Latest / Startup Stories with Fexingo: Conversations About Founders, Funding, and Building Companies from Zero / How Notion Built a Product Without a Category
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- Lucas: So Notion is now valued at roughly ten billion dollars. It has tens of millions of users. It's a verb inside a lot of tech companies — 'just Notion it.' But here's the strange thing: when Ivan Zhao and his co-founder Simon Last started building this in 2013, there was no category for what they were making. Luna: Right, because it wasn't quite a notes app, wasn't quite a wiki, wasn't quite a project management tool. It was like they were trying to build the Swiss Army knife of productivity software. Lucas: Exactly. And most investors hated that. They'd ask, 'Is this Evernote? Is this Confluence? Is this Trello?' And Zhao would say, 'It's all of them, but also none of them.' That answer did not go over well in pitch meetings. Luna: I remember reading that they got rejected by pretty much every VC on Sand Hill Road. They were basically bootstrapping with a tiny seed round from a few angel investors who believed in the vision. Lucas: Yeah, they raised about two million dollars total in their first few years — which is almost nothing for a SaaS company trying to build a brand new type of product. And the first version they launched on the App Store in 2015 was a disaster. Luna: What went wrong? Lucas: It was too slow. They had built the entire thing using a custom rendering engine that was incredibly flexible but also incredibly sluggish on mobile. Users downloaded it, tried to type a sentence, saw a delay, and deleted it. The app had something like a two-star rating. They were almost out of money. Luna: So how did they not die right there? Lucas: They basically hit the reset button. Zhao and Last moved into a small apartment in San Francisco, cut their salaries to zero, and spent a year rewriting the entire product from scratch. They rebuilt the rendering engine to be fast, and they redesigned the user experience around what they called 'blocks.' Luna: The block system is really the core of Notion's magic. Every piece of content — a paragraph, a heading, a to-do, an image, a database — is a block that can be moved, transformed, or nested inside another block. Lucas: Right. And that was the breakthrough. They gave users Lego bricks instead of pre-built houses. The problem with most productivity tools is they force you into a structure — a folder hierarchy, a list format, a kanban board. Notion said, 'You decide the structure.' That's incredibly powerful, but it also creates a huge learning curve. Luna: Which brings up the 'blank page problem.' A lot of users open Notion for the first time and think, 'Okay, what do I do now?' Most software companies see that as a fatal flaw. But Notion turned it into a feature. Lucas: They did. They leaned into templates. Hard. They built a template gallery with hundreds of pre-made pages — personal dashboards, company wikis, student notebooks, project trackers. And then they empowered users to create and share their own templates. That became a massive growth engine. Luna: It's almost like Notion outsourced its onboarding to the community. You had YouTubers making hour-long tutorials on how to set up a second brain in Notion. You had Reddit threads where people shared their elaborate dashboard setups. The template ecosystem became a moat. Lucas: And that's a really interesting business lesson. A lot of startups obsess over reducing time to value — get the user to the 'aha moment' in under sixty seconds. Notion's time to value was sometimes days or weeks. But once you got it, you were hooked. And the switching cost was enormous because you'd built an entire system inside their tool. Luna: So they traded conversion speed for retention depth. And it worked. Their net dollar retention is reportedly over one hundred percent — meaning existing customers spend more over time as they build more and more of their workflow into Notion. Lucas: Exactly. The company also made a clever pricing move. They offered a generous free tier — unlimited blocks for personal use — which got people building their whole life inside Notion. Then when those people joined a company, they'd push for the team plan. It was bottom-up adoption, enterprise pricing. Luna: Kind of like how Slack spread, but with even more lock-in because you're not just storing messages — you're storing your actual knowledge base and databases. Lucas: Right. And that leads to another key insight: Notion's biggest competitor isn't another tool — it's the status quo. Most companies don't have a single source of truth. Their knowledge is scattered across Google Docs, Dropbox folders, email threads, and people's heads. Notion offers the promise of one unified space. That's a compelling pitch. Luna: But it's also a hard sell to executives who look at it and see a blank page. How did they get past that? Lucas: They built templates specifically for business use cases — like an employee handbook, a meeting notes template, a project roadmap. And they invested in a sales team that could demonstrate how a company could migrate from Confluence or Sharepoint. But honestly, a lot of their enterprise growth came organically. A developer at a company would start using it for personal notes, then share a doc with their team, and then the whole engineering org would adopt it. Luna: So it's product-led growth with a community multiplier. And I think that's the part that's hardest to replicate. Notion didn't just build a product — they cultivated a culture of people who evangelize it. The Notion subreddit has over a million members. That's insane for a SaaS tool. Lucas: It is. And it's a direct result of the product philosophy. Because Notion is so flexible, every user's setup is unique, and people love showing off their custom systems. That's a built-in sharing mechanic. Compare that to a tool like Airtable, which is also flexible but more structured — you don't see people proudly posting their Airtable base layouts the way they post Notion dashboards. Luna: That's a really good point. The aesthetics matter too. Notion's design is clean and minimal. It feels good to look at. That sounds superficial, but for a tool you stare at all day, it's actually a functional advantage. Lucas: Totally. And now Notion is expanding — they launched Notion AI, they're adding more database features, they're moving upmarket. But the core tension remains: how do you add power without destroying simplicity? That's the tightrope they've been walking since 2016. Luna: It's also a good reminder that not every successful startup needs to fit neatly into a box. In fact, if you're building something truly new, you might not have a category at first. You have to create one — and that's harder, but the moat is deeper. Lucas: And that's what makes stories like this so valuable. If these conversations have helped you think differently about your own work or projects, there's a simple way to help keep them going. A couple of dollars a month genuinely makes a difference — it's what lets us keep the show ad-free and focused on the real stories. That's at buy me a coffee dot com slash fexingo. Luna: Yeah, honestly, the support from listeners has been incredible. It's what funds the research and the time we put into these deep dives. So if you've gotten something out of the show, it's a small way to give back. Lucas: And back to Notion — one thing I find fascinating is that the company still operates with a lot of the original ethos. Ivan Zhao is still CEO, and he's said publicly that he wants Notion to be a hundred-year company. That's a refreshing stance in an era of fast exits. Luna: Do you think the 'no category' strategy is something other founders should try to replicate, or is it a one-off miracle? Lucas: I think the lesson isn't 'avoid categories.' It's 'don't let the lack of a category stop you.' Notion succeeded because the product solved a real, painful problem — information fragmentation — in a way that felt magical. If you have that, the category will eventually form around you. But if you're just being different for the sake of being different, no amount of positioning will save you. Luna: And that's probably the most honest takeaway. Build something that works, that people love, and let the labels come later. Lucas: Exactly. Next time, we'll look at another company that defined a category — or refused to.