- The speaker discusses his experience with starting multiple startups, including Evernote.
- He emphasizes the importance of having great co-founders and cultivating a group of brilliant and dedicated individuals.
- The speaker shares the lessons he learned from his first startup, Engine 5, which was a consulting company.
- He explains that being a consultant and working for someone else does not allow for long-term value creation.
- After selling Engine 5, the speaker and his team started a second company, Core Street, where they built security products.
- However, they realized that they were not passionate about the product they were building.
- They eventually sold Core Street and decided to start Evernote, with the goal of building something they loved and wanted to use themselves.
- The speaker highlights the importance of building a company that is their life's work, with no exit strategy.
- They wanted to create something epic that they could devote their lives to building.
- The motivation for Evernote came from their love for video games and wanting to create something they enjoyed.

- The speaker and his co-founders considered starting a video game company but decided against it due to the already saturated market.
- They then considered social media but again felt that there were already many companies providing that service.
- They realized that productivity software was lacking and decided to create a modern and effective solution.
- They merged with another company called Evernote and relaunched as a new company.
- The speaker advises against being too clever or innovative with the legal and financial structure of a startup.
- They struggled to raise funds and almost failed due to the complicated structure.
- Eventually, they secured a $10 million investment, but faced difficulties pitching the idea in Silicon Valley.
- They were on the verge of shutting down the company but received an email from a satisfied user in Sweden offering investment.
- The speaker responded positively to the offer.

- The speaker talks about the early days of their company and the struggle to secure investment
- They eventually received half a million dollars which helped them survive the crisis and gain traction
- The first investors were Russians, Canadians, and Japanese, all of whom were fans of the product
- They share a funny anecdote about a language mix-up with Japanese investors that led to them receiving more funding
- The speaker emphasizes the importance of building something they love and finding something sufficiently epic to do
- They believe that building something for themselves gives them an advantage in the tech world
- They encourage not wasting time on people who are not suitable for starting a company with.

The speaker discusses his experience with starting multiple startups, including Evernote. He emphasizes the importance of having great co-founders and cultivating a group of brilliant and dedicated individuals. They started with a consulting company but realized they wanted to create something they loved. They considered video games and social media but decided to create a modern productivity software. They struggled to raise funds but received an investment from a satisfied user. They share the importance of building something they love and finding something epic to do. They believe building for themselves gives them an advantage in the tech world and encourage not wasting time on unsuitable people.

Phil Libin is the cofounder and CEO of All Turtles. Prior to that he was the CEO of Evernote. This is his 2013 Startup School talk.

I think this is literally the largest number of people I've ever spoken to.

Paul asked me to come in and talk a little bit about what we went through at Evernote, especially in the early years, and the mistakes we made and the lessons we learned, and I'm happy to do that.

It was our third startup, and we learned a lot kind of all the way through the process.

The first real startup that I was involved with, I started with a few college roommates of mine, you know, my best friends in Boston.

And that was, I think, the first and probably the most important lesson to me right there was that I had great co-founders.

The most important thing, and this is very much the same team of people that was with me at the first startup and then the second startup and then many of them are even at Evernote.

And so I think the most important thing to do at as young an age as possible is to just cultivate this group of really, really brilliant, high energy, willing to work for free, best friends for life.

I got lucky that the people that I happened to meet in college in the computer science department of Boston University are people that have stuck with me for at least so far the rest of our lives, and I fully expect much longer.

In fact, I would go so far as to say that you shouldn't even make friends with people that you don't see starting a company with.

It kind of sounds dickish, I guess, but to be honest with you, why bother?

You only have so many best friends that you're gonna have and if you can't imagine counting on them in a pinch as a co-founder, use those resources wisely.

I happened to get these great people And I've been able to get really great people in every other company.

So basically, we started our first company, Engine 5.

The core group of those people went on to found the second company, Core Street.

The core group of those people went on to found Evernote.

Evernote, I really hope, is my life's work.

I don't intend to really work on anything else.

But if I ever do, I already know that the 50 or so people at Evernote that are gonna hopefully be with me for whatever the next thing is.

And so developing this crew is super huge.

And I can kind of tell from most of you, you look like you're right at about that age in an area of life where you're making these connections, you're making these friendships, and it's gonna go by really fast.

There was originally gonna be 5 of us, but then 2 people chickened out, but we already had the domain name.

And it was just all 3 of us were computer programmers, we were all developers, And we literally didn't know that there was such a thing as investors.

We didn't know that there were people who would give you money so that you can build something.

We just assumed that the way you build a business is you just start working and you get paid and you make more money than you spend and so on.

