Startup with Russian roots Evernote called "dying unicorn"

    Well-known American venture investor and board member of Uber and eBay, Bill Garley, expects the death of several "unicorns" (companies with estimates of more than $ 1 billion) in 2015. He attributes his hypothesis to his excessive love of risk and big investments in Silicon Valley.

    Head of Syrah blogging platform Josh Dixon believes that the first will be a project for working with Evernote notes . The closure of three offices and the dismissal of 47 people that the company announced this week should be considered a wake-up call.

    The Slon publication provides reasoning and expert forecasts about the future fate of Evernote.

    How it all began?


    The founders of the project are Phil Libin and Stepan Pachikov - immigrants from Russia who moved to the United States. Evernote launched its first commercial product on the market in 2008. In 2012, Evernote was valued at more than $ 1 billion, the valuation in the last round - the company raised $ 20 million from the Japanese Nikkei - remained unknown. Throughout its existence, Evernote raised about $ 300 million.

    Evernote allows you to create notes, synchronize files between devices, collaborate on documents. This summer, Evernote reported that it has 150 million registered users (mainly in the US). In Russia and the CIS, according to the director of business development in this region, Rodion Nasakin, more than 6 million users.

    In May 2012, Evernote had 25 million users, and in May 2014, 100 million. This shows the growth rate of the company.

    Evernote makes money by selling paid accounts with additional options (from $ 24.99 to $ 49.99 per month) and corporate accounts ($ 12 per month from one employee). According to Nasakin, with a change in Evernote's pricing policy in April 2014, the company's revenue grew by 60%. The company does not disclose revenue indicators, but market participants estimate it at $ 120-200 million per year.

    Problems or mistakes?


    The main product of Evernote - a service for working with notes and file synchronization - has not changed much over the years of the company's life.

    “Evernote has an excellent core product,” says business angel Pavel Cherkashin. “But the fact that Evernote has a solid base formed back in 2012 does not mean that the company has no problems.” The market in which Evernote was once a pioneer was gradually taken over by other companies specializing in individual functions.

    “Cloud storage products like Dropbox captured one part of the Evernote potential audience, project management systems (like Asana or Podia) the second, and the third went to the messengers,” says Artem Inyutin, partner at TMT Investments venture capital fund. He notes that the company released the mobile application too late, and the new services were not the most successful.
    Entering the exchange provides additional capital and opens up new opportunities for companies. But startup founders and early investors sometimes postpone IPOs, as they fear they won’t be able to meet the high demands of the market. Just to confirm its estimate of $ 10 billion, the company should increase revenue by the end of 2015 by 226%, to $ 1.4 billion. And Evernote has already missed the best time for an IPO, according to investors surveyed by Slon correspondent.

    To be or not to be?


    The new CEO of Evernote, a native of Google Chris O'Neill, who arrived in July 2015, does not communicate with reporters, and in many ways the company was in the center of suspicion. Evernote needs a new round of audience growth and new, revolutionary products, and they are what they expect from O'Neill.

    Who is next?


    Evernote is not the only company whose pace of development is not keeping pace with investments. Such companies have access to huge capital, and after unsuccessful decisions they do not leave the market, but pour new money into the correction of errors.

    But this cannot go on forever.

    “The venture capital market does not buy current business financial indicators, but growth expectations. A company with revenue of $ 20 million, a loss of $ 40 million, but an x80 multiplier (because investors believe in its future) will cost $ 1.6 billion and be considered a unicorn (a good example is Slack), and a company with revenue of $ 200 million and a steady profit of $ 20 million may have a multiplier of x1.5 and, accordingly, a capitalization of $ 300 million - because investors do not believe in future growth and return their investments through dividends. Another year of such a life for Evernote - and the company will have Nokia's fate at best, ”says Cherkashin.

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