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: In 2016, Notion was basically just a note-taking app with a nice design — but it was months away from running out of cash. The founders had pivoted twice already, and investors kept asking the same question: 'What category are you in?' Luna: And that question almost killed them, right? Because they didn't have a clean answer. Lucas: Exactly. Ivan Zhao, the CEO, would say 'It's a tool for work, it's like a wiki meets a database meets a project manager' — and investors would just roll their eyes. They wanted to hear 'productivity software' or 'project management' or 'collaboration platform'. Something they could slot into a spreadsheet. Luna: But Notion refused to be slotted. They wanted to be the one tool that could replace multiple tools. Lucas: Right. And in the early days, that ambition meant they were getting compared to Evernote, Confluence, Trello, even Excel. None of those comparisons were flattering because Notion was worse at each individual task — at first. It was a jack of all trades, master of none. Luna: So how did they survive that phase? Because most investors would say 'focus, be the best at one thing'. Lucas: They survived because the founders genuinely believed that the 'one tool' vision was the right bet for the future. They raised a small seed round from a few believers — like Elad Gil and Naval Ravikant — and then they basically starved for years. In 2017, Notion had about 20 employees and maybe 10,000 paying customers. Revenue was under a million dollars. Luna: And they were burning cash. I remember reading that they were weeks away from shutting down at one point. Lucas: Yeah, there's a story that in early 2018, Ivan Zhao had to ask employees to take a pay cut so the company could make payroll. That's how tight it was. But during that period, they did something smart: they started listening to their power users. Luna: The ones who were already using Notion as a database? The template creators? Lucas: Exactly. They found that a small but passionate group of users — mostly indie makers, designers, and engineers — were building elaborate second brains inside Notion. They were using it as a CRM, a habit tracker, a recipe book, a project dashboard. Notion wasn't just notes for them; it was a platform. Luna: So the insight was: instead of trying to be the best note-taking app, double down on flexibility? Lucas: Yes. And that's when they built the block-based editor, the database views, the ability to link between pages. They released the 'what you see is what you get' editor that let you drag and drop anything. The product started to feel less like a tool and more like a Lego set for information. Luna: And the growth curve started to bend. But it wasn't through paid ads, right? It was through templates and word of mouth. Lucas: Totally. Notion's marketing was almost entirely community-driven. They created a template gallery where users could share their setups — a personal dashboard, a startup OKR tracker, a student class planner. Those templates were shared on Twitter, YouTube, and Reddit. Every template was a free ad for Notion. Luna: It's genius because the templates show the product's power better than any marketing copy could. You see a beautiful dashboard and think 'I want that'. Lucas: And it's not just about aesthetics. The templates demonstrated functionality. You'd see a table with automatic filters, linked pages, formulas — and you'd realize, 'Oh, I can actually run my small business inside Notion.' That was the turning point. Luna: When did the revenue start to really pop? I remember 2020 was a big year for them. Lucas: 2020 was huge. Remote work exploded, and Notion was perfectly positioned as a digital workspace for teams. Their revenue went from about $2 million in 2019 to over $10 million in 2020. By 2021, they hit a $10 billion valuation in a funding round led by Coatue and Sequoia. That's a 10,000x return on the initial seed investment. Luna: Let's talk about the product itself. One of the criticisms was that it's 'too flexible' — that users feel overwhelmed by the blank page. How did Notion address that? Lucas: They tackled it head-on by improving onboarding. They introduced a 'getting started' template that automatically loaded a sample workspace. They also created a library of use case specific templates for students, engineers, writers, and HR teams. And they built a community education program: Notion Academy, with video tutorials and certification. Luna: So they didn't dumb down the product; they educated users on how to use its power. That's a very different approach from most SaaS companies. Lucas: Absolutely. Most products try to be intuitive out of the box, which often means limiting functionality. Notion chose to be powerful, and then provide a ramp. It's like learning to use a professional camera instead of a point and shoot. The payoff is that once you're fluent, you're hooked. And that's why their net dollar retention is over 130 percent — customers expand their usage over time. Luna: When you look at competitors like Coda, which is similar, what made Notion win? Was it timing, execution, or both? Lucas: I think both, but I'd argue execution was key. Notion's design was cleaner, their blocks were more intuitive, and they integrated with more third-party tools early on. Also, Coda initially focused on replacing spreadsheets as a place for formulas, while Notion positioned itself as a general-purpose workspace. That broader positioning gave them a larger addressable market. Luna: There's also the pricing strategy. Notion's free tier is very generous — unlimited pages, up to 1,000 blocks per page. That invites experimentation. Lucