Evernote's $290m Problem

Evernote is a type of product we all need: A place to store and organize all our information. But it has a terminal disease, shared by many of our beloved software products today. And that disease is venture capital (VC) investment.

Because even if everyone in the world used Evernote and loved it, there would come a time where investors' desires would deviate from user needs and expectations. The more people who use Evernote everyday, the more valuable the data set Evernote as a company is sitting on. That data will always be worth more as a product than whatever revenue Evernote gets from subscriptions.

Things look good right now. Evernote has one of the best privacy policy pages of any SaaS company I've seen. The company explicitly says that it doesn't sell your data to advertisers. But as always, all we have is the company's word and our trust in it.

I trust Evernote now, but what if it IPOs? Gets acquired? What if share holders push it to behave differently? For Evernote, the product is a business, but for me the data I give them is my life. It doesn't really get more personal than my medical records, financial records, and family photos.

This personal data is in jeopardy no matter how pure the intentions of current employees, simply by the nature of Evernote as a VC backed company, and potentially as a publicly traded company. We've seen Terms of Service and Privacy Policies change overnight without warning, and as users there's nothing we can do about it except to stop using a service we depend on.

The Facebook Trap

Like a digital extension of your brain's memory, with Evernote you upload all your documents, business cards, thoughts, photos, etc. and it makes them all searchable. Over the years it gets more and more intelligent and useful. It has apps for every platform, kickass OCR for effortlessly digitizing and searching paper documents, an API to incorporate it into any workflow, etc.

It's different from other storage services like Dropbox because it's not trying to extend the folder/file structure metaphor of a desktop. Evernote encourages you to organize your thoughts and files in a way that makes sense to you.

This type of data product is hard to build. That's part of the reason why Evernote needed to take $290 million in funding. It also means that there are very few, if any, alternatives at a similar scale. If Evernote starts misusing users' data, there's not a clear alternative platform for users to move to that has feature parity.

It's kind of like the Facebook problem. You can't get the same experience as Facebook precisely because everyone is on Facebook. Evernote leverages its user base to improve its products for its users, presumably with analytics and machine learning. It's a significant moat that no competitor has come close to crossing as far as I know.

Constant growth is antithetical to what users desire from a product of this category. Like Twitter, Evernote would probably work better as something resembling a public utility rather than a company with ever-growing profits.

Once you add revenue growth expectations, you're inevitably driving user desires toward a brick wall. It's not a matter of if users' data will be used in a way they don't like, it's when.

Users as Shareholders

What we need is to realign the business needs of these expansive products with the needs of users. One way this might happen is to open up ownership to users. This idea got some momentum in 2016 when a purchase of Twitter seemed imminent and sparked the #BuyTwitter campaign.

This would be different than an IPO because it would convey ownership to users, not just speculative investors.

A tech co-op that works to optimize user value instead of shareholder value, as radical as it may sound, seems like a more plausible endgame for these giant platforms, or new ones that replace them, than this constant push/pull and diverging of business goals from user goals.

The big obstacle is that no one knows how it could, or should, work. #BuyTwitter's ask is that Twitter conduct a study on how to do it. Until there's a clear roadmap, it will always sound like a pipe dream to skeptics.

Nailing down the specifics of how to restructure private platforms that the public depends on is one of the main goals of The Tools We Need. It's a necessary step to us owning our data. Subscribe below to stay updated when I release new posts.

Photo by Banter Snaps on Unsplash

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