Evernote embodies an “exemplar” product business model: its core offering is a suite of software and services that enable users to find, capture, store, organize, and access information across multiple platforms and devices. The customer can use a basic version of the software product for free, but has to pay for additional premium features.
Evernote is an independent, privately held company headquartered in Redwood City, California. The company was founded in 2007 by Stepan Pachikov and has collected $205M in 10 funding rounds from 14 investors. Evernote is currently headed by CEO Chris O’Neill with more than 200 million users worldwide and nearly 400 employees.
CUSTOMERS – WHO THEY ARE
The typical customers of Evernote range from the average consumer who owns a few devices such as a phone, desktop and laptop, to businesses with hundreds of computers. All consumers use the software to organize all kinds of data (notes, pictures, videos) across multiple platforms like mobile phones, tablets and PCs. Evernote does not allow the display of advertisements, nor does it enable the sales of data to other companies.
ENGAGEMENT – VALUE CREATION PROPOSITION
Evernote is a cloud-based note-taking system that is designed to keep the user organized and save time. It is often described by its users as being their “external brain,” whereby the user can add text, images, audio, scanned documents and files all the while automatically synchronizing the databank across all registered devices. Evernote analyzes new data inputs –i.e., pictures – with a range of algorithms to enable an efficient tagging system, in turn facilitating users’ data search via specific context-based keywords.
Evernote offers a flexible range of organization tools to adapt to any of the users’ preferred working methods. Insofar as the user can remember a few words of the document – whatever the format – it can be swiftly and precisely pinpointed by the Evernote search bar. Additionally, users can easily share the various notes collected with other users – either publicly or with other specific users – and the system records a complete history of all changes made to files. Another distinctive feature of the Evernote software is the Web Clipper, which enables the users to clip any part of a webpage and save it in a particular folder for future use.
Furthermore, users can also reap the benefits of additional Evernote applications, including Skitch – which allows users to annotate, draw shapes and sketch on pictures – Scannable – which digitizes sheets of paper into high-quality scans – or Penultimate, an iPad application designed to mimic the natural calligraphic experience.
DELIVERY – THE VALUE CHAIN
Users must first download the Evernote software on their device, and create an account from a range of options depending on the amount of monthly data they wish to upload. Customers can then access Evernote via a mobile application or direct web access. In terms of customer acquisition, Evernote traditionally relied on partnerships, such as pre-installation agreements on Samsung and Lenovo mobile phones and notebooks.
MONETIZATION – VALUE CAPTURE
Evernote offers four subscription options to its users: “Basic,” “Plus,” “Premium” and “Evernote Business,” depending on the required amount of uploaded data. This ranges from 60MB for the Basic option, to 10GB + 2GB for the “Evernote Business” package.
All Evernote subscriptions encompass the following features: notebook sharing, text search in images, industry-standard security, text encryption and image annotation. “Plus” accounts, costing £29.99 a year, allow for emails to be saved into Evernote, syncing across all devices (basic accounts only allows for 2 devices), offline access to notebooks, and customer support via email. “Premium” accounts, costing £44.99 a year, offer the added features of PDF searching, office documents and attachments, digitalizing business cards, viewing previous versions of notes and switching between multiple accounts. “Evernote Business” includes all the aforementioned features, as well as a team knowledge and content hub, and other IT tools enabling a centralized account administration and user management.
Evernote has been quite consistent in converting free users the longer they use the free product. While only 0.5% of first-time users jump straight to the premium product, this conversion rate increases to 7% after one year, and to 11% after two years. For those using the software for four or five years, a full 25% is likely to become paying users 1. Recent reductions to the number of syncable devices to only two for the free service are expected to increase the number of paid subscriptions 2.
Written by Felix Hieronymus and edited by Danielle Reza under the direction of Prof Charles Baden-Fuller, Cass Business School, in September 2016. This case is designed to illustrate a business model category. It leverages public sources and is written to further management understanding, and it is not meant to suggest individuals made either correct or incorrect decisions. © 2016