And luckily this was right at the lead up to the original dot com bubble in the very late 90s.

And so if you could program, people would just throw money at you.

And we didn't have much motivation in starting this company other than we just wanted to work together.

We wanted to see what it would be like to have a company, to be our own boss, to call the rules.

And so we did a lot of programming, consulting, mostly around e-commerce stuff.

And what we learned, and this is probably the second most important lesson, is being your own boss and having your own company and making the rules kind of sucks.

If what you're doing ultimately is being a consultant, it's just like you're just getting paid by somebody else to write some code, because you're not actually building any value, any long-term value.

You can be getting paid, you can be making a decent amount of money while you're working, but all of this idea that you're actually calling the shots and you're in control is a complete illusion if what you're really doing is working for building something for some other company.

So it's amazingly hard work, and the rewards are very immediate, but they're not lasting.

And so after working harder than we've ever worked for about 2 and a half years.

I remember, I would come into the office at like 2 a.m.

And there would be people leaning out of the windows smoking because we didn't have time to even go outside.

And we finally did sell that, we sold that company to a big company called Vignette in Austin, Texas about 2 and a half years later, and we were super happy to sell it because we didn't love this work.

We were just building stores and e-commerce things, and so we sold it.

We didn't know how to sell a company, so we came down to Austin, and it was totally, the acquirers did everything that you would expect.

Like, they totally slid the paper across the table with like, I'm gonna write down a figure, and slid it across the table.

If any of you have seen the Always Sunny in Philadelphia episode, it was just that.

And a couple years later, we left Vignette and we decided, okay, what did we learn?

You know, time to do something new, time to start a company, because obviously we weren't gonna go and get real jobs at this point.

And we said, well, our lesson is we don't wanna be consultants.

We don't just wanna develop stuff for somebody else.

And so we started our second company, which was an MIT spin-off at the time called Core Street, where we got together with this brilliant MIT cryptographer to build cryptography and security stuff for banks and for governments, products.

And that was better in the sense that we were building a product.

We were building something that we can add value to.

But what we got wrong was it turned out that it wasn't a product that any of us were madly in love with.

Because it turns out nobody is madly in love with government security and cryptography stuff.

People don't wake up in the morning being like, oh yeah, I'm so excited, the new government standard for contactless smart cards is out today.

That guy was me, so it was like doubly sad.

And at some point, basically, we decided, after about 7 years of this, and we had a good experience, We set out to change the world a little bit, to redefine security.

But what we started realizing was like, man, we just like, I'd sooner chew my own arm off than sit through 1 more Department of Defense procurement process hearing.

And so we exited that company, we brought on adult leadership and then we were able to sell that second company as well.

And then got together in 2007 and said, okay, now we're all in our mid-30s, and we've had 2 companies, and we've had some exits, we've made a little bit of money, what do we want to do now?

And we said, okay, well the first lesson, we were right, let's not be consultants, let's build a product.

But the second lesson is it shouldn't just be any product.

It shouldn't be a product about, we shouldn't sit around thinking, what does the market want?

How do we build something that we can sell?

I got tired of board members and investors constantly telling me, which would happen all the time, they would constantly tell me, remember Phil, you're not the target audience.

You know, your customers are the target audience.

And you know, remember, the best product doesn't always win.

All those things are true, and they're especially true if you're building stuff for systems for banks and for governments.

And we said, OK, the third time around, let's do this again.

Let's build something that we love so that we are the target audience.

And let's do it in a way that we're not gonna try to sell the company, because we've sold 2.

And selling a company is, it's a mixed feeling.

I mean, It's nice, especially the first time you do it, if you have a decent exit and you make some money.

But you've put your entire life into this for years, and then it's not yours anymore.

And we said, the third time around, let's do it differently.

Let's only build things for us that we're in love with, that we want to use, and let's build a company that we want to keep.

Let's explicitly say there is no exit strategy.

Let's make something that is sufficiently epic to be our life's work, And if you have something that's your life's work, you don't need an exit strategy.

There's no exit strategy for your life's work.

You should have a liquidity strategy, especially if you're gonna raise money.

Let's make something that we can devote our lives to, that we can devote our lives to building, and let's build it for us.

And that was the motivation for Evernote.

So we sat around thinking, okay, well, what should we build?

Well, let's start with stuff that we like.

And we said, I said, you know, I play a lot of video games.

Maybe we should start a video game company.

But we already have really great experiences with video games.

Even back then, there was already a giant stack of games that I wanted to play that I couldn't play through.

I thought, the world isn't going to be significantly better if we add another 1, because there's already people doing a great job keeping us entertained with video games.

