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Evernote Raising $50 Million To $100 Million At A $1 Billion+ Valuation

84 points by ssclafani 15y ago

MarlonPro 15y ago
How do they really perform valuation? I don't understand why Evernote and Instagram are worth virtually the same.
- nicksergeant 15y ago
  Take "best-case-scenario annual revenue" and multiply by 10?
- gklitt 15y ago
  Do you mean that Evernote should be valued at less than Instagram? I think the opposite is true. Evernote has demonstrated that it can monetize its user base, and it has a strong lock-in effect (I store all my stuff there so it's not worth leaving to a competitor). I happily pay for Premium just like many others. Instagram, on the other hand, has a fantastic free app, a giant user base...and no revenue.
- chimeracoder 15y ago
  'I'm willing to give up x% of my company. How much cash will you give me for it?' In theory, that should be the same as saying 'my company is worth y% of what company Z is worth, so this is how much cash you need to pay in order to get x% of it', but in practice, you can't always make that conclusion based on how people behave.
timdorr 15y ago
All these multi-billion valuations are making me nervous...
- pdubs 15y ago
  Considering flippin' Ducati just sold for around $1 billion...me too.
  - brico 15y ago
    Yes it's mind-boggling, e.g.: Bayern Munich is valued at $1.2 billion http://www.bbc.co.uk/sport/0/football/17769654 http://www.bbc.co.uk/sport/0/football/17769654 What I don't get: couldn't you build something like Evernote for let's say $500mm from scratch? It's not a company, it's a smartphone app!
hackinthebochs 15y ago
We're in a bubble folks, plain and simple. The fact is no one knows how to price these things. These valuations are betting that being essentially a first mover in a new market that has endless possibilities is worth many billions. Eventually people will get tired of waiting for these expected profits to roll in and the crash will soon follow.
- ajross 15y ago
  Undeniably. Now the question to me though is how a pre-IPO valuation bubble pops. Obviously lots of venture investors lose a lot of cash if these companies can't exit; but that cash wasn't in the public markets anyway and shouldn't cause a ripple, right? Who is bearing the risk here? What money will flee where when it becomes clear that Groupon and Evernote are losses and that Facebook is going to break even at best with their IPO?
  - adamjernst 15y ago
    All this VC money comes from pension funds, university endowments, and other large institutional investors that are looking for a return on investment that is higher than regular public equities. When the crash comes, pensions and endowments will stop seeing tech venture funds as a safe investment so they'll shift their money elsewhere, leaving VC firms without money to invest.
    - ajross 15y ago
      Exactly, so it really doesn't "pop" then, except in the sense of drying up access to cash in our own little community. That doesn't sound so bad. Remember YC was founded in an environment of limited venture funds and those early startups seem to have done quite well on the whole.
- rollypolly 15y ago
  When would you say this bubble started?
- clarky07 15y ago
AznHisoka 15y ago
Evernote has a popular app, I grant them that. But how does that translate to a $1 billion company? It's not like you can take the same users and sell them insurance or weight loss pills.
- theorique 15y ago
  Ongoing revenue stream and one of the few consumer apps to really make a freemium model work right.
juliano_q 15y ago
With some effort I think I understood why Zuck paid 1 billion on Instagram (IMO Instagram had a huge potential to be the next big social network, so I think Mark noticed it too and bought before it became too big), but I fail to understand how it is possible to Evernote to value the same. This seems to be a bad smell to me.
- tesseractive 15y ago
  You could make a pretty good case that Evernote is the single most important productivity app of the smartphone era. At the bare minimum, you'd have to grant that it has the potential to be. For comparison, the single most important productivity app of the PC era was either Office in general, or just Word in particular. How much are those worth?
  - trotsky 15y ago
    what, google maps?
erichocean 15y ago
I'm convinced that valuations calculated by multiplying shares x 'the last price someone payed for one share' is completely useless. A better valuation would be the sum of the equity that has been sold (for actual money) - liabilities + cash on hand + discounted future earnings at some reasonable growth rate (this can be industry specific). IOW, what would a single entity be willing to spend in cash to acquire the company today. I don't see how saying Evernote is a "one billion dollar" company has any merit at all.
- wpietri 15y ago
  The main advantage is that it's very easy to measure and it sums up the demonstrated beliefs of a lot of participants. Anybody actually trying to buy the company will do a much more complicated calculation than the one you describe. For what it's worth, when acquisitions happen it's almost always above the shares x price number, so I think it's reasonable to call Evernote a $1bn company if the shares x price number works out that way.
  - erichocean 15y ago
    Unless a company is failing, acquisitions should also increase the worth of the company if cash is put in and it's not a pure stock swap. So it's not strange that valuations go up after an acquisition, and in my formulation, they would also go up as well, and for the same reason. On the one hand, you're right: if everyone is using misleading valuation calculations, then they're all relatively misleading by the same amount. That still doesn't make these numbers remotely helpful. Here's a thought experiment: Company X sells $10K in equity at a $1 billion valuation, with no revenue. Wow, good for them. Company Y sells $15K in equity at a $1.5 billion valuation with no revenue, and promptly acquires Company X for $1.1 billion in cash and stock. Well color me impressed! That's an amazing exit for Company X! Incredible. Bravo. /sarc It's both easy and cheap to be a paper billionaire when valuations are calculated as shares x 'last price of an individual share'. Anyone can sell their company for $1.1 billion dollars with minimal actual capital changing hands, or value created. FWIW, the real problem isn't the valuation numbers per se, it's when people start talking about "losses". Evernote's stock drops, and somehow they "lost" $600 million in "value". Uh, no, they didn't. They never had that value to begin with, and didn't even lose it. If you think about it, that makes sense. How can a stock sale worth, say, $1000 change the value of the company being sold by $100 million? That doesn't make any sense. With my formulation, selling a single share at a lower price wouldn't move a company's market cap by hundreds of millions of dollars, ever, unless that share somehow was sold at a loss of hundreds of millions of dollars (that's one pricey share!). Instead, it would decrease only be the amount that was lost on that particular share, which is generally minimal in stock sales. My approach is much more stable, and would prevent all of these idiotic headlines about "market drops" that we keep hearing about (and market increases, for that matter). It's just more honest all the way around, and furthermore, it's easy to calculate. You can always track each share's individual purchase history, and trivially calculate the value of the company based on that (and the other factors I mentioned), in real time. It would also prevent the quarterly gaming that goes on, since recent stock sales would not be a major driver for increased (or decreased) valuation. Instead, you'd have to actually improve the company's fundamentals, and as investors and shareholders, isn't that what we really want anyway?
heifetz 15y ago
a notepad app company that's worth 1bn...hmmm.
- AznHisoka 15y ago
  yep, that's all they are - a notepad app. People are overblowing Evernote's significance when they say it's in charge of our memory... When they come up with nanontechnology that can backup our entire brain in a flash drive, come back to me with $1 billion valuation.
  - AznHisoka 15y ago
    I got high standards. Gimme some THICK life-changing value! Not thin, retina, prettified, fluff value! That ain't a billion dollar valuation.
goronbjorn 15y ago
> "the app had 20 million users" How many paying users do they have?
pchristensen 15y ago
One piece of data for Evernote skeptics - the founder has said that they have a very slow monetization, in that people convert more and pay more the longer they've been a user. So the longer people use it, the more ways they find to use it, the more data they put into it, the more valuable it becomes to their process and they outgrow the free plans. Older customers pay because Evernote has become more valuable to them. So rapid growth in free users over the last couple years has a demonstrated (not hypothetical) path to payoff over time. EDIT: reference: http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2799 http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2799
Maro 15y ago
