I just found this beautiful article. In short, the figures are as follows:
May 2009: 900,000 users total; 12,000 paying users.
Nov 2009: 2,000,000 users total; 31,000 paying users.
The cost a user incurs is $0.09 per month.
A few observations:
- The user base growth is very solid. Going from 900K to 2000K in just 6 months is cool.
- Their conversion percentage is up from 1.33% to 1.50%. This is insanely important (unless the numbers were just rounded this way).
- They are loosing money: $4.50 * 12 * 31,000 = $1,674,000 income. $0.09 * 2,000,000 * 12 = $2,160,000 costs of serving the users. Total is ($486,000) annually.
- Those were just the costs of providing the service to the users. They also have user acquiring costs as well as development costs (to improve the service and to extend to other platforms). These costs are easily into $2-3M a year.
Note: I used $4.50 per month fee because it is $5.00 if you pay for a month. If you pay for a year, it’s $45/12 = $3.75 per month. Plus, payment processing is not free, especially for small transactions.
A few questions:
- Is Evernote a good business? Not yet. Even if they stop all development, their operating costs give them a fat red number.
- Will it become a good business? The trend is still not in their favor. However, even making losses, they might be eventually bought out by someone like Google, making a happy exit for the founders and VCs. It seems to be their strategy.
- How does MobileNoter compare to Evernote? I won’t share any hard numbers, but if we stop the development, we’ll be cash positive.