So then we thought, OK, well, what else do we like?

And 1 of my co-founders said, well, I kind of like the new social networking, social media stuff.

And we thought, yeah, that is kind of cool.

Twitter was just kind of getting started.

There's already so many companies doing it.

And I mean, MySpace has already done everything you'd ever do with a social network.

Why would we want to start something to compete with MySpace?

By the way, I suck as an angel investor, just so you guys know.

But then we thought, okay, well, we have pretty good experiences with entertainment, we have pretty good experiences with communication and with social networking, But when we're using productivity stuff, when we're using stuff to try to make us smarter, to try to actually accomplish something, it's for the most part just a really crappy experience.

Every time we use productivity software, it feels either old or kind of cultish.

It doesn't actually get the job done, it doesn't feel very elegant, and we thought, okay, that's cool, we're all nerds, we all want to build a second brain, we all want to be smarter.

It really feels like things like smartphones and app stores are about to take off and get started, let's build something that is gonna be the modern definition of what it means to be effective and productive as a knowledge worker.

So we made a plan, We were gonna call the company ribbon like you tie a ribbon around your finger to remember And then in in my due diligence and my research about it.

We were in Boston We ran into this other group of people here in in actually very close to here in Cupertino Sorry in Sunnyvale That was called Evernote that was started by this guy named Stepan Pachukov, and he had a team of people, Stepan is sort of this genius, kind of mad scientist, inventor, entrepreneur, kind of Russian-American guy.

He had a team of people that actually worked, that went all the way back to the Apple Newton days.

The Apple Newton was kind of the way ahead of its time, first in a portable device with handwriting recognition and everything, and they were working on this idea of a second memory to everyone, building a second brain, we were saying the same things.

So Stepan and I got together and we decided, hey, instead of competing, let's actually just merge the companies.

Let's merge the teams and make something Evernote.

And so we merged the 2 teams in 07, and we kind of recreated the company, relaunched it as a new company called Evernote.

We recapitalized it, which means it's a technical financial term, it means that it used to have a capital N, Evernote, and we made it a lowercase n.

We also changed the investment structure, but that was less important to me.

And we launched a new product in 2008, and there was an important lesson there too, which is this was a mistake that I think we made.

This wasn't the typical Silicon Valley startup start where you go to Y Combinator and you have a couple of co-founders and you get an A round and you start something.

It was a weird, complicated structure with 2 teams coming together and 1 of them already had some investments and it all had to get redone.

I mean, it was great that we combined the teams and that we merged and the personalities were great and we were able to build something really fantastic, but we were way too clever with the structure.

It does not pay to be clever, to be innovative on kind of the structure, on the legal entity and how you divvy up your stock and any of that kind of stuff.

Because it basically made us unfundable for a couple of years.

Because until we were significant enough that it was actually worth a VC's time actually understanding why we were different and figuring out how to unwind it and how to fix it, until we were significant enough to get over that barrier, like no 1 would even take a look at us.

And it took us, you know, the fact that we were clever in the early days and tried to kind of preserve this unconventional structure probably cost us 18 months of not being able to raise money.

I don't advise doing anything particularly clever or different about how you do the basics and the dynamics.

So just pay attention to what people here will tell you and at YC and other resources and just do exactly that.

Be innovative about 1 thing only, which is your idea.

Like that's the only thing you can afford as startup founders to really be innovative about is the main thing that you're doing.

Everything else you want to do as by the book as possible, at least in the early days, to minimize your chances of failing for a stupid reason.

Evernote almost failed for the stupid reason that we were too clever with our legal forms early on.

So we cleaned up everything, and we had self-funded it.

I put some money in, Stepan put money in.

We had some friends and family investors, but we were just about ready to raise a big round, and it took a long time, but we finally got a $10 million term sheet, not from a Silicon Valley investor, from a European investor, because the Silicon Valley guy still didn't want to talk to us.

And we had about 3 weeks of cash in the bank left.

It was a very long due diligence because we had to fix all the structure stuff.

But the deal was supposed to close finally.

It was supposed to close in 2008, in the fall.

And the closing date was actually the day that Lehman Brothers collapsed.

And the investor called me on the day of closing and said, hey, we just lost 60% of our fund value in 1 day.

And we had 3 weeks of cash left at that point.

We hadn't been able to talk to too many other investors for about the previous 3 months, because we were kind of locked up in due diligence with exclusivity.

At that point I already had 20 something people in the company.

So I spent a week just frantically calling everyone, calling everyone I knew, everyone I didn't know, just trying to get meetings, trying to get investment.