I have Evernote installed on all my machines and use it regularly. If they started charging for it I'd probably pay $5/month for it. Assuming 20M active users and a sky-high 10% conversion rate [+] at $5/month gives $120M/year in revenue, which would kind of justify a $1B valuation. That is, until something better comes along for storing text notes across devices... [+] I understand their users are pretty f(r)anatic.
- mrtron 15y ago
  They already charge for some additional features. I currently pay 5$/month.
  - Maro 15y ago
    I guess I meant if they make their pricing more aggressive so users like myself also have to pay for it. Eg. you have to pay if you have more than 1 notebook or use it on more than 2 devices...
- tesseractive 15y ago
  I'm thinking about paying for the premium version just for the rare cases when I'm out of cell range and need offline access on my phone. Evernote is so indispensable to me that even though it doesn't happen very often, it's super-frustrating when it does.
wildmXranat 15y ago
Valuation bubble level: Fortune teller. This is getting out of hand.
lanstein 15y ago
Billion is the new million.
- bandy 15y ago
  Mike Meyers taught us that in '97: http://www.imdb.com/title/tt0118655/quotes?qt=qt0367876 http://www.imdb.com/title/tt0118655/quotes?qt=qt0367876
janlukacs 15y ago
Bubble it is. I like Evernote, i like the model however these valuations are crazy... the good news is that it's not another Instagram. Gambling other peoples money always turns out bad. "it's different this time" they said...
- cma 15y ago
  There has been considerable inflation since the last bubble.
loverobots 15y ago
Someone wake me up when we're talking about real money. Now the investors think that Evernote is only worth 3-10 times the valuation they bought in...or around $3,000,000,000.00 to $10,000,000,000.00
larsberg 15y ago
Hopefully now they can afford to extend their iOS client to includes handwriting input ala Notability (especially the Tablet PC-style input pane at the bottom).
- trustfundbaby 15y ago
  ... and write decent cmd+f functionality on OS X
ig1 15y ago
Rather than just shouting "bubble" why not take an analytical approach to this by comparing them to other consumer SaaS companies. Last year DropBox made $240m from from 2m paying customers (out of 50m users). So about $120/customer. DropBox's valuation is around $5-$10bn, around 20-40x revenue. Which given their growth rate seems a reasonable revenue multiplier. Over the same period Evernote made $18m from 750k paying customers (out of 20m users). So about $24/customer. A $1bn valuation would give a multiplier of 50x. LinkedIn is currently trading at 45x revenue - a figure that's been relatively stable for a while. So arguably 50x is high but not ridiculously so, if Evernote manages to double their customer base over the next couple of years (or their revenue per customer) which isn't unfeasible, it'll look cheap at that price. (Given Evernote costs $45/year that presumably means most of their customers signed up relatively late in the year resulting in the average revenue per customer being $24/year, so even if they only managed to keep their current customers they'd make 34m this year bringing their multiplier down to 30x)
- antirez 15y ago
  If we assume a bubble is an implicit, crazy multiplicator of evaluations, then it makes sense that if we are in a bubble companies are still relatively comparable. So this does not provide much info about the fact we are inside the bubble or not.
  - deleted 15y ago
    [deleted]
- 3am 15y ago
  50x is ridiculous, just not on a relative basis in among the peer group. Many retail companies trade at less than 1 (Walmart trades at .5, the S&P trades at around 1.5) Even larger tech companies like GOOG, MSFT, and ORCL trade at 3-4. So, looking at it analytically, the P/S of the average recent IPO is very high, and Evernote's valuation is extremely high, even compared to them.
  - ig1 15y ago
    Most SaaS IPOs in recent years have been at 10x - but almost none of them were consumer SaaS so it's hard to say how the markets will treat them. It's not unusual that later stage companies will trade at lower multiples, and as companies become more mature their multiple drops. A good way of looking at it is in terms of future revenues, what's the chance of company doubling their revenue in the next couple of years ? For Walmart it's almost negligible, for Google it's small but not completely out of the realms of possibility but for Evernote and DropBox it's actually quite high. They're the leading products in immature markets.
saturdaysaint 15y ago
