#28 - Prerequisites for Starting a Company - Phil Libin

Financial Struggles

Phil Libin recounts the financial struggles Evernote faced, highlighting a pivotal moment when the company was on the brink of shutting down. With only two weeks of cash left, Phil was prepared to close the company, but a late-night email from a fan in Sweden changed everything. This fan not only expressed admiration for Evernote but also offered investment, which led to a crucial half-million-dollar lifeline.

I decided this was going to happen. I remember sitting there at 03:00 a.m. When I finally decided to do this, and I kind of had this epiphany.

--- Phil Libin

This investment allowed Evernote to stabilize and eventually attract further funding from international investors, including Docomo Capital from Japan 1 2.

   

Structural Mistakes

Phil reflects on the structural mistakes made during Evernote's early days, which made the company unfundable for a significant period. The unconventional structure, involving two teams merging with existing investments, complicated the investment process and delayed funding by 18 months. Phil advises against being too clever with legal structures, emphasizing the importance of sticking to conventional methods to avoid unnecessary hurdles.

It does not pay to be clever to be innovative on the structure, on the legal entity, and how you divvy up your stock and any of that kind of stuff.

--- Phil Libin

Despite these challenges, Evernote eventually secured a $10 million term sheet, although the process was fraught with difficulties 3 4.

   

Emotional Journey

Phil shares the emotional journey of entrepreneurship, describing it as both rewarding and challenging. He notes that while the work becomes more significant and fulfilling over time, it also grows increasingly difficult. Phil candidly admits that the day-to-day experience is not always fun, but the satisfaction comes from achieving long-term goals and working with a talented team.

It's not fun day to day. It's a huge amount of fun month to month, but it's not fun day to day.

--- Phil Libin

The emotional highs and lows are part of the entrepreneurial experience, with the real challenge beginning once the immediate financial threats are overcome 5 6.