It was arguably the worst time to be doing it in the history of the universe.

I'm Phil Libin, you've never heard of me.

We're gonna make this thing called Evernote.

It's gonna let you Write stuff down, remember things.

And then, usually, you know, usually that would be enough to get us thrown out in Silicon Valley.

But sometimes, just out of politeness, they would ask a follow-up question.

And the most common question would be, so who's your competition?

I would say, oh, our competition, well, Pretty much every single computer or phone or PDA or any other device that's ever come out in the last 50 years already has a pretty good free note-taking solution on it.

I spent a week trying to get cash, nothing.

Now we have 2 weeks of cash left in the bank.

I'm gonna shut down the company tomorrow morning.

I'm going to go to sleep, I'm going to stand up from my desk, I'm going to go to sleep, I'm going to force myself to sleep, I'm going to come into the office tomorrow, I'm going to lay everyone off, shut down the company.

Because we only have 2 weeks of cash left, and you can't really take it to 0, then you get into legal trouble, so you have to make sure you pay the last bills and all that kind of stuff.

When I finally decided to do this, and I kind of had this epiphany.

I kind of thought, oh, this is what it must feel like to be an adult.

For the first time in my life, I felt like I was an adult.

This is what it feels like to be an adult, to make an adult decision.

Whatever happens afterwards, I'm going to optimize my life for being as childish as possible from here on out.

But I decided that this is what was going to happen.

And at about 3 AM, right before I went to sleep, I got an email.

And so I said, all right, I'll read 1 more email.

And this email was from some random guy in Sweden.

And he said, dear Phil, I'm a random guy in Sweden.

And I'm just writing to let you know that I love Evernote.

It's only been out for about 2 months at that point.

And I remember thinking, oh, that's nice.

They say if you can make a difference to 1 random guy in Sweden, you've kind of achieved something.

But then he went on to say in his email, so I'm just writing to see if you guys need any investment.

And 20 minutes later I was in a Skype call with him.

And of course we told him the whole situation.

And 2 weeks after that he wired us half a million dollars.

And it was exactly enough, that half a million dollars was exactly enough that we cut back.

I had stopped drawing a salary a while ago and some of the management staff wasn't drawing a salary and we really tightened their belt.

But that half a million dollars was enough.

It lasted about 6 months and then the worst of the crisis was over, but more importantly, we had already cleaned up all of our structure, and the most important thing is we finally had traction.

We finally had enough data where I could do a VC presentation that wasn't awful, where I can actually say, This is the model.

Here's how the business is actually working.

Here's how we are making money today, and here's why it's gonna scale.

And that's what's made all the difference.

The first investors were actually Russians and Canadians and Japanese.

We got 1 of our first investors, professional investors, was Dokomo Capital, you know, the giant telecom in Japan.

You know, they reached out somehow on Twitter because, you know, they liked Evernote.

By the way, every single investor in Evernote, from the early days down to the people that we're bringing in now, last year, every single investor is a fan of the product.

We don't even talk to people anymore who don't love Evernote.

But even early on, no 1 knew what it was.

The investors were all giant fans of the product.

So we built it for us, but it turns out we also built it for our investors and for our employees and for the media and for every other constituency that was important to us.

So DoCoMo came in, We were still struggling at that point.

We still didn't have too much professional investment, but a couple of executives flew in from Japan.

And they had a meeting with myself and our CTO, Dave Engberg, 1 of my co-founders, in our office in Sunnyvale.

And they come in to the room, and we bow and say hello, and then in back of me, I hear Dave talking to them, and I hear Dave say, thank you very much to them in Korean.

And I hear this, and my thought is like, why is Dave speaking to these people in Korean?

And I kind of look at him, and he immediately realized what he had done, because he was just in Korea, and his brain just got frazzled, so he immediately realized what he had just done, that he just spoke, he just said thank you.

He meant to say hello in Japanese, but he instead said thank you in Korean.

And I look at the Dōkomo guys, and the Dōkomo guys are completely, completely embarrassed.

And the thing with Japanese people is they're so, for the most part, they're so emphatic, they have so much empathy, like they feel your embarrassment worse than you do.

And like they're mortified about how bad we feel.

And so the only way out of the situation was for them to just give us several million dollars just to like.

Just to prove that there was no hard feelings.

But then things did get a lot better, and then we did have traction.

And then Morgan Thaler came in as the first Silicon Valley firm, and then Sequoia went in big several times.

It got a lot harder once we were a real company.

That actually the most fun I ever had, the most carefree that I ever was, the least stress that I ever had, was back when it looked like we might go out of business any day.

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Phil Libin at Startup School 2013