I find this product to be really weak. I've been disappointed with all of the clients (do I seriously have to hit an "edit" button to make any change?) and can't think of any use case that couldn't be handled far more elegantly with my go-to tools - Google Docs, Workflowy and Dropbox. I've lost audionotes and changes to notes in the iPhone app. Worse, they seem focused on fluff (wallpapers, ancillary apps) when the core product feels unpolished. I just tried their web client and simple things like undo/redo are glaringly buggy. The charm, at the moment, is that they're one of the few one stop shops for files and note management that has a passable mobile client. It's something glaringly simple that a lot of people want (especially the %90 of the population intimidated at the idea of integrating a few services). If Google Docs ever get serious about their mobile client and/or if Dropbox cater more to this kind of crowd (I think a simple note editor on the web and their mobile clients would be well used), I expect Evernote to be in trouble.
- rkwz 15y ago
  You forgot another big player in this space - OneNote
georgemcbay 15y ago
It's like Oprah for startups. Everyone look under your seat. You get a billion dollars! you get a billion dollars! you get a billion dollars!
gruseom 15y ago
All this bubble talk reminds me of 1995.
dhaivatpandya 15y ago
I actually think Evernote is not very well designed; especially on the web front. Not sure if there any other people out there who feel the same...
eaurouge 15y ago
A lot of comments here from people that have never used Evernote and don't really understand it's value proposition to its users. I pay $45 a year for the service. It was a no brainer when I converted from free to paying about 18 months ago and it still is. If you're going to make incredibly insightful comments like, "we're in a bubble folks, plain and simple" please try to back it up with some analysis. At least try to give us some indication that you've given this some thought. It's tempting to compare Evernote to companies like Ducati (apparently recently bought by Audi for $1.1b). But remember Evernote sells software with higher margins. It is still in its growth phase, it's total addressable market includes a large percentage of the global population, and its revenue comes from recurring annual customer purchases. Personally I think it holds more value than Dropbox, but I guess we'll have to wait and see.
awayand 15y ago
evernote really sucks I cannot believe how anyone could find their service useful
- larrywright 15y ago
  I use and pay for it (over 7,000 notes and counting). Apparently many other people do as well.
Tossrock 15y ago
Man, I've never heard of Evernote before but it sounds exactly like a service I was mentally designing (which I tentatively dubbed "thoughtbank"). If only I'd started executing a few years earlier I could be a billionaire!
hristov 15y ago
I think the reason is that people saw the torrent of media attention that Instagram got. Every CEO is thinking now "If I can only get the number 1 billion somehow in a press release I will be on every newspaper and blog in the country." Quite predictably, Instagram got people greedy and spurned them to action. If you go to a good securities lawyer and say "We need to get a round closed at one billion dollar valuation, but the investors need it to be effectively at a lower valuation because for them 1 billion is just ridiculous" the lawyer will figure out a way to do it. There are all kinds of tools that you can use to ensure that the investors still make money for exits under 1 billion even if the valuation is technically 1 billion. So this is all just headline grabbing.
daemon13 15y ago
It is difficult to find a black cat in a dark room, especially if there is no cat. Many of the comments assume that a valuation, derived from stock price or venture financing, is rational. It is not. Yes, the value of the business is defined by future cash flow adjusted for time-value of money and risk. In case of new, unknown businesses/industries, without prior history, it is not possible to estimate the future cash flow and the associated risk. Therefore, if we would look at this from investment angle, I would compare this to a gamble, or, taking into account human component, a poker tournament [from my financial perspective]. P.S.: of course in case of Dropbox and Evernote, which have revenue, it is possible to do some financial modeling, but this would not substitute future cash flow since risk/uncertainty is still an open question. P.P.S.: in the past the best strategy was to follow the ride and get off the train before everybody else ..... :-)

