Can a Korean startup with zero VC funding beat an American unicorn – i.e. Evernote – at its own game?
It’s no secret that some of the most heavily-funded, highly-valued startups on the planet make little or no money. The Silicon Valley mantra seems to be build something that people love, acquire a massive user base, and then maybe dip your toes into the monetization pool. When you’re raising money left and right from eager venture capitalists, it’s easy to keep the ship sailing with nary a banner ad or premium subscription service.
ColorNote, a minimalist, completely free note-taking app from South Korean startup Social & Mobile, has been downloaded more than 90 million times since launching in November 2009. It boasts 18 million monthly active users (MAUs), 4 million daily active users (DAUs), and co-founder Mijae Kim claims that it’s adding 2.8 million new registered users per month. And that’s all solely on Android.
But ColorNote hasn’t earned the husband-and-wife team a single cent, nor have they accepted a penny of venture capital funding. With Mijae estimating that the service will acquire its 100 millionth user by April, more than six years after debuting on Google Play, can ColorNote finally open the floodgates and monetize successfully, or will it nosedive toward irrelevance like Evernote?
Perhaps a better question is, can a Korean startup with zero VC funding beat an American unicorn at its own game?
Before domestic giant Samsung unveiled its first Android phone, Mijae’s husband Sungsuh Park was already designing ColorNote. Sungsuh, an early Android developer, noticed that the Motorola Droid was about to hit international markets without a pre-installed note-taking app. He built ColorNote in just two weeks, unveiling it in time for the Droid’s global rollout.
Though Evernote was founded in 2007, ColorNote beat the ailing unicorn to the Google Play store by a month. While its California-based rival offered a number of extra features (and a premium paid service) right off the bat, ColorNote focused entirely on simple color-coded text notes.
Functions are minimal without skipping on necessities. Users can create notes and lists, stick them to their home screen, set reminders, and check things off as they’re completed. Notes can be locked with a password, synced to the cloud or an SD card, shared, and archived. There’s also a search function to find text across all memos that have been taken.
“Being a first mover and avoiding useless features are key factors to our success,” Mijae tells Tech in Asia. “There are so many simple note-taking apps out there, and others who put a lot of money into marketing. We have stayed true to when we launched, cautiously adding new features and channeling simplicity. Whether it’s pre- or post-monetization that will not change. We have gotten this far by putting the user first and believe that our future lies in that.”
Chasing venture capital funding, or monetization, hasn’t been a priority for ColorNote because the startup is already earning revenue from other apps – enough to keep its five-member ship sailing. Those apps include popular Android flashlight app Color Flashlight and ColorDict Dictionary, both of which were spun off into a separate entity last November so the team could focus its resources entirely on ColorNote.
“Every startup has its own way,” Mijae says. “Some want to raise money and grow fast, but we want to build the business ourselves and run it ourselves. We’ve been stable for almost seven years by making our own decisions.”
Hitting that 100-million-user milestone will have no bearing on the startup’s decision to keep its note-taking app free, and free of external funding, she adds:
When we do decide to monetize ColorNote it will not be up to specific download numbers. We will consider monetization when advertising evolves enough to a place where it adds value. Currently, most advertising harms the user experience and would cause some of our users to likely leave the app. Our goal is to find the right balance for our users.
ColorNote amassed its user base by targeting international users from the outset. Keeping the app as bare-bones as possible played an integral part.
“We knew from the beginning that we had to think global, as the domestic market is not that big,” Mijae says. “[ColorNote] might not be beautiful in terms of design. Koreans and Japanese really love pretty design language, but people in the U.S. and elsewhere care a lot more about functionality.”
More than 20 percent of ColorNote users reside in the U.S., the service’s largest market by a long shot. Brazil and India are next, with about 6 percent each, followed by South Korea, Spain, and Japan with about 5 percent each.
“When you search for note-taking apps on Google Play, we will often show up first, so many people give it a try when they see it’s the top result,” Mijae says. “[ColorNote has] a 4.5-star review on Google Play, from more than 1.5 million reviews – including more than 1.1 million 5-star reviews.”
Evernote has fewer reviews (about 1.3 million) and less than a million 5-star reviews, despite having more total installs. Evernote surpassed 100 million users in May 2014, and hit 150 million in July 2015. ColorNote isn’t too far behind, despite being almost entirely bootstrapped. The distance between the two feels even shorter when you consider that Social & Mobile has five people on its company roster, compared to about 400 at Evernote.
While the startup has never raised VC funding, it accepted a $40,000 grant from the Korean government in October 2014. Mijae says those funds were used entirely for marketing in Japan, specifically for running print ads in Japanese tech magazines. She stresses that the startup’s growth everywhere else has been 100 percent organic.
To date, ColorNote has been localized in 15 languages. There’s no set timeline for an iOS release, but Mijae says there’s a plan – “it’s just not a top priority.”
For now, the emphasis remains on user acquisition.
“The U.S. was a growth driver, but now we’re really focusing on South and Southeast Asia, as well as South America, to sustain that growth,” Mijae explains. “Smartphone penetration is increasing in those regions, and they’re also Android-first markets.”
India and Brazil are ColorNote’s fasting growing markets at present, and the co-founder says that the app works without a hitch on the low-end devices common in developing countries.
Even in markets that have a lower financial barrier to entry than Korea or Japan, product marketing is certainly not free. Monetizing the app could provide the funds to run an ad campaign, but – in typical ColorNote fashion – the startup hopes to hold off for now.
“We think we can afford to do some more marketing, especially in emerging markets,” Mijae adds. “We have our own money, but maybe we’ll seek investors if we need them in the future.”
Editing by Terence Lee and Michael Tegos
This post was originally published on Tech in Asia.