Notion - Reaching 1 million users with 18 employees
How Notion went from nearly bankrupt to having VCs knocking on its door.
If you're like me, you have one word to describe our digital world: overwhelming.
Our home screens are getting more and more crowded. The number of apps is growing exponentially, with increased complexity. Everyone is trying to do more of the same thing and you don't know which option to choose so you go back to your Word file.
Notion is changing that. It's building a digital platform that wants to become your go-to place to store and work on information.
It wants to become your second brain.
Ivan Zhao is not the traditional founder that studied computer science and went on to create his scale-at-all-cost startup. He has the mind of an artist with a minimalist approach to everything he does.
Born in China, Ivan moved to Canada as a child and studied cognitive sciences in college with a minor in fine arts.
While studying, several of his friends were artist and wanted to have their own websites, but didn't know how to code. Ivan did, so he did freelance work for his friends to help them with that.
He noticed how it did not feel right that only those who were able to code could build websites and software tools, and that these tools were limited and didn't change.
He wanted to change that.
“A lot of my friends are artists. I’m the only one among them who can code. I wanted to build a software that gave people more than just a document or a web page," he said.
So after graduating University of British Columbia in 2012 and while working at Inkling, a document-sharing start-up, he started Notion. His goal was to build a no-code app-building tool that would enable everyone to build their own tools.
"We want to give more people the ability to build the tools they actually want and need without having to code. And we want to do this in a way that will help people think more clearly and collaborate with each other better."
Soon he and his co-founder, Simon Last, were able to raise $2 million from individuals like Ram Shriram and spent the following years developing the product.
Until the problems arrived.
The pivotal moment
After 3 years of product development, they were facing critical issues. While running out of their angel investment money, Ivan and Simon noticed that they had built the platform with a tech stack that couldn't scale. This led to several crashes and stability issues. They also realised that there was no demand for their product.
“We focused too much on what we wanted to bring to the world. We needed to pay attention to what the world wanted from us," Ivan said.
He saw that people did not want to learn a new tool from scratch - people want to use the tools to solve their problems.
With the cash running out, they were left with two options: they'd either run out of runway, or fire their team of 4 and start over.
So they started over. “If you looked at the burn rate, we all would’ve died together. It wasn’t much of a choice.”
They decided to sublet their San Francisco office and move to a cheaper city where they could focus: Kyoto.
“Neither of us spoke Japanese and nobody there spoke English, so all we did was code in our underwear all day,” Ivan says.
They set out to rebuild Notion from scratch with a new purpose: build an all-in-one platform that combines almost every workspace and productivity tool, with a collaborative approach. They wanted to take on tools like Evernote and Trello to make a product that was more complete but, at the same time, remove as much clutter as possible.
After almost one year of hard work in Japan, Notion 1.0 was finally launched on Product Hunt.
Source: Product Hunt
Here's how Ivan Zhao described the product:
"To give you some background, our goal is to create the general purpose work tool for a post-file, post-MS Office world. My cofounder and I often joke that this was like the "hot startup topic" of the 90s. Unfortunately, tools for knowledge workers haven't advanced much since then. The state of art is either Google Docs/Quip/Dropbox Paper (multiplayer WordPerfect), or rigid SAAS apps (Visual Basic on the web by outsourced IT). To end users, all the knowledge and workflows are trapped in different "silos", the best people can do is to duct-tape everything together, previously with emails, nowadays with Slack.
Notion wants to challenge this status quo of "software as silos". For the 1.0 release, we are bundling real-time documents, wiki-like organization, and lightweight tasks into a unified tool that can handle pretty much all your team's knowledge needs – and this is just the beginning. 😉"
The launch was a hit. After glowing reviews and initial impressions from early adopters, Notion quickly climbed to the top of Product Hunt, with several people admiring the quality of the product and the ability to replace their adopted solutions like Evernote, Google Docs and Trello.
Some of the reactions from early adopters. Source: Product Hunt.
Since then, the company had another major release with Notion 2.0, which further enhanced the capabilities of the product. Along with that, they have grown to more than 4 million users and $30 million in annual revenues.
There are several factors that have influenced the success of the company. Here are four that stood out as most defining.
Building a community
There aren't many products that I know that are as loved as Notion. From students, entrepreneurs, companies, it has reached mass adoption for most use cases.
This is the result of a strong engagement with the community. Not only do they use several channels to communicate with customers - Facebook, Reddit, Discord, Youtube and Slack -, they also released a Community page that lists all the different ways that customers can engage with each other and share their feedback. Just the Notion subreddit alone has more than 110.000 subscribers.
This keeps the customers engaged and interested, as these platforms are used not only to exchange ideas but also used as feedback for the Notion team to improve the product.
The growing interest is evident in Youtube videos from Ali Abdaal or Thomas Frank, reaching more than 1 million views per video. If you search for "Notion templates" on Youtube, you'll find an endless amount of videos of customers sharing their custom made Notion setups.
They also promote an offline Notion community, with in-person meet-ups occurring in several countries across the globe. These are mostly organised by the community itself and serves as a way for the users to meet each others and share their experiences.
This makes the product more appealing, as there is a big community support behind it and enpowered by the Notion team, resulting in a better product-market fit.
"We owe so much to our community. It’s our not-so-secret weapon and our biggest strength. The one thing we did right was never taking the community for granted. In the early days, I spent a lot of time replying one-on-one to users on Twitter, making sure they knew there was a human behind Notion. We also logged every piece of feedback we got and tagged it so we could use it to develop features."
Building from first principles
Notion was built using first principles thinking. This methodology was first introduced by Aristotle as “the first basis from which a thing is known.” Its goal is to simplify the problem and understand what is the fundamental truth.