84 points by ssclafani 15y ago

MarlonPro 15y ago

How do they really perform valuation? I don't understand why Evernote and Instagram are worth virtually the same.

nicksergeant 15y ago
Take "best-case-scenario annual revenue" and multiply by 10?
gklitt 15y ago
Do you mean that Evernote should be valued at less than Instagram? I think the opposite is true. Evernote has demonstrated that it can monetize its user base, and it has a strong lock-in effect (I store all my stuff there so it's not worth leaving to a competitor). I happily pay for Premium just like many others. Instagram, on the other hand, has a fantastic free app, a giant user base...and no revenue.
chimeracoder 15y ago
'I'm willing to give up x% of my company. How much cash will you give me for it?' In theory, that should be the same as saying 'my company is worth y% of what company Z is worth, so this is how much cash you need to pay in order to get x% of it', but in practice, you can't always make that conclusion based on how people behave.

timdorr 15y ago

All these multi-billion valuations are making me nervous...

pdubs 15y ago
Considering flippin' Ducati just sold for around $1 billion...me too.
- brico 15y ago
  Yes it's mind-boggling, e.g.: Bayern Munich is valued at $1.2 billion http://www.bbc.co.uk/sport/0/football/17769654 http://www.bbc.co.uk/sport/0/football/17769654 What I don't get: couldn't you build something like Evernote for let's say $500mm from scratch? It's not a company, it's a smartphone app!

hackinthebochs 15y ago

We're in a bubble folks, plain and simple. The fact is no one knows how to price these things. These valuations are betting that being essentially a first mover in a new market that has endless possibilities is worth many billions. Eventually people will get tired of waiting for these expected profits to roll in and the crash will soon follow.

ajross 15y ago
Undeniably. Now the question to me though is how a pre-IPO valuation bubble pops. Obviously lots of venture investors lose a lot of cash if these companies can't exit; but that cash wasn't in the public markets anyway and shouldn't cause a ripple, right? Who is bearing the risk here? What money will flee where when it becomes clear that Groupon and Evernote are losses and that Facebook is going to break even at best with their IPO?
- adamjernst 15y ago
  All this VC money comes from pension funds, university endowments, and other large institutional investors that are looking for a return on investment that is higher than regular public equities. When the crash comes, pensions and endowments will stop seeing tech venture funds as a safe investment so they'll shift their money elsewhere, leaving VC firms without money to invest.
  - ajross 15y ago
    Exactly, so it really doesn't "pop" then, except in the sense of drying up access to cash in our own little community. That doesn't sound so bad. Remember YC was founded in an environment of limited venture funds and those early startups seem to have done quite well on the whole.
rollypolly 15y ago
When would you say this bubble started?
clarky07 15y ago

AznHisoka 15y ago

Evernote has a popular app, I grant them that. But how does that translate to a $1 billion company? It's not like you can take the same users and sell them insurance or weight loss pills.

theorique 15y ago
Ongoing revenue stream and one of the few consumer apps to really make a freemium model work right.

juliano_q 15y ago

With some effort I think I understood why Zuck paid 1 billion on Instagram (IMO Instagram had a huge potential to be the next big social network, so I think Mark noticed it too and bought before it became too big), but I fail to understand how it is possible to Evernote to value the same. This seems to be a bad smell to me.

tesseractive 15y ago
You could make a pretty good case that Evernote is the single most important productivity app of the smartphone era. At the bare minimum, you'd have to grant that it has the potential to be. For comparison, the single most important productivity app of the PC era was either Office in general, or just Word in particular. How much are those worth?
- trotsky 15y ago
  what, google maps?

