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How Evernote's Disastrous Meeting With DoCoMo Somehow Paid Off

Evernote CEO Phil Libin
With $251 million in venture backing and a valuation estimated at $1 billion, Evernote Corp. Chief Executive Officer Phil Libin has said he doesn’t need to rush to the public markets. Photographer: David Paul Morris/Bloomberg

In the midst of the financial crisis in 2008, Evernote needed money. The Silicon Valley software maker had been setting up meetings with just about anyone with cash who was willing to listen to their pitch. Finally, a prospect emerged in the investment arm of NTT DoCoMo, Japan's largest mobile carrier.

"We couldn't get any money from investors because we had a really terrible pitch, and the whole economy was falling apart," Evernote CEO Phil Libin said in a recent interview. "I don't know why DoCoMo came in."

A few executives from the Japanese phone company agreed to meet with Libin and Dave Engberg, Evernote's chief technology officer. The entrepreneurs were understandably anxious to make a good impression. Engberg, for his part, hoped to impress the businessmen with his worldly knowledge.

"Dave is a person who, whenever he goes anywhere, he's just trying to pick up as many phrases as possible," Libin said. "I turn around, and in back of me, I hear Dave saying to the people of DoCoMo, 'It's nice to meet you' in Korean. Immediately, I had this thought: 'Oh my God. Why is Dave speaking Korean to these people?'"

Cultural misunderstandings are commonplace when conducting business globally, especially for wide-eyed entrepreneurs. These mix-ups can be humiliating and harm relationships in some cases, but they aren't always deal-breakers.

"I can't tell if he's more embarrassed or if they're more embarrassed for him," Libin said. "A lot of Japanese people, they're so empathetic. They feel your embarrassment more than you do."

Engberg was mortified, so you can imagine the intense empathy that DoCoMo's management must have felt. But the story has a happy ending. DoCoMo Capital kicked $2 million into Evernote in 2009. The money helped the startup to continue developing its file-storage and productivity tools.

The investment is working out for DoCoMo, too. Evernote has more than 75 million users spanning the globe, Libin said at the company's third-annual conference last week. There, Libin announced that Evernote is teaming up with 3M to cross-promote its brand with Post-it Notes , and is also working with on corporate software. Evernote, which plans to hold off on an initial public offering until at least 2015, has an estimated valuation of more than $1 billion.

"We want to make something that's globally great," Libin said last week. "We want to make products that transcend local tastes."

Libin is a green-tea drinker who's a little bit obsessed with Japanese culture . ("I'm still hoping to be on a whiskey ad in Tokyo ," he once told me.) He's still somewhat confounded by DoCoMo's ability to look past the awkwardness when his colleague "spoke broken Korean to Japanese people," he said.

Libin's only explanation: "I'm pretty sure that their only way to get out of this is just to give us millions of dollars."

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