The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:14:38 · Harry Stebbings, Federico Simionato
[00:14:38] S1: How many people still use Evernote? Millions. Millions? Millions. Like, how many million? [00:14:44] S2: I'm not sure I can share, but but millions of people. Yes. Wow. Yes. Yes. And and every day, hours a day, there are people running their business on Evernote. It's just that for us working in tech, this looks weird because Evernote was popular once, and it's not as relevant today in in, like, tech pop culture. But if you run, like, a real estate agency, you might have everything on Evernote. What metric do you [00:15:08] S1: use to guide product success in Evernote? Is it DAU to MAU? Is it hours spent in Evernote? [00:15:15] S2: Retention. Subscriber retention is the most important thing on Evernote. Making sure that everything we are doing is either not touching or improving the the churn rate and especially the level at which you are you are retained as a customer. The way I think about retention is it's the percentage of your life that you choose to spend together with a product. Right? So for instance, I am subscribed to Spotify, and I've been for, I don't know, ten, twelve years, something like that. And I'm... I plan on being a subscriber for as many years or even more. And so it means that Spotify is very useful to me because I spend... I I choose to spend decades of my life, so, like, half my life on Spotify. And there are people for which Evernote is as useful as Spotify is to me, and so they choose to be subscribed to that product for decades of their life. And we absolutely must do everything we can to to not mess it up.
00:15:15 · Federico Simionato, Harry Stebbings
[00:15:15] S2: Retention. Subscriber retention is the most important thing on Evernote. Making sure that everything we are doing is either not touching or improving the the churn rate and especially the level at which you are you are retained as a customer. The way I think about retention is it's the percentage of your life that you choose to spend together with a product. Right? So for instance, I am subscribed to Spotify, and I've been for, I don't know, ten, twelve years, something like that. And I'm... I plan on being a subscriber for as many years or even more. And so it means that Spotify is very useful to me because I spend... I I choose to spend decades of my life, so, like, half my life on Spotify. And there are people for which Evernote is as useful as Spotify is to me, and so they choose to be subscribed to that product for decades of their life. And we absolutely must do everything we can to to not mess it up. [00:16:06] S1: I love that in terms of, like, the commitment attached to periods of your life. What product decision has led to the greatest churn, and what did you learn from that?
00:16:06 · Harry Stebbings, Federico Simionato
[00:16:06] S1: I love that in terms of, like, the commitment attached to periods of your life. What product decision has led to the greatest churn, and what did you learn from that? [00:16:16] S2: The thing we did on Evernote that produced the biggest churn was when we raised prices in 2023, which is something that we thoroughly analyzed and we ultimately made the decision to do it nonetheless. The reason being we believed, and and we still believe it, that Evernote provides a great deal of value to people that use it and that we could optimize pricing. At the time, we thought we could increase prices and people would still consider it a great deal. Not all of them, of course. There is a small amount of people who thought Evernote was either already too expensive or kind of at their threshold. It's it's like when you are subscribed to Netflix, and you see that every year or two, they increase your subscription. And when you receive the email, you're like, is this still a good deal for me? It's either yes or no, and then you make a decision based on am I getting enough out of this product and subscription that I'm accepting to stay subscribed to it. And similarly, on Evernote, we thought, let's increase prices in a way that still it's a no brainer for the vast, vast majority of people accepting that some people will... This will be over their threshold and will have to to let them go. The most, like, unmotivated people, the the least advanced ones, maybe the ones that were... Maybe we're already thinking about unsubscribing.
00:16:16 · Federico Simionato, Harry Stebbings
[00:16:16] S2: The thing we did on Evernote that produced the biggest churn was when we raised prices in 2023, which is something that we thoroughly analyzed and we ultimately made the decision to do it nonetheless. The reason being we believed, and and we still believe it, that Evernote provides a great deal of value to people that use it and that we could optimize pricing. At the time, we thought we could increase prices and people would still consider it a great deal. Not all of them, of course. There is a small amount of people who thought Evernote was either already too expensive or kind of at their threshold. It's it's like when you are subscribed to Netflix, and you see that every year or two, they increase your subscription. And when you receive the email, you're like, is this still a good deal for me? It's either yes or no, and then you make a decision based on am I getting enough out of this product and subscription that I'm accepting to stay subscribed to it. And similarly, on Evernote, we thought, let's increase prices in a way that still it's a no brainer for the vast, vast majority of people accepting that some people will... This will be over their threshold and will have to to let them go. The most, like, unmotivated people, the the least advanced ones, maybe the ones that were... Maybe we're already thinking about unsubscribing. [00:17:36] S1: How much did you increase prices by? [00:17:38] S2: I think 50% or 60%, something like that.
00:17:38 · Federico Simionato, Harry Stebbings
[00:17:38] S2: I think 50% or 60%, something like that. [00:17:41] S1: Okay. That's quite a lot. Yeah. That is different to a Netflix, like a dollar difference where you're like, fuck it. But what's interesting is that proportionally to the churn numbers, increase prices by 50 or 60% and people go, woah. You're making a lot more money in that case. [00:17:54] S2: Yes. And and on one hand, it's like economic play. It's a financial play where where you're where you're making more money. The thing I like about it is that it all boils down to how useful the product is for you. And if it's more useful than what you're paying for it, it's a no brainer decision to stay retained, to stay subscribed. [00:18:11] S1: Absolutely. And also, like, as you said, it separates the flexi user who had just switched to another tool very willingly versus something different. [00:18:19] S2: Yes. [00:18:19] S1: Do you have any lessons on pricing communication in terms of how to let users know a price is changing, the right words to use, is email the best way, is it push notification? Any lessons?
00:18:19 · Harry Stebbings, Federico Simionato
[00:18:19] S1: Do you have any lessons on pricing communication in terms of how to let users know a price is changing, the right words to use, is email the best way, is it push notification? Any lessons? [00:18:32] S2: I think what you want to do is you want to be confident about what you're doing so that you don't fear communication. If I'm confident that the price I'm asking you to pay is fair, then I can tell you 10 times, and you will still make the decision of staying retained. If you're trying to, like, shy away and, like, should we, like, use bullshit language and and not really tell people that we are increasing their prices? That's a bad move, and I and I and I wouldn't... It means that you're not confident that your product is delivering value to people. You just need to accept the fact that some people... This new price is going to be over their threshold for for usefulness and just be confident that what you're asking is best for most people. [00:19:12] S1: Do you think you make it easy enough for people to unsubscribe from your products?