Xconomist of the Week: Phil Libin, Evernote, and the Death of the Exit
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significantly more money. It’s just that for whatever reason, the startup narrative conflated exits and liquidity, but Yuri and a couple of other [investors in] Facebook broke that and said, “Look, this doesn’t make sense.” So the world has totally changed. But it’s only been like this for two to three years, at the most.
X: How is this trend at work within Evernote?
PL: The idea with Evernote was to make a 100-year company, which means we have to have a series of financing events, liquidity events, which serve two purposes. First, they allow existing shareholders to sell the stock they want to sell and allow other people to buy it. That means founders and other employees who have been here a long time have the ability to get some liquidity. The other point of these financings is to enable a steady increase in operations. We get acquisition currency that enables us to acquire other companies. Right now the secondary markets support doing that about once a year. If the market changes, that’s fine. Our goal is to always have enough cash so that we never have to time the market.
X: I’ve spoken with Silicon Valley executives who are concerned that allowing startup employees to cash in their shares on the secondary markets will destroy their incentive to stick around for the long haul. Do you ever worry about that?
PL: No, that is ridiculous. You don’t have a hold on people. I don’t want people waiting around here because we have set up structures that mean they can’t leave. We want employees to be here because they love being here. We want them to be comfortable that they can sell 5, 10, or 20 percent of their holdings and be secure enough to buy a house or send a kid to college.
Plus, if you sell 20 percent, you still have 80 percent. My job is to take care of the employees, and if I can’t come up with a single reason for people to stay once they hold 80 percent of their shares instead of 100 percent, that’s my problem.
X: Let’s change gears and talk about Evernote’s progress. You had your first developer conference and competition this summer, where you invited lots of programmers who are working on apps and services that connect to Evernote. You’ve long had application programming interfaces that let outside developers write such software, but up until the conference, you had never really spoken about Evernote as a platform that other companies can build on top of, in the same way that developers might think of Facebook or Salesforce.com as platforms. Why not?
PL: I think we started planning the developer conference about nine months in advance. We said to ourselves, “We think we have enough traction now to where we could help the community advance further by having a conference and a competition.” Our plan had always been to make a platform of this—but you’re right, we were pretty careful not to overhype that phrase. It’s the sort of thing that you want other people to say about you, not to say about yourself, just for credibility.
X: What’s the evidence that you’ve turned that corner?
PL: Just the numbers that we see—there are more than 8,000 third-party developers at this point, and they’ve built quite a bunch of high-quality products. Some were featured at the conference. There is a next phase that we’ll get to, which we also announced at the conference, where developers will be able to put Evernote functionality inside their apps. We’re pretty excited about that. There is a high degree of uncertainty, but we are working with some selected third-party developers now and seeing preview builds. You’ll be able to access your Evernote notes from outside Evernote, and third parties will be able to build plugins and extensions that allow much richer integration. All of that is launching early next year. That’s the next major stage for us.
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