Selling the First Company | Phil Libin

And that proved to be successful?

Yeah, yeah, it was. I think we did that. So we grew from 3 of us, I think we grew to maybe about like 15 people in like 2 years, 2 and a half years. And then we were building, we wound up building a lot of e-commerce, like first-generation e-commerce sites. So we built like the first site for like eToys and Barnes Noble, like Nokia, a few companies that were just experimenting with e-commerce. So we built some of the first sites. And it was super hard. You know, we'd be working easily 16 hours a day, 7 days a week. Like, just there's no break, no, like, just straight up all the time. And so it was mostly we were just building software for other companies, you know, kind of consulting or contracting. And that's— we realized that was kind of sucky. It's a good— you can get paid a lot of money. We were getting paid a good amount of money, but you're not creating any residual value. You're not building a product. Like, you're not— nothing is accumulating value. It's like when we stop Like, we didn't get paid a lot, but it was basically like an hourly wage. It wasn't that much different than working in an ice cream store. It was just a higher hourly wage. But, you know, if you didn't work, if you stopped working, you weren't, like, adding anything. So we decided at some point in the future we would definitely try to build a product. And then we were— we got lucky. We were able to sell that company right at the very top of the dot-com bubble. We sold it in January of 2000, which is like 20 minutes before everything fell apart. So we just got really fortunate that we were actually able to get anything out of that.

Cool. You sold the company. I'm sure the paycheck was pretty good compared to anything that had happened before.

Yeah, we sold the company for— it was funny. We got asked by Vignette, the company that we sold it to. It was a big company in Texas that did content management software. And they wanted to know if we were interested in discussing acquiring the company.

Sure.

So me and one of my co-founders flew down to Texas, to Austin, to talk to them. And none of us had ever sold a company before. We had no idea what to expect or anything. And they hadn't told us a price, so we didn't know what was going to happen. So on the plane over, we kept thinking, well, so what are we going to do? How do we think about this? Do we say a price? Or how much do we want to sell a company for? What sounds reasonable? And then we decided, no, no, no, we definitely— we're going to let them pick the price. We're not going to say anything. We're going to let them pick the price because they're the ones that are interested. But then we thought, okay, but how are we going to respond? What do you think sounds reasonable? And I said, well, I think we should get at least $1 million for this company. It was like, we had no investors at the time, so it was just us that had all the shares, the 5 co-founders. I said, well, I think— 4 co-founders— I think we should just get at least $1 million. Like, does that sound reasonable? And my friend said, well, yeah, I guess we could probably do that. Definitely shouldn't sell for less than that, because, you know, less than that we just make, you know, in terms of revenue pretty quickly. And we're like, okay, we're gonna— if they offer less than $1 million, we're definitely not gonna agree. And then like 2 hours later on the plane trip, we're like, maybe we can get $2 million. Like, do you think we can get $2 million? My friend was like, you know, yeah, I guess so. Like, they're a big company. It doesn't really matter to them. Like, we could probably get $2 million. They're like, okay, if they let— anything less than $2 million, we're not gonna agree. So we get to the boardroom, this big building. There's like this giant conference table, you know, big wooden table. It's just me and my co-founder, 3 people on the other side. And they literally do this thing, you know, where they like write down a number on a piece of paper and they like slide it across the table. Like the movies. Yeah, like that literally happened. I think they had probably seen the same movie, so they probably thought it was cool too. So they're like, well, so we want to make you an offer. So they write down a number, and they fold the paper up, and they slide it on the table. And I get it, and I unfold it, and it says $25 million. And I'm like, I guess that's kind of in the ballpark of what we were thinking about, but we were really thinking $30 million. And they were like, we'll give you $26 million, and that's it. Fine. You could have said no. We could have said no, yeah. But that's how the negotiation went. So we sold it for $26 million, which was, you know, not a huge amount of money, especially since it was half cash, half stock, and like all of the stock went pretty much to zero immediately. And then most of the cash we wound up investing in other tech companies, which went to zero. So we wound up with a few million dollars out of it. But, but it was, it was more money, you know, when I, when I got my share, because we had no investors, I just got basically a quarter of it or something like that. It was more money than I think the sum total of anyone in all of my ancestors put together had ever seen. Like, going back, you know, 100,000 years, back to the existence of money. Like, I was sure, because, like, my family, like, nobody made any money. Like, I was sure that at that point, like, I had more money than all of my ancestors summed up had ever had, which was kind of a weird and, like, humbling feeling.

Do you think that feeling of, you know, being financially okay then when you finally sold this company, does it push you to take more risks with the things that you were going to build in the future? Or how much of an impact was that on building Evernote later on?

Um, it's great because even with all of the— even with all the ups and downs, uh, in it later, like having enough money where, uh, I, I didn't have enough money at that point where I— like, I knew I would have to keep working. Like, it wasn't— it wasn't enough where I could just like never do anything again, but I knew that I would never have to do anything I didn't want to do. Now that was the best freedom. Like, that was the best part of it, was like Just like this knowledge that I have, I have just enough where, yeah, I have to keep working, but I'm pretty much never again going to be forced to do something that I don't want to do. So, like, I'm in control of, like, how I spend my life, which is kind of this amazing luxury and privilege to have. That made the biggest difference. I don't know that it— like, I don't really think about risk. I don't really think that making startups is particularly risky. You know, it's kind of an unconventional view, but I don't see where the risk is. But it definitely let us do stuff that we didn't know whether it would work out or not, because we knew we had a little bit of a buffer. We didn't have to just think about how we were going to get by. And if we worked on something for a year and it didn't make any money, that wasn't a disaster. We could recover from that. So it was very nice, very nice to have that security.