erichocean 15y ago

I'm convinced that valuations calculated by multiplying shares x 'the last price someone payed for one share' is completely useless. A better valuation would be the sum of the equity that has been sold (for actual money) - liabilities + cash on hand + discounted future earnings at some reasonable growth rate (this can be industry specific). IOW, what would a single entity be willing to spend in cash to acquire the company today. I don't see how saying Evernote is a "one billion dollar" company has any merit at all.

wpietri 15y ago
The main advantage is that it's very easy to measure and it sums up the demonstrated beliefs of a lot of participants. Anybody actually trying to buy the company will do a much more complicated calculation than the one you describe. For what it's worth, when acquisitions happen it's almost always above the shares x price number, so I think it's reasonable to call Evernote a $1bn company if the shares x price number works out that way.
- erichocean 15y ago
  Unless a company is failing, acquisitions should also increase the worth of the company if cash is put in and it's not a pure stock swap. So it's not strange that valuations go up after an acquisition, and in my formulation, they would also go up as well, and for the same reason. On the one hand, you're right: if everyone is using misleading valuation calculations, then they're all relatively misleading by the same amount. That still doesn't make these numbers remotely helpful. Here's a thought experiment: Company X sells $10K in equity at a $1 billion valuation, with no revenue. Wow, good for them. Company Y sells $15K in equity at a $1.5 billion valuation with no revenue, and promptly acquires Company X for $1.1 billion in cash and stock. Well color me impressed! That's an amazing exit for Company X! Incredible. Bravo. /sarc It's both easy and cheap to be a paper billionaire when valuations are calculated as shares x 'last price of an individual share'. Anyone can sell their company for $1.1 billion dollars with minimal actual capital changing hands, or value created. FWIW, the real problem isn't the valuation numbers per se, it's when people start talking about "losses". Evernote's stock drops, and somehow they "lost" $600 million in "value". Uh, no, they didn't. They never had that value to begin with, and didn't even lose it. If you think about it, that makes sense. How can a stock sale worth, say, $1000 change the value of the company being sold by $100 million? That doesn't make any sense. With my formulation, selling a single share at a lower price wouldn't move a company's market cap by hundreds of millions of dollars, ever, unless that share somehow was sold at a loss of hundreds of millions of dollars (that's one pricey share!). Instead, it would decrease only be the amount that was lost on that particular share, which is generally minimal in stock sales. My approach is much more stable, and would prevent all of these idiotic headlines about "market drops" that we keep hearing about (and market increases, for that matter). It's just more honest all the way around, and furthermore, it's easy to calculate. You can always track each share's individual purchase history, and trivially calculate the value of the company based on that (and the other factors I mentioned), in real time. It would also prevent the quarterly gaming that goes on, since recent stock sales would not be a major driver for increased (or decreased) valuation. Instead, you'd have to actually improve the company's fundamentals, and as investors and shareholders, isn't that what we really want anyway?

heifetz 15y ago

a notepad app company that's worth 1bn...hmmm.

AznHisoka 15y ago
yep, that's all they are - a notepad app. People are overblowing Evernote's significance when they say it's in charge of our memory... When they come up with nanontechnology that can backup our entire brain in a flash drive, come back to me with $1 billion valuation.
- AznHisoka 15y ago
  I got high standards. Gimme some THICK life-changing value! Not thin, retina, prettified, fluff value! That ain't a billion dollar valuation.

goronbjorn 15y ago

> "the app had 20 million users" How many paying users do they have?

pchristensen 15y ago

One piece of data for Evernote skeptics - the founder has said that they have a very slow monetization, in that people convert more and pay more the longer they've been a user. So the longer people use it, the more ways they find to use it, the more data they put into it, the more valuable it becomes to their process and they outgrow the free plans. Older customers pay because Evernote has become more valuable to them. So rapid growth in free users over the last couple years has a demonstrated (not hypothetical) path to payoff over time. EDIT: reference: http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2799 http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2799

