when I was remodeling my apartment, I’d put tasks in Nozbe and notes (with photos) in Evernote.
I was really impressed by Evernote and especially by their management team - Phil and Andrew - and even more so when I met them in person in San Francisco, as I was attending GTD Summit in April 2009 as a speaker and fellow sponsor.
We talked about a potential integration and collaboration and in the Fall of 2009 I engineered one together with my fellow developer magician, Tomasz. It was announced with a bang on the Evernote blog (web archive copy) and on our blog and it was praised throughout the industry as a cool collaboration between two cool apps. Later in 2010 as we followed up with an iPhone and iPad app for Nozbe, the Nozbe + Evernote connection was a hit!
Evernote and Nozbe - both big in Japan!
At the same time Evernote was becoming big in Japan. Thanks to our integration, Nozbe also became popular in that country.
As Evernote was getting more traction (and more VC rounds of funding), they suddenly became interested in integrating a to-do list functionality into their core app. I was afraid they’d become a competitor and they’d remove Nozbe integration which so many users praised.
Actually, they had different plans…
Acquisition offer from Evernote!
When I was back from Japan riding the #publicNozbe wave, I got an email from Phil, the CEO of Evernote:
At first I didn’t know what he meant. Later it turned out the “potential collaboration” was an acquisition offer. They were expanding into to-dos and wanted me to run it for them.
I was stunned. For the first time in my life I got a serious offer from someone to buy my entire business of Nozbe. I didn’t know where to start, really.
They invited me and my wife to Silicon Valley for a week to get to know them better and talk it all over. I accepted and in early April of 2011 we spent a week in Palo Alto, not far away from their then-HQ (333 W Evelyn in Mountain View), just a short ride on the El Camino Real.
I visited their office every day, talked not only to Ken, Andrew and Phil, but also Dave (then CTO) and Phil C (VP engineering) and others. We even took some promotional photos:
Pros and Cons of getting acquired by Evernote
As mentioned above, I was a huge fan of Evernote and the guys running it at the time, so I couldn’t imagine a better company offering to buy my business than them. On the other hand, I was about to lose my company and become an employee. What to do?
Here’s how my thought process looked like:
- I was about to be acquired by a much bigger company and a significant player in the Silicon Valley, yay!
- They wanted me to move there so I’d be in the center of the Startup/Internet universe!
- I’d be running a significant and important part of Evernote and hopefully contributing to their status of a unicorn ($1B+ valued startup) which they were hoping to achieve soon.
- I’d be networking with all other fantastic startup founders in the Silicon Valley - something I was impressed by every time I’d visit in the past. Now, I’d be a part of all that.
- I’d not only receive an upfront injection of cash, but I’d get some stock and when they’ll eventually IPO I’d be rich!
Great, but there were also things I didn’t like as much:
- I’d have to move to the USA (west coast) quickly with my family: my wife and our baby daughter. While visiting USA is great, comparing the quality of living there to Europe and the cost of all that - it’s not as rosy as you might think.
- My wife due to this move would lose her job which she loved and had been enjoying for the last year and a half. She was still open to it, but she wasn’t excited by it.
- Selling my company would mean losing the freedom of running my own business and becoming a regular employee with a fixed salary. I started my business in 2003 and launched Nozbe in 2007 so I had been an entrepreneur for almost a decade by then and I wasn’t that thrilled by a thought of letting it all go.
- I’d have to go to a physical office. That’s right, no more working from home and if you know me, you know that this argument alone could be a deal-breaker.
Then, once we started talking, there were additional issues:
- Nozbe was already making good money (tens of thousands of US$ in monthly recurring revenue) with a very small team - the Evernote guys were actually surprised how well we were doing.
- Our mobile phone app was done by an external company (now-defunct Macoscope) so it wasn’t really ours so they would be some additional ownership issues.
The pros, cons and everything around them made the whole negotiation more difficult. It seemed they thought they’d get me (and Nozbe) for cheap and they realized they couldn’t. Also I wasn’t as thrilled to move my entire life to the USA so quickly as they wanted.
In the end they offered a higher amount that they initially wanted but a smaller one than I would have wanted. And they split it into 1/3 in cash and 2/3 in RSU (restricted stock unit) that would vest over 4 years subject to a liquidity event (merger or IPO).
As I understood I’d get the shares valued at $4.31 per share, which is what Sequoia Capital paid by giving them $50M at around $500M valuation (my guess, as they didn’t disclose it, but they mentioned it was significantly lower than $1B). Additionally I was offered an OK salary, which coincidently was around what my wife was already making here back in Europe.
Consultation with mentors and decision NOT to go for it!
Apart from talking extensively to my wife, I also consulted the decision with a few of my most trusted mentors. I talked to Michael Hyatt, the owners of Macoscope company (developers of Nozbe iOS apps at the time) and a few other mentors. Each told me NOT to take the deal as they believed I was already living the dream of running my own, profitable company on my own terms.
Michael Hyatt actually gave me the anecdote of the Mexican fisherman also known as Anecdote on Lowering the work ethic where he explained, that I didn’t need to sell my company to be successful, I could just keep running it and enjoying it!
Basically: I was already running my own company, working from home, having time for family and work and enjoying this kind of lifestyle!
That’s when it hit me:
- My wife had a great job and by taking this offer, we’d reduce one source of income and I’d become the only family supporter.
- We were living in Europe and while pretty far from our family, it was still much closer than west coast USA (with 9 hours time difference!).
- We only had one child then, but wanted more - would I have time or bandwidth for it? (Spoiler: now we’ve got three!)
- And the offer? We’d spend cash on just buying a normal house in Silicon Valley and then we wouldn’t know if we’d ever see the other 2/3 in vested stock (spoiler: we wouldn’t!). It wasn’t a blowout offer that would really make it worthwhile for us to turn our lives upside down.
- And I think I still wanted to see where I could take Nozbe and how far I’d go running it (spoiler: further than I expected!).
In the end I rejected the offer but kept being an Evernote fan!
What happened to Evernote afterwards? Not a unicorn!
What later happened made me sad. Evernote is still a meaningful app but it never became a sensation it was meant to be. In 2015 their investors fired the founding team and replaced CEOs twice since. Their competitors basically ate their lunch (Notion, Apple Notes, etc.).
I think they lost their way and they were too busy chasing their unicorn status. Unfortunately this is what happens in Silicon Valley.
Acquisition by Bending Spoons?
In the end late last year Evernote got acquired for an undisclosed sum. I’d guess it was for something around $50-$100M USD, which is 5-10 times less than the valuation I was offered my shares at.
Their fall from grace is complete and now my main concern is about the service itself. The new owner is apparently a predatory player on the App Store, tricking people into buying basic apps for weekly subscriptions. There’s a whole discussion on HackerNews about it (and why Evernote failed to realize its potential).
Suffice to say, I’m concerned. We built this recent Evernote integration out of respect for our current Nozbe customers but we don’t know how long Evernote as we know it will stick around or if they will cut off our API access just like Twitter and Reddit recently did. Let’s hope for the best, anyway!