Invest Like the Best with Patrick O'Shaughnessy
00:32:07 · Patrick O'Shaughnessy
[00:32:07] S0: Wow. Yeah.
00:32:08 · Luca Ferrari
[00:32:08] S2: A strong brand, an important use case, a lot of customers with thousands or tens of thousands of notes using Evernote to run their lives really. So that means potentially good retention. The product had not probably kept up with the times as well as you as a customer would have loved to see. Of course, you can only realize that fully once you're on the inside and really open hood and you get a sense of that as a user. I was a user actually before I acquired it. I've been a user since 2014, I believe. And so we bid, we won it. We began our usual transformation process on a different scale, but essentially had a team of some of our best experts, functional experts, growth product design and engineering. Going, we met everybody. We spent a lot of time with everybody on the team and worked on projects and really got acquainted with the nitty gritty details of the business, broadly speaking. And then developed a roadmap for how to make Evernote more successful and got to work. It's a completely different business today. I think in two and a half years, we have released probably about two fifty significant product improvements. It's difficult to be a 100% quantitative of product improvements because there's no perfect definition, but my... In my estimation, we have been improving and innovating probably three to five times faster than before. We've been able to do this with a smaller team, really working on keeping all the positions that were critical, getting rid of projects and initiatives that we thought were tangential and really not adding a lot of value, working on talent density, the culture of impact orientation and rationality, really trying to make sure that what we do moves the needle. It's a million things you bring in as a business with our platform. But we rebuilt almost entirely code based, the cloud infrastructure. There's almost nothing, at least nothing of the core components. It's now far higher performance. Nodes sync up in less than 10% of the time, in some cases 1% of the time.
00:33:53 · Patrick O'Shaughnessy, Luca Ferrari
[00:33:53] S0: I remember that being a problem when I was using it. That's why I stopped. [00:33:56] S2: It is super fast. You would not tell the difference at all compared to the products you probably consider the best in the broader productivity. Maybe you think Notion is top notch in the broader productivity. I think if you tried Evernote today, you would consider... They do different things, but the quality of the experience you consider probably on par. So we had to close a big gap there. Retention is at an all time high despite prices being higher because now Evernote is substantially more expensive. It varies by country and it's probably on average, say 60% more expensive. So it's substantially more expensive than before, but sure retention is better because yeah, we did lose 10% of customers who were already not so sure and once the price goes up, okay, I'm out of here. But all the more engaged loyal customers are still on board and customer satisfaction by any quantitative metric is better than it's ever been before. But it was a very time consuming effort, not something, I think completely beyond what say a private equity could do without having its own [00:34:53] S0: R and D team and everything. [00:34:54] S2: Yeah. And having to maybe be ready to sell within a few years. And again, can't do it a 100 companies each year, but we could do three or five or six.
00:34:54 · Luca Ferrari, Patrick O'Shaughnessy
[00:34:54] S2: Yeah. And having to maybe be ready to sell within a few years. And again, can't do it a 100 companies each year, but we could do three or five or six. [00:35:02] S0: How do you know when there's pricing power? If prices are 6% higher, you've made it a better product so maybe that's why the price can go higher. But how do you think about price charge to end users across your universe of applications that you own?
00:35:02 · Patrick O'Shaughnessy, Luca Ferrari
[00:35:02] S0: How do you know when there's pricing power? If prices are 6% higher, you've made it a better product so maybe that's why the price can go higher. But how do you think about price charge to end users across your universe of applications that you own? [00:35:15] S2: It really depends on each case. I'll give you another case that's quite different from Evernote and that would be Meetup. So Meetup historically you could only use it as an organizer. You could only use it if you paid for it. And since we acquired it, we introduced a free tier so you could organize. We actually do quite a lot for free. It kind of qualifies as a price decrease in a way, like we give away more for free. And we actually increased the price for the more advanced use cases for the truly dedicated. Based on my observation, there's room for being more sophisticated about pricing, which is different from increasing prices. Being better at segmentation, what's paid, what's given away for free, personalization, communications, experiences that ultimately all blend into monetization and the maximization of user LTV. Our direct experience is that there's a wide range of levels of sophistication in the market. I'd like to think Bending Spoons being at the very top of that sophistication spectrum. Whether that translates into higher prices or lower prices or same prices, I don't know. It certainly translates into a very different overall approach to monetization. [00:36:20] S0: Just as a quick aside, why is it called Bending Spoons?
00:36:23 · Luca Ferrari
[00:36:23] S2: So when we started, we knew that we weren't going to be a one product company. We still wanted the name to connect to something for us. A lot of companies are named after somehow after the problem they're trying to solve or not all of them, or the product they're trying to deliver. Of course, that wasn't an option for us. We figured, okay, why don't we look for a name that's more connects to some principles or values that we find inspiring? One of my co founders, Mateo, is a big fan of The Matrix. Watched the movie the night before, I'm not sure. But anyway, he told us, why don't we call it Bending Spoons? He watched the movie and there's this little bold guy who bends a spoon with his mind, and I... Yeah. I think it's cool. Initially, we didn't like it. I still have a spreadsheet with different names. At Bending Spoons, think we gave it like four out of five stars. There were a couple others that got more stars. The one I remembered, in hindsight, thank God we didn't pick it. Appeal. We were doing only apps initially. Now we do all sorts of technology and software. Appeal. I think it's awful for some reason. The Luca from 2013 thought it was brilliant. So it got five stars out of five. But we picked Bending the reason why we liked it was it connected to two principles or values. They're still very dear to us. One is call it the power of the mind. The idea of bending spoons somehow, at least to me, it inspires this vision of a powerful mind that can do things that appear impossible. And we're big believers that the human brain has incredible potential if you work on it and at it and try to really give it the tools. And the second reason why we loved it was that even if you have that brain, it, again, just intuitively feels to get to the point where you can bend spoons, you've probably worked really hard at your craft. And we like the idea of almost anything in life that has value, you got to work at it. I think it's true with a family, romantic relationships, your craft as a professional, your abilities as an athlete. I think almost anything that will really give you satisfaction requires work. And so it... And plus, it was a unique name. We hadn't heard of any company called The Bending Spoons, and so we figured it's probably memorable. Let's go for it.