Maro 15y ago

I have Evernote installed on all my machines and use it regularly. If they started charging for it I'd probably pay $5/month for it. Assuming 20M active users and a sky-high 10% conversion rate [+] at $5/month gives $120M/year in revenue, which would kind of justify a $1B valuation. That is, until something better comes along for storing text notes across devices... [+] I understand their users are pretty f(r)anatic.

mrtron 15y ago
They already charge for some additional features. I currently pay 5$/month.
- Maro 15y ago
  I guess I meant if they make their pricing more aggressive so users like myself also have to pay for it. Eg. you have to pay if you have more than 1 notebook or use it on more than 2 devices...
tesseractive 15y ago
I'm thinking about paying for the premium version just for the rare cases when I'm out of cell range and need offline access on my phone. Evernote is so indispensable to me that even though it doesn't happen very often, it's super-frustrating when it does.

wildmXranat 15y ago

Valuation bubble level: Fortune teller. This is getting out of hand.

lanstein 15y ago

Billion is the new million.

bandy 15y ago
Mike Meyers taught us that in '97: http://www.imdb.com/title/tt0118655/quotes?qt=qt0367876 http://www.imdb.com/title/tt0118655/quotes?qt=qt0367876

janlukacs 15y ago

Bubble it is. I like Evernote, i like the model however these valuations are crazy... the good news is that it's not another Instagram. Gambling other peoples money always turns out bad. "it's different this time" they said...

cma 15y ago
There has been considerable inflation since the last bubble.

loverobots 15y ago

Someone wake me up when we're talking about real money. Now the investors think that Evernote is only worth 3-10 times the valuation they bought in...or around $3,000,000,000.00 to $10,000,000,000.00

larsberg 15y ago

Hopefully now they can afford to extend their iOS client to includes handwriting input ala Notability (especially the Tablet PC-style input pane at the bottom).

trustfundbaby 15y ago
... and write decent cmd+f functionality on OS X

ig1 15y ago

Rather than just shouting "bubble" why not take an analytical approach to this by comparing them to other consumer SaaS companies. Last year DropBox made $240m from from 2m paying customers (out of 50m users). So about $120/customer. DropBox's valuation is around $5-$10bn, around 20-40x revenue. Which given their growth rate seems a reasonable revenue multiplier. Over the same period Evernote made $18m from 750k paying customers (out of 20m users). So about $24/customer. A $1bn valuation would give a multiplier of 50x. LinkedIn is currently trading at 45x revenue - a figure that's been relatively stable for a while. So arguably 50x is high but not ridiculously so, if Evernote manages to double their customer base over the next couple of years (or their revenue per customer) which isn't unfeasible, it'll look cheap at that price. (Given Evernote costs $45/year that presumably means most of their customers signed up relatively late in the year resulting in the average revenue per customer being $24/year, so even if they only managed to keep their current customers they'd make 34m this year bringing their multiplier down to 30x)

antirez 15y ago
If we assume a bubble is an implicit, crazy multiplicator of evaluations, then it makes sense that if we are in a bubble companies are still relatively comparable. So this does not provide much info about the fact we are inside the bubble or not.
- deleted 15y ago
  [deleted]
3am 15y ago
50x is ridiculous, just not on a relative basis in among the peer group. Many retail companies trade at less than 1 (Walmart trades at .5, the S&P trades at around 1.5) Even larger tech companies like GOOG, MSFT, and ORCL trade at 3-4. So, looking at it analytically, the P/S of the average recent IPO is very high, and Evernote's valuation is extremely high, even compared to them.
- ig1 15y ago
  Most SaaS IPOs in recent years have been at 10x - but almost none of them were consumer SaaS so it's hard to say how the markets will treat them. It's not unusual that later stage companies will trade at lower multiples, and as companies become more mature their multiple drops. A good way of looking at it is in terms of future revenues, what's the chance of company doubling their revenue in the next couple of years ? For Walmart it's almost negligible, for Google it's small but not completely out of the realms of possibility but for Evernote and DropBox it's actually quite high. They're the leading products in immature markets.

