The Ex-CEO Of Evernote Isn’t Really Interested In Investing. Here’s Why He Just Became A VC

In many ways, Phil Libin is a walking contradiction.

The co-founder and recently ex-CEO of Evernote, Libin made his name by creating a program that helps people organize their lives. Yet he professes to be one of the most disorganized people he knows and is quite bad at responding to emails. He stayed at Evernote in the CEO role for nearly nine years -- growing the company from 20 employees to 400 with nearly $300 million in funding -- but claims to have no real appetite for scaling businesses.

And now, after leaving his startup’s C-suite to assume the role of executive chairman, Libin is taking his first full-time gig in venture capital. The contradiction there? He doesn’t really find traditional VC work interesting.

“I am not motivated by investing. I don’t pick my own stocks, for example. I don’t really know what stocks I own. I used to, but I found that pretty stressful and I wasn’t very good at it,” he said. “I thought I would let other people deal with it. I wasn’t that interested in the strictly financial aspects of investing.”

Yet it only takes an hour with Libin -- in my case an hour sitting outside of Ritual Coffee Roasters in the Mission neighborhood of San Francisco -- to realize that it is his deep understanding of these contradictions that give him his power. It was his disorganization that led him to build Evernote into the popular platform that it is today. It was his acceptance of his particular interest in launching companies -- not growing them -- that led him to step down as the the startup’s CEO to bring in what he calls a “professional” leader to scale it further and potentially take it public. And it was his disinterest in finances that led him to General Catalyst Partners, a venture capital firm where he is not so much focused on investing. At GCP, he wants to build companies.

“General Catalyst is its own thing… It is the only top-tier VC firm that actually hatches companies,” he told me. “I really love working with founders and starting things. I thought that I wouldn’t be good at venture capital. I still don’t know if I am going to be good at it, but I am going to try.”

Last week, Libin and I had a wide-ranging conversation about his plans at General Catalyst, his fundamental issues with email and even his take on what’s going on over at Theranos and with Elizabeth Holmes.

Edited Excerpts:

What spurred your decision to leave the CEO role at Evernote?

I didn’t leave Evernote completely, I just don’t do much anymore. The plan was to bring on someone who was going to bring the right discipline to the company. I figured out a year and a half ago that I wanted to solve for more early stage companies. When we hired Chris [O’Neill, Evernote’s current CEO], I didn’t really know how much work being executive chairman takes. I actually talked to Reid [Hoffman, the co-founder and executive chairman of LinkedIn] a lot about it. He said for the first six months I should disconnect as much as I can and not be hovering around. After a few months, he told me to figure out how to re-engage as needed. So I followed that advice and I really thought I wouldn’t be doing much of anything for about a year. I thought I would write some more and relax, but I sort of got bored toward the end of that thought. I wanted to do something else.

What about hatching new companies is exciting to you?

I always think about what am I working on and what am I contributing. In the beginning, it was very important to Evernote for me to be involved 120 hours a week. Now, that wouldn’t make any sense. It is the same thing [working at General Catalyst.] I would want to start some companies and work with amazing founders and be very involved early on and in a very natural way be less involved as they mature and become real companies. I don’t want to run companies anymore. I’ve been a CEO for 19 years, I think I got it out of my system. At this point, I am super happy not being the person making all the decisions.

What about the CEO role got old for you?

Everything. (Laughs). There are parts of it that I really loved. Early on, it was mostly those parts, but as companies get older you end up doing a lot of different things. I think I am pretty good at intrinsically motivating people. Give me a group of highly-functioning nerds and we can walk through walls together. But the first time that someone asks me about their career progression, it’s like I hit a wall of jello. I just don’t know how to relate. I think there are the things you have to do to scale an organization that are very important, but they are not my skillset. My skillset is five, 10, 20 sharply talented weirdos that I can get to more or less go in the same direction and achieve pretty amazing things.

Did you have any desire to run a public company?

I think Evernote ought to be a public company at some point. We have a moral obligation to do so. The skill set to run that is very different. I agonized over this for awhile. For a couple years I would think, ‘Well, do I want to be the CEO who takes the company public?’ I wasn’t sure, and then I had an epiphany one day. I realized that being a CEO that takes a company public is something that you really ought to be sure about. The company deserves someone who wants to do this more than anything in the universe. The fact that I [wasn’t sure] was a problem. I loved the idea that maybe I would help create this and I could nurture it, but the day-to-day actual leadership should be up to someone else.

What made Evernote successful in the beginning?

