Oct 26, 2013, 7:38 AM ETConference Presentation, Fireside Chat, Interview

Phil Libin at Startup School 2013

Phil Libin identifies co-founder selection as the single most critical factor in startup success, emphasizing the need to cultivate "brilliant, high-energy" friends willing to work for free early on.
Libin advises against forming friendships with individuals one would not consider a potential co-founder, noting that "best friends" are a scarce resource best reserved for business partnerships.
Evernote represents the third iteration of the same core team, beginning with "Engine 5" (a failed consulting firm), followed by "CoreStreet" (a cryptography product), before culminating in Evernote.
Libin explicitly states a shift in philosophy from seeking an exit strategy to building "life's work," arguing that epic projects do not require an exit strategy but rather a liquidity strategy if capital is raised.

Engine 5 Lesson: The team learned that being a "consultant" is an illusion of autonomy; it lacks long-term value creation because the company merely sells labor rather than building a reusable product.
CoreStreet Lesson: While building a product is superior to consulting, Libin notes that building products for niche, unloved markets (like government cryptography) leads to founder burnout and a lack of passion.
Evernote Guiding Principle: The team decided to build a product specifically for themselves ("build it for us"), operating under the belief that if they love it and it solves a problem they face, a massive global audience will inevitably share that passion.
Market Validation: Libin rejects the traditional advice of "finding market fit" first, arguing that in the modern app economy, building something sufficiently epic for the founders guarantees finding millions of others who love it due to the meritocratic nature of digital distribution.

Structural Error: The 2007 merger with Stepan Pachikov's team (who worked on the Apple Newton) was delayed by "overly clever" legal and capital structures, which rendered the company "unfundable" for approximately 18 months.
Lesson Learned: Startups should avoid innovation in legal structures or stock splits; the only area where innovation is safe is the core product idea.
The 2008 Crisis: During the Lehman Brothers collapse, a planned $10 million investment from a European firm was cancelled because the investor lost 60% of their fund value, leaving Evernote with only three weeks of cash.
Emergency Fundraising: Libin nearly shut down the company on October 31, 2008, but secured $500,000 from a random investor in Sweden (an early product user) via email, which provided enough runway to survive the worst of the crisis.
First Investors: Early institutional investors included Japanese (DoCoMo Capital), Russian, and Canadian entities who were "giant fans of the product" rather than traditional Silicon Valley VCs.

The "Hard Day" Phenomenon: Libin observes that the stress was lowest when the company faced immediate existential threats; once safety was secured with a Series B round, the pressure shifted from "survival" to "execution" and managing expectations.
Day-to-Day Reality: While the long-term mission remains rewarding, day-to-day operations have become significantly more difficult and stressful as the company scaled to millions of users.
Hiring Philosophy: The team's longevity is attributed to the difficulty of the work being offset by the presence of a "sufficiently epic" mission and a culture where the founders are the primary judges of product quality.
Current Investor Strategy: Evernote currently refuses to speak with potential investors who do not already love the product, maintaining the principle that investors must be genuine users.
Industry Trend: Libin asserts that the advice to "build it for yourself" is now essential, as the connectivity of smartphones and app stores allows niche products to reach millions of users instantly, making "market fit" validation through personal passion more viable than ever before.