Latest / Startup Stories with Fexingo: Conversations About Founders, Funding, and Building Companies from Zero / How Notion Became the Everything App Without Venture Capital
Transcript
- Lucas: So there's this idea that to build a billion-dollar software company, you have to raise tens of millions in venture capital, grow fast, and figure out monetisation later. Notion, the productivity app, is one of those rare counterexamples. Luna: And I think a lot of people know Notion as this tool that sort of exploded in popularity over the last few years. But I didn't realise how long it took them to get there. Lucas: Yeah, the timeline is wild. Ivan Zhao and Simon Last started working on Notion back in 2013. They were based in San Francisco, living on ramen, and they built the first version in a shared apartment. That first product was essentially a note-taking app with some database features. Luna: And it didn't take off immediately, right? Lucas: Not at all. They launched in 2014 to basically crickets. They had maybe a few thousand users. And they were running out of money. They actually did try to raise venture capital early on, and they got rejected by pretty much everyone. The feedback was that the market was too crowded — Evernote, OneNote, Google Docs — and that they didn't have a clear differentiator. Luna: So they were forced to bootstrap, basically. Lucas: Exactly. And that constraint turned out to be a gift. Because they couldn't afford to spend on marketing or sales, they had to make the product so good that people would fall in love with it and tell their friends. So they focused obsessively on quality and on building a product that could be infinitely customised. Luna: And that customisation piece is really the key, isn't it? Notion isn't just one tool — it's a platform where you can build your own workspace. Lucas: Right. They positioned it as an all-in-one workspace — notes, docs, wikis, databases, project management, kanban boards. Instead of having five different apps, you could have one. And the real breakthrough was the template system. Users started creating templates for everything — from personal journals to startup pitch decks to entire company wikis — and sharing them with the community. Luna: That created a network effect. The more templates people made, the more valuable Notion became for everyone else. Lucas: Yes. And they didn't pay for any of that content creation. The community did it for free, because they loved the tool. By 2018, Notion had about a million users, all organic. And they were generating real revenue from subscriptions — mostly from small teams and individual power users. Luna: But by that point, they had also built enough traction that VCs came calling. They raised a Series A from Index Ventures in 2018, and then a Series B in 2019 that valued the company at around $2 billion. Lucas: That valuation has since grown. In 2021, they raised a Series C at a $10 billion valuation. So they eventually took VC money, but on their own terms. They didn't need to raise earlier, because they were already profitable or close to it. Luna: I think a lot of founders look at Notion and think, 'We can do that too.' But how replicable is that path? Notion had a very unique product and a very patient founder. Lucas: Ivan Zhao is famously deliberate. He once said in an interview that he didn't want to grow too fast because he wanted to preserve the quality of the product and the culture. He was willing to sacrifice growth for polish. That's rare in Silicon Valley, where the default is to scale as fast as possible. Luna: And the product itself is hard to copy. The flexibility of Notion's block-based editor — where every block can be a text, a database, an image, an embed — that's technically complex. And their offline support and sync are notoriously good. Lucas: So the moat is partly technical, partly community-driven. But they also made some smart business decisions. For example, their pricing model. They have a generous free tier, then a personal pro tier for $5 a month, and team plans starting at $10 per user per month. It's simple and it scales naturally as teams grow. Luna: And they avoided the trap of selling to enterprises too early. They focused on individual users and small teams, which created a grassroots adoption pattern. Then later, those users would bring Notion into larger companies. Lucas: Exactly. It's a bottom-up SaaS model, similar to what Slack and Zoom did. By the time the IT department realises there's a tool running wild in the company, everyone's already using it and they can't replace it. Luna: So what's the biggest risk for Notion now? They have a valuation of $10 billion, they're competing not just with Coda but also with Microsoft Loop, with Google's smart canvas, with Atlassian's Confluence. Lucas: The biggest risk is that one of the big players clones the most important features and bundles them into their existing suite for free. Microsoft does that well. But Notion's advantage is that it's a standalone product built around a consistent design philosophy. It's not a feature in a larger suite; it is the suite. And the template ecosystem is hard to replicate because it's built on years of user contributions. Luna: Another angle is that Notion hasn't really done much AI. A lot of productivity apps now have AI features — automatic summaries, writing assistants. Notion has some basic AI, but nothing flashy. Lucas: They've been cautious there too. They added AI features in 2023, but it's not a core differentiator. I think their bet is that the flexibility of the platform matters more than any single AI feature. But if AI becomes table stakes for productivity tools, they'll need to invest more. Luna: So what's the one lesson founders should take from Notion's story? Lucas: I think it's that you don't have to follow the venture capital playbook to build a massive company. You can bootstrap, stay small, focus on product quality, and let organic growth do the work. But you have to have a product that people genuinely love and can't find elsewhere. Notion had that. Not every product can be Notion. Luna: And also, patience. Ivan Zhao was willing to wait years for the company to gain traction. Most founders would have pivoted or given up. Lucas: Absolutely. And that's the thing — sometimes the biggest competitive advantage is just outlasting everyone else's impatience. Luna: Speaking of patience, if these conversations have moved your work forward in some small way, a couple of dollars a month is genuinely what keeps these going. Lucas: Yeah, we keep the show ad-free and independent, and listener support is what makes that possible. If you've gotten something out of it, you can find us at buy me a coffee dot com slash fexingo. Luna: Every little bit helps, and it means we can keep digging into stories like this one. Lucas: So back to Notion — the real takeaway is that slow and steady can win the race, even in a world that glorifies speed. Notion proved that building something people love, and giving them the tools to make it their own, can create a defensible business. Luna: And that's a lesson worth remembering, whether you're building the next billion-dollar company or just trying to get your side project off the ground.