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A backpack to remember: can Evernote become a lifestyle company?

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A year ago, Phil Libin stood on stage at Evernote's annual conference and announced a cease-fire with paper. As the CEO of a company whose primary product is note-taking software, Libin had fought a years-long battle against physical goods for customers. But the time had come for a truce, he said, before introducing the Evernote Smart Notebook by Moleskine. At the time, the notebook looked like a novelty — a one-off partnership designed primarily for its entertainment value. In truth, though, the notebook represented the start of a new era for the company. One of Silicon Valley’s fastest-growing software companies is going unexpectedly analog.

Today, at its third annual conference in San Francisco, Evernote is unveiling a marketplace for high-end physical goods carrying the company’s brand. There's the Evernote ScanSnap, a high-end scanner that integrates deeply with its note-taking software. There's a fine-tipped stylus for writing on tablets and smartphones with added precision. There's a partnership with 3M to brand its iconic Post-Its with Evernote’s logo and encourage people to digitize them using new features in the company’s software. Then there are lifestyle goods, selected for their “smartness,” including a triangle-shaped messenger bag that sits flat when you set it on the ground; a wallet as slim as a money clip, built from a single piece of fine-grained leather; and a laptop sleeve that fits perfectly even though it has no zipper.

All told, Evernote Market reflects the company's enthusiasm for products that make you smarter. But it also represents an important evolution of the company’s business model. Evernote has long been the poster child for "freemium" software, in which a small fraction of its customers pay for added features while the rest use it without paying. Lately, the company has embraced a more old-fashioned business model: selling goods for money. Evernote sold hundreds of thousands of the Moleskine Smart Notebooks, giving the company hope that its customers will buy other physical goods. Libin sees Evernote as the ultimate brand for the knowledge worker, and says there's no reason that has to begin and end with software.

In an interview with The Verge at his company’s headquarters in Redwood City, he presses the point: "Where can we punch stupidity where it hurts?"

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Punching Stupid

Punching stupid

In 2009, Libin crafted a six-year plan for the company. Each year, Evernote would focus on a single goal. The first year, the goal was adding users. Last year, it was getting users to spend more time using its products. In 2013, as the company creeps toward an eventual initial public offering, the goal is about conversion: getting more of the company's existing 75 million users to pay something for an Evernote product. As of today, they have options beyond a $45-a-year Evernote premium subscription. "We want to make the transition that this is something worth paying for," Libin says. "Getting someone from paying zero to a dollar is as big a leap as getting someone from a dollar to a hundred dollars. And the market is a big part of that."

"There are products that can help you make good decisions, do things well, be better at this craziness that is modern living."

Like most tech companies, Evernote had long produced T-shirts and water bottles to give away to employees, tour groups, and attendees of its annual conference. It sold stickers and other goods in its online store. But two years ago, Libin declared a moratorium on schwag. He wanted to treat the brand with more respect. "You rarely see an Apple logo on a stress-relief ball," he says, deadpanning. From now on, Libin told employees, the Evernote brand would appear only on things the company could sell with pride.

Employees often hear Libin call the company "Nike for smart people." Nike's mission statement declares that "if you have a body, you are an athlete" — a convenient motto for a company that wants to sell sneakers to everyone on earth. Evernote, for its part, is selling a vision of performance enhancement for the mind. "There are products that can help you make good decisions, do things well, be better at this craziness that is modern living," says Andrew Sinkov, the company's marketing director. "Evernote is that. We're giving you the tools."

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Building the market

Building the market

Libin's idea for Evernote Market is to go beyond the stores you find at most tech companies and begin to sell the company itself as a lifestyle brand. It's not that Libin thinks his users are clamoring for Evernote-branded gear. He thinks they're clamoring for great gear, period — and Evernote wants to sell it to them, sharing the revenue with its partners. If his plan succeeds, other tech companies might be inspired to start selling physical goods — Dropbox hard drives, say, or Pinterest scrapbooks. On the other hand, if it fails, "Evernote backpack" could become synonymous with wild-eyed Silicon Valley overreach.

To create its marketplace, Evernote first had to define a look for the products that would carry its brand. Libin turned to Jeff Zwerner, who joined the company a year ago in the newly created position of vice president of branded products. Zwerner is a veteran of Apple who spent more than a decade working for the company in various roles; among other things, he developed the packaging for the original iPod.

Zwerner traveled the world looking for items that connected with Evernote's interest in intelligent objects. He guided the design of the products in Evernote Market, creating a palate of dark gray and black, with accents of Evernote green. He sourced backpacks from French boutique Côte&Ciel and wallets from Japanese designer Kazushige Minami, working with them to make Evernote versions of their wares.

But this is no ordinary corporate merchandise; the company's signature elephant logo is barely visible on most of the products. "While we want it to carry the brand, the primary purpose isn't to promote us," Zwerner says.

"While we want it to carry the brand, the primary purpose isn't to promote us."
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Deep integrations

Deep integrations

If Evernote is Nike for smart people, the $500 ScanSnap is its Air Jordan. Developed in partnership with PFU, a Fujitsu company, Evernote collaborated on both the hardware and software. ScanSnaps has long offered Evernote integration; with this version, Evernote has redesigned nearly all of the user experience, down to the installer icon you see when you first plug it in. The result is an uncommonly dignified-looking scanner, with a soft-touch coating, subtle branding, and powerful Evernote integration. The hardware chews through mixed-up documents accurately and at high speeds; the software automatically recognizes the type of document (photo, business card, receipt) and files it accordingly.

"We were quite frustrated with these chunky metal crayons."

Evernote took a similar approach with its stylus, the Jot Script Evernote Edition by Adonit. The company was desperate to find a fine-tipped stylus for its Penultimate handwriting app. "We were quite frustrated with these chunky metal crayons," Zwerner says. "They're not accurate. They're not precise." They turned to Adonit, an Austin, TX company that has sold 1 million units since a successful Kickstarter campaign two years ago. The new stylus uses an accelerometer to make writing with a stylus as precise as writing with a ballpoint pen, says David Sperry, an Adonit co-founder. He's hoping the collaboration brings styluses a popularity beyond the artist community that has served as its core customer.

But Evernote's most important partnership may be with 3M, which is launching six Evernote-branded products today in the United States and Japan. The company sells "tens of billions" of Post-Its every year, says Jesse Singh, a vice president at the company. But teaming up with Evernote gives 3M a chance to reach a broader audience — one that has largely forsaken paper in favor of digital note-taking.

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Market risks

Market risks

Scanner, stylus, wallet, backpack — it's a lot to tackle, even for a company that has 330 employees and has raised more than $250 million. Even as it moves into selling physical goods, Evernote is far from perfecting its core suite of apps. To a cynic, or perhaps a competitor, this push into the physical world could represent a distraction from the company's core focus.

To a cynic, or perhaps a competitor, this push into the physical world could represent a distraction from the company's core focusWallet4

Libin is prepared for the criticism. "There's always this trade-off perceptually in the public space between focus and stagnation," he says. "And which of those two things you wind up being accused of depends on how successful the products are. If you make different products and they're great, people are like, 'That's genius! Clearly, the right thing to do.' And if you focus on one product and it fails, people are like, 'That company is no longer capable of innovating.'"

"Everything we do is about staying a startup," he continues. "How do we keep innovating, how do we keep creative, how do we keep inspiring new ideas?" Pushing a vision of smart objects in the real world will lead to innovations in the company's software, he says. Designing a scanner, a stylus, and other goods have already led to new features in the product, and more are on the way. "I'm trying to find a way to keep the app innovative for the next decade. Doing this is the way to do that. This is how we make Evernote better."

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