Some of the most successful companies in the world were developed using this approach. Elon Musk has famously used this in his companies to, for example, understand how to reduce the battery costs for Tesla vehicles or reduce the cost of SpaceX rocket ships compared to conventional rockets.
"I think it's important to reason from first principles rather than by analogy. The normal way we conduct our lives is we reason by analogy. We are doing this because it's like something else that was done, or it is like what other people are doing. But with first principles, you boil things down to the most fundamental truths and then reason up from there."Elon Musk said in an interview with Kevin Rose.
Ivan Zhao has used this not only to build the product, but in all aspects of the company including hiring and structuring the team.
"I argue that’s the only way to solve a problem." Ivan said in an interview with InVision. "Use first principles thinking, what some people call “systems thinking.” Don’t base your approach just on copying and tweaking a little bit what other people have done. Take a step back, and see how you can fundamentally solve it."
Staying lean as the company grows
When you hear numbers like 4 million customers, $2 Billion valuation, $30 million annual revenues, you think that a company like this has hundreds or thousands of employees, growing the number of employees at an exponential rate. And you're normally right.
But not Notion. Notion has achieved this with just 40 employees. And its first 1 million customers were achieved with just 18 employees.
Why do they want to stay so lean?
"Sometimes I joke, “Moby Dick was written by one person.” Three of [Herman Melville] probably wouldn’t be much faster. Software is a lot like that. Without understanding what you’re trying to do, adding more people will actually slow you down. So the product side of Notion is four people or five people." Ivan said.
They know that hiring more people creates more entropy in the system and needs to be justified. This means that the company operates in a very efficient way , with higher returns per employee.
Saying NO to VC money
If Notion was on Tinder, it'd be one of those people that swipes left 99% of the times, in this case to VCs.
Most companies want to follow the path of raising more money as fast as possible, to grow at all costs. That's not the case with Notion.
Ivan uses the same approach to Venture Capital as he uses to scale his team: having more money doesn't translate to a better product or faster development. If you don't know which problems to focus on, money won't make that disappear.
After the Product Hunt exposure and a glowing review from the Wall Street Journal, VCs started pouring in wanting to invest in the company. So much so that they were literally knocking on the door of the company, in addition to the multiple calls Zhao received every day from interested investors. The interest was so much that they had to move to a new office and take it out from Google listings.
And Ivan always said no. In fact, he declined to speak with VCs.
Ivan wasn't anti-VC, he was just selective on what problems to solve and how to address them.
"It’s great that people believe in the company and believe in me. The capital is not going to add another Moby Dick directly. At this stage we’re blocked by our internal process, our team, and distribution. Not necessarily capital. We want to figure out how to turn incoming capital into Moby Dicks first before getting more capital."
In 2019, the company did a $10 million fund raising with a $800 million valuation.
Why did they do it? Some of Notion investors had convertible notes with carried interest that needed to be converted, so Notion wanted to close them.
Last year, in the middle of the global pandemic, they decided to do a new raise, due to the uncertainty in the global economy. This time they raised $50 million with a $2 billion valuation. The company said that this raise would put them in a stable position with enough funding for at least 10 years.
“Ten years is enough."
Looking back, it's incredible to see what such a small team has accomplished. Not only have they built a product that is challenging and beating the Goliaths of the industry such as Microsoft Word, Google Docs and Evernote, they have also grown a community that loves the company.
With a product that is getting more fully fledged based on customer requests, including its most recent addition of a Notion API, the possibilities are endless and it's hard not to bullish about them.
“If you think about the [Microsoft] office suite and the dominance they had in the 1990s, and how Google changed that in the previous decade,” Akshay Kothari, Notion's head of operations, said. “We think Notion is the next one. “
3 articles to read
Great article about growth tactics used by Notion.
Interview to Ivan Zhao that focuses on the product design.
An inside view of Notion's offices.
2 videos to watch
Great interview from Francesco D'Alessio, from Keep Productive, to Ivan Zhao, where they talk about the product, the early days and what's next.
One of the best setups I've seen from a Notion power user, Thomas Frank. This video was viewed more than 1 million times.
1 podcast to hear
How to craft a viral product, with Ivan Zhao.
Quotes to remember
“You work on something long enough, you realize it’s not about you, it’s about people loving what you are building. If you keep doing that, the market will drag you where you should be.”
"Go to the edge of what is still acceptable to your peers and go to the far, far edge of that. And how do you go to the far edge of that? You distill from something not in the circular place you are living but look in a plane outside of what you are working. Imagine Andy Warhol, right? He said, “art is whatever you can get away with.”"
“‘Moby Dick’ is written by one person. Adding another person doesn’t necessarily give you a higher-quality ‘Moby Dick.’ It doesn’t even necessarily make it faster.”
Follow what the world wants, not what you think it wants - This is a problem that I see in many startups - they start by working on the solution, without having a problem in mind. You should start with a problem in mind and develop a solution to address it. Notion's initial product wasn't a hit because there was no market demand. Once they revamped it to solve problems that people had, it became successful.
Be willing to pivot - Don't be afraid to change your product if you see it's headed to failure through the current path. It's better to take a step back and redirect the product or think of a better alternative before it's too late. Had Notion continued the original path, they would have been bankrupt.
Scale lean - You don't have to constantly raise more money and hire more people. Don't get too caught up in the status of valuations. Notion is a clear example that you don't thousands of employees and raising money every year to have a successful product. Focus on developing your product and company using first principles thinking.
Understand the underlying problem - If you don't know what problems you have and how they will impact the development of your company, raising more money and adding more people won't solve those issues. Stop for a second and think about what is the most foundational problem that you're trying to address.
Note: This article, as well as all others from the Disclosing Growth newsletter, was written on Notion.
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