The paid, the free and the freemium

Remember Google Notebook, the text note information manager that Google provided from 2006 to 2009? It went away, like Google Reader did a few years later.

Google shut down their free notes application probably because it didn’t make them enough money. Google Notebook had no ads, and people stored copious amount of information, which cost significant resources to store and handle.

A few years after Google Notebook was launched, Evernote launched in 2008. They offered a note taking application as a freemium service, and they offered a simple migration tool to import your stuff from Google into Evernote.

After 3 years Evernote announced that they had 11 million users. It seemed like the freemium was successful. But, this is not the full picture.

In 2009 Evernote had already raised $45 million. Since then, the company has raised additional funding rounds: $20 million, $50 million, $70 million, $64 million, and so on, for 1 rounds. Now, the cumulative funds raised by Evernote is up to $290 million.

Will Evernote’s freemium business model ever be sustainable? It appears that regular infusion of venture capital is required to keep the company in business.

Where does this leave Evernote’s users? Are my notes in better hands now with Evernote than they were with Google Notebook?

When I pay for using Evernote, I cover part of the cost of providing free service to many millions of free users, plus I contribute to the expected 10 times return on the capital invested in the company.

It’s an open question, what happens the day it’s not possible to raise more funding to sustain this unhealthy business? Though, the answer may be obvious.

The Internet has become infamously known for breeding overvalued technology businesses that go bust, and leave users (and investors) with nothing but regret.

I believe in charging for products. Pay for the service you get, also on the Internet. And, most important: Choose companies that have a business model you can understand.