Max & Varun
This Remote-First Edtech is Going to Help You Build a Second Brain
Have you ever heard a teacher say, “Remember, we covered this topic two weeks ago”? Since we started our MBA in August, this has become a recurring theme in our lives. Although we are seasoned professionals, taking valuable notes in the MBA classroom has widely been a futile endeavor so far. Multiple tech companies have been trying to tackle note-taking for years, yet millions of students, academics, and researchers struggle every year on how they think and learn from their notes. Are pen and paper the way to go, or do we need to reimagine the possible with note-taking apps?
What is RemNote?
RemNote is the all-in-one tool for optimising note-taking, thoughts, and everything else you might jot down to make connections or inferences. The device is actually “just” an intelligent and digital version of the century-old Zettelkasten. What a word, right?
Zettelkasten, which is German for “box with notes,” describes the principle of adding metadata such as keywords, as well as an index to small paper cards. These paper cards are ordered in a box, and information can be easily extracted and re-ordered. A German sociologist, Niklas Luhmann, took this to the extreme and collected 90,000 paper cards throughout his life. It allowed him to make inferences from his thoughts and write almost 400 scientific articles and more than 70 books.
How does RemNote work?
On the surface, RemNote is a blank canvas with a blinking cursor, but that is only the case because text editors show you an empty page when you open them. In RemNote terminology, you are creating documents in which you can write down bullets.
However, each bullet goes beyond simple formatting and hyperlinking, as is commonplace in traditional note-taking apps. RemNote turns a list of bullets into a fluid note-taking experience with the hotkeys memorised. Before we take a step further into RemNote’s key characteristics, we must understand what the definition of a ‘Rem’ is: A Rem is something you want to store and remember.
Flashcards and integrated spaced repetition system (SRS)
By typing “>> or ::” you can automatically create a flashcard in your notes like the following:
This is a small but powerful feature as you’re taking notes, replacing an outdated method of memorising notes on traditional note-taking apps. While flashcard apps such as Anki and Brainscape exist specifically for this purpose, RemNote has a phased learning algorithm that optimizes your retention skills and gamifies the whole process to maintain engagement. After generating flashcards from your Rem, RemNote automatically schedules a spaced repetition practice schedule and reminds you when to practice. The algorithm is divided into three parts:
Superior PDF annotation
When a user creates a new Rem, there is an option to upload a PDF which splits the screen into two such that the user can read the PDF and take notes. More interesting is that as you highlight text in the PDF, the highlighted text automatically comes onto your notes with a linked reference. Compared to other note-taking apps, the RemNote integrated note functionality allows for seamless read-and-note process and is far more intuitive.
Synced blocks / Portal
A portal is a tool for embedding the same Rem into multiple documents. For example, suppose the word “Cell” is mentioned in your biology lecture numerous times. RemNote will allow you to link all Rems related to “Cell,” so that they update simultaneously with any new changes. In addition, you can just search for the “Cell” and learn across lectures.
Singular knowledge base
The actual Zettelkasten-value lies in its global search functionality. RemNote is a search engine for the brain where you can filter, index, and connect information that you may have previously forgotten. As a user, you create and link connections from different knowledge inputs and basically extend the neural network that is your brain. Instead of just dumping knowledge in a document you connect it with existing information and take note-taking to the next level.
How does RemNote go to market?
As a brain extension, RemNote becomes more valuable the earlier you start using it. Therefore, RemNote is currently focusing on students and academics, and has built a small yet very highly engaging community on Discord, Reddit, and Twitter.
RemNote has 100,000+ registered users and approximately 15,000+ Daily Active Users. With a great and free tool to use, growth will be very easy to achieve in that space; we estimate that RemNote could convince up to 70% of all students to try their platform.
With its lock-in effect of developing and maintaining a knowledge base that serves as an extended brain, it is expected that especially students in knowledge-dense fields will use RemNote extensively. That includes professions in areas such as Medicine or Law, where RemNote has the potential to become an indispensable tool.
The risk here is that RemNote relies on a viral effect in a generation with a brief attention span. Its business model is freemium, so it cannot spend heavily on user acquisition. Industry benchmarks show that only between 2-5% of freemium users convert to a paid plan. That is why the RemNote team is engaging heavily with the community right now, focusing on serving the student population’s needs to achieve the goal of going viral. In fact, most of RemNote’s platform updates are discussed on social media channels by loyal users who continually provide live feedback to the RemNote team.
Source: RemNote Forum.
How does RemNote differentiate itself from its competitors?
RemNote’s target market (students, academics, researchers, technical professions) would say that RemNote acts as an enhanced learning and knowledge platform that minimizes the need to use multiple apps to manage how we think and retain information. This is how we believe RemNote is positioned among its main competitors:
Key distinctive features
Integrated spaced repetition system
Superior PDF annotation
Synced blocks/ Portal
Singular knowledge base
These key features take RemNote beyond being a simple note-taking tool to an extension of our brain. However, it is essential to note that RemNote still competes with advanced flashcard apps such as Anki, Brainscape, and NeuraCache. Additionally, the broader note-taking app industry is crowded with big names such as Amplenote, Apple Notes, Evernote, GoodNotes, Notability, and Notion, among many others. Although these competitors are built to take notes rather than to augment our thinking, they are platforms that have a dense and sticky consumer base. It is also worth noting that a great deal of RemNote’s potential audience already has access to paid tools. For example, every Office365 subscriber is automatically on OneNote.
