The idea that “the best product doesn’t always win” is something that gets repeated fairly often, but Phil Libin, chief executive of notekeeping and memory aid startup Evernote, declared recently that it’s “complete and utter bullshit, totally wrong, totally pernicious.”
“Anyone who’s telling you this wants you to fail,” he added.
Libin was speaking last week at the Founder Showcase, a gathering of graduates from the Founder Institute for training startups. The video of his talk is now viewable on Vimeo, and I have embedded it below.
So, okay, it is literally true that the best product doesn’t always win. However, when people make that statement to entrepreneurs, Libin argued, they’re actually trying to say that you need to divide your resources between building a good product and other things like marketing. Evernote, on the other hand, has found that it pays off to invest all of its money on product, because if you’ve got a good product, “almost everything else comes for free.” And the company has a very simple business model:
1. Make an amazingly great product.
2. Charge money for it.
Libin has offered versions of this talk before, where he goes over strategies for building a “freemium” business combining free and premium services (his photo above is from the Freemium Summit). During the Founder Institute talk, he presented specific numbers about how Evernote is doing:
- Less than two years after launching, it has more than 3 million users. It’s gaining nearly 10,000 new users per day.
- Evernote makes between $300,000 and $400,000 per month on premium subscriptions.
- More than 68,000 percent of its customers, or 2 percent of its total userbase, has signed up for a premium account.
- Licensing revenue accounts for between $30,000 and $40,000 a month. It was once the majority of Evernote’s revenue, but subscriptions have grown more quickly.
- As users stick with Evernote for longer and longer periods of time, they’re more and more likely to sign up for a premium account. Or as Libin put it, “The longer you use it, the more valuable it gets.”
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