I don't think it is a problem with the VC model at all. Evernote has taken more than $300MM in funding. Nobody put a gun to their head and made them take that money. The people who run Evernote decided to go in and tell investors that they had a plan to turn Evernote into a multi billion dollar company, and that plan said they needed a huge pile of money, and the investors made the mistake of writing a check.
Evernote could have skipped those VC meetings, skipped renting the huge, insanely expensive office just off Rt. 1 by SF, skipped putting huge, expensive light up Evernote signs on that office, and skipped hiring hundreds of engineers in the most expensive place in the world to hire engineers. They could have rented a small office in a commercial park in San Jose and only hired 10 people and now they would be quite profitable. They could have done this by only taking a few million dollars in funding, and now they wouldn't need an insane valuation to exit.
This feels like the same thing as the other poster said. The problem is not so much that the VC model exists, so much as the leaders of Evernote decided to pursue it (and perhaps to some degree the culture in silicon valley which pushes founders towards this model).
101, not rt 1. They’ve had a massive sign on a building on 101 that always struck me as a zeitgeist for SV — a note taking app with its logo on a building...
Evernote could have skipped those VC meetings, skipped renting the huge, insanely expensive office just off Rt. 1 by SF, skipped putting huge, expensive light up Evernote signs on that office, and skipped hiring hundreds of engineers in the most expensive place in the world to hire engineers. They could have rented a small office in a commercial park in San Jose and only hired 10 people and now they would be quite profitable. They could have done this by only taking a few million dollars in funding, and now they wouldn't need an insane valuation to exit.