At Evernote, and it sort of felt like cheating, we really were just building the product for ourselves. I think that is really the closest thing there is to a shortcut. If you can, build something for yourself. Then you can be honest about when it is getting better and when it is good enough and the iteration cycles become much faster. The founders that really excite me overwhelmingly are those that are building something for themselves. There is too much being written about product market fit and MVPs. I don’t buy that at all. What is happening now is that the world is becoming more and more of a meritocracy thanks to things like LinkedIn and Facebook and the App Store. They make the distribution of good products and good ideas almost instantaneous. All you really do now to be successful is make a good product, whereas 20 years ago that could get you nothing. 

What’s the most surprising thing that has come up now being on the other side of the investing table?

What’s been surprising to me is what the motivations are on the investor side of the table. For a fund like General Catalyst… we can’t really afford to spend time on things unless they have a shot of being really epic. We don’t need them to have a high chance of being really epic. We can place lots of bets and they can all be long shots and we can be wrong 90% of the time, but when we are right, it has to be huge. That filter has been new to me. There are tons of ideas that seem great, but they don’t fit how we would invest. Even if the expected return is pretty good, we only want to invest in things that are world changing. You can be wrong most of the time, but when you are right, the world knows it.

What kind of advice have you started to share with founders?

Founders will come up with a good vision, but their execution plan has a bunch of safety valves in them to avoid failure. I have to convince them that you are not trying to maximize your shots of success, you are trying to maximize your one shot at enormous success. Absence of enormous success you might as well fail quickly. That is the single biggest piece of magic that this side of the world has that no where else does.

Any big mistakes you made in the beginning?

The partner who recruited me to this sat down with me for a couple of pitches and diagnosed the mistake I was making right away. He said, ‘You are a product guy and so you hear a pitch and you get excited about the idea. But really when you do that, you are excited about what you would do with the idea.’ That isn’t a very useful framework to use while investing. What you really have to do is flip it around so 90% of your excitement comes from the founders -- you need to get goosebumps from them -- and 10% of the excitement is from the idea. As long as the founders are amazing and the idea is directionally correct, then that is a good investment.

How do you structure your day now?

Structure is way too generous. I am struggling with it. I made Evernote because I am such a disorganized person. I am back to interacting with a much greater group of people. When I was CEO, the vast majority of my interactions were with the same group of people. I have tried lots of different things. I have thought maybe I just need to get up at 4am and do all my emails for two hours in the beginning of the day. That doesn’t really work. I am figuring it out. One thing I have started to think about is when I make a mental list of the things I accomplished today, how many of those do I feel good about because it got someone off my back and how many those do I feel good about because I wanted to do them? I try to balance it. I want to do things that feel important to me, not just because there is someone on my case to do it. 

Is someone going to fix the email problem?

Your inbox is a list of things you are already behind on sorted in the wrong order. If you tried to think of a cognitively poorer way to structure your day, you couldn’t. I know there are a thousand startups who are trying to figure this out, but I think it deserves another run. The reason email keeps coming back is because it is the only thing that really works reliably outside of any given network. Slack is for inside your company and it is great for that, but a way to make communication work with people outside of your organization is needed. The employee directory is largely irrelevant and becoming more irrelevant everyday. Any tool that favors the people who are inside your network or organization is on the wrong side of history.

What’s your take on what is going on over at Theranos right now?

It’s a tough situation. I have read some of the back and forth and I give a ton of credit [to Elizabeth Holmes] for showing up on stage and being relatively forthright with it, but I don’t really know what to make of it. Not enough facts have come out yet. I would not invest in anything that I did not understand at a deep level, but I have this view that the world is not that mysterious. I am capable of understanding everything worth understanding. Having a founder who can actually explain to someone like me what the company does is an important trait that you should evaluate. Being able to explain in an articulate way to a generally smart layperson [what your company does], is a core skill. I don’t really understand what goes on in people’s minds who do invest in things they don’t understand. I am not saying that Theranos’ investors didn’t, I am not sure.

 Five years from now, where do you want to be?

I have a very specific life’s work. This is just on the path of that. I want the world to become a little bit smarter. I want people making better decisions. I want fewer dumb things. This is very much the mission of Evernote. I want to start or be at the moment of inception for the next five to ten great companies that come after Evernote and go a lot further. In five years, that probably means that I’ve made 15 investments and hatched three or four things. Of those, hopefully a good percentage are still around and growing. Right now I have 100 people in my network that I would work with on anything at the drop of the hat. I want that to increase sharply. That would be a good outcome for me.

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