Selected KPIs worth watching out for:
Daily Active Users (DAUs)
Calculated as the number of users who spend a set amount of time every day on the platform (time spent varies from company to company). Metric is helpful in understanding platform adoption.
Annual Recurring Revenue (ARR)
Typically calculated as the monthly revenue subscription x number of users signed up for that subscription tier. Metric helps understand the stickiness of revenues and provides investors with further insight into how closely a startup is expected to meet revenue targets.
Lifetime Value (LTV)
The holy grail of subscription businesses and the modern platform economy: It is calculated from the average lifetime of a user (usually in years) times the expected annual revenue (see ARR above). It is the key metric to determine how much a company can spend on customer acquisition.
How does this business make money?
There are two pricing models available for RemNote.
Pro: $6/month. This is recurring and has helped RemNote generate an impressive ARR thus far. Our survey with users tells us that the pro version is for those who have already used the product for a few months. The pro version also includes priority access to all of the upcoming feature updates.
Life-long learner: $300/one-time. This deal is ideal for users who have adopted the product as their dedicated second brain and believe that they will continue to use it for the foreseeable future.
Who are the visionaries behind RemNote?
RemNote was started as a research project by Martin Schneider (Right) in 2017 while pursuing his Ph.D. in AI research at the Massachusetts Institute of Technology (MIT). The project was publicly launched in February 2020, following which Moritz Wallawitsch (Left) found the initial version of RemNote on Reddit and reached out to Martin with excitement. Martin and Moritz ultimately co-founded RemNote in June 2020. Martin has since left his Ph.D and Moritz paused his Software Engineering program at the CODE University of Applied Sciences so that they can work on RemNote full-time and turn it into the all-in-one tool for thinking and learning.
Additionally, RemNote is backed by investors such as General Catalyst. On September 22, 2021, RemNote raised $2.8 million of seed funding from General Catalyst, Soma Capital, and 468 Capital. Other undisclosed angel investors also participated in the round. The funds will be used to grow the company's team.
What’s the market opportunity here?
This is a $2.8bn market opportunity, even alongside competitors such as Obsidian. Here are our assumptions and our math:
1) The main markets for RemNote lie in Academia and knowledge-dense professions. For now, the user community consists predominantly of students.
2) Converting digital natives to a new and free tool is low, so the adoption rate is very high. We take 70% for students and 50% for professionals.
3) The conversion rate of freemium products to a paid subscription is low, usually between 2% and 5%. As part of our addressable market, we assume 2% for the initial student community, emphasising a low purchasing power. Later on, we upgrade this conversion rate to 10% for graduate-turned-professionals since they rely on the tool and are in the top earners’ bracket.
4) Germany, the UK, and the US are our target markets. Western education systems should generally be applicable for such a product.
5) For simplicity, we use $72 as a baseline revenue driver for the annual subscription price.
We decided to distinguish between academia and professional markets in the table below since some assumptions are radically different. The serviceable market is also relatively small compared to the addressable market, caused by the low conversion rate to paid subscriptions highlighted above.
The world of academia is RemNote’s entry into the broader market. With a potential user-base of 25M students in higher ed institutions (not including alternate forms of education), this translates into a massive market opportunity of $1.8bn. Given that this user base has low purchasing power, the conversion rate to paid subscriptions is likely at the lower end of the benchmark (usually between 2%-5%).
The sensitivity analysis shows that the overall adoption rate is far less important than the paid conversion rate. That is why we decided to go with the lower-paid conversion rate as our base scenario.
Post-graduation, we expect the academia user-base to keep using RemNote, especially when working in knowledge-dense jobs. This is based on RemNote’s core premise: becoming an extended brain of the user.
We expect that the stickiness is relatively high, given that switching costs to move your connected notes will be high (speaking in terms of effort required). As a proxy for knowledge-dense professions, we took doctors, researchers, lawyers, and software engineers, i.e., very well-paid jobs relative to other occupations. We expect the conversion rate to increase to 10% based on these two assumptions. The knowledge density here is defined as a job that requires a lot of factual knowledge and the ability to connect it logically.
At the same time, the adoption rate is likely to drop because professionals are less likely to switch tools. Furthermore, it is important to understand that we expect these figures to be reached in the near-term future. RemNote will trickle down from universities. Once its users graduate, we expect most will stay with it.
As for professionals, the paid conversion rate is more relevant when determining the serviceable market. The sensitivity analysis shows us that growing the paid conversion rate impacts top-line revenue far more than comparable improvements on the adoption rate. That is why early lock-in effects are important for RemNote’s long-term success.
Our conservative analysis of Academia and Professional markets tells us that RemNote can achieve $70m+ in revenues. RemNote’s future is very much dependent on its success in academia, and we believe that user-centric strategy and fostering the community are the right way to ensure that success.
Nonetheless the money is somewhere else for them. If RemNote also manages to establish itself as the go-to tool for knowledge-dense professions, there is a huge potential expanding into other markets outside of the US, UK, and Germany.
To our audience, you’ve now made it to the end, and we must thank you dearly. If you liked this analysis, are a RemNote user or have feedback for us, please reach out to us and subscribe to our blog to stay up to date!
Additionally, the original publication can be found on the LBS PE/VC blog, along with other interesting reads from our peers.
Note: The views and opinions expressed in this article are solely of the contributing writers and in no way reflect the official views of RemNote or the London Business School.