saturdaysaint 15y ago

I find this product to be really weak. I've been disappointed with all of the clients (do I seriously have to hit an "edit" button to make any change?) and can't think of any use case that couldn't be handled far more elegantly with my go-to tools - Google Docs, Workflowy and Dropbox. I've lost audionotes and changes to notes in the iPhone app. Worse, they seem focused on fluff (wallpapers, ancillary apps) when the core product feels unpolished. I just tried their web client and simple things like undo/redo are glaringly buggy. The charm, at the moment, is that they're one of the few one stop shops for files and note management that has a passable mobile client. It's something glaringly simple that a lot of people want (especially the %90 of the population intimidated at the idea of integrating a few services). If Google Docs ever get serious about their mobile client and/or if Dropbox cater more to this kind of crowd (I think a simple note editor on the web and their mobile clients would be well used), I expect Evernote to be in trouble.

rkwz 15y ago
You forgot another big player in this space - OneNote

georgemcbay 15y ago

It's like Oprah for startups. Everyone look under your seat. You get a billion dollars! you get a billion dollars! you get a billion dollars!

gruseom 15y ago

All this bubble talk reminds me of 1995.

dhaivatpandya 15y ago

I actually think Evernote is not very well designed; especially on the web front. Not sure if there any other people out there who feel the same...

eaurouge 15y ago

A lot of comments here from people that have never used Evernote and don't really understand it's value proposition to its users. I pay $45 a year for the service. It was a no brainer when I converted from free to paying about 18 months ago and it still is. If you're going to make incredibly insightful comments like, "we're in a bubble folks, plain and simple" please try to back it up with some analysis. At least try to give us some indication that you've given this some thought. It's tempting to compare Evernote to companies like Ducati (apparently recently bought by Audi for $1.1b). But remember Evernote sells software with higher margins. It is still in its growth phase, it's total addressable market includes a large percentage of the global population, and its revenue comes from recurring annual customer purchases. Personally I think it holds more value than Dropbox, but I guess we'll have to wait and see.

awayand 15y ago

evernote really sucks I cannot believe how anyone could find their service useful

larrywright 15y ago
I use and pay for it (over 7,000 notes and counting). Apparently many other people do as well.

Tossrock 15y ago

Man, I've never heard of Evernote before but it sounds exactly like a service I was mentally designing (which I tentatively dubbed "thoughtbank"). If only I'd started executing a few years earlier I could be a billionaire!

hristov 15y ago

I think the reason is that people saw the torrent of media attention that Instagram got. Every CEO is thinking now "If I can only get the number 1 billion somehow in a press release I will be on every newspaper and blog in the country." Quite predictably, Instagram got people greedy and spurned them to action. If you go to a good securities lawyer and say "We need to get a round closed at one billion dollar valuation, but the investors need it to be effectively at a lower valuation because for them 1 billion is just ridiculous" the lawyer will figure out a way to do it. There are all kinds of tools that you can use to ensure that the investors still make money for exits under 1 billion even if the valuation is technically 1 billion. So this is all just headline grabbing.

daemon13 15y ago

It is difficult to find a black cat in a dark room, especially if there is no cat. Many of the comments assume that a valuation, derived from stock price or venture financing, is rational. It is not. Yes, the value of the business is defined by future cash flow adjusted for time-value of money and risk. In case of new, unknown businesses/industries, without prior history, it is not possible to estimate the future cash flow and the associated risk. Therefore, if we would look at this from investment angle, I would compare this to a gamble, or, taking into account human component, a poker tournament [from my financial perspective]. P.S.: of course in case of Dropbox and Evernote, which have revenue, it is possible to do some financial modeling, but this would not substitute future cash flow since risk/uncertainty is still an open question. P.P.S.: in the past the best strategy was to follow the ride and get off the train before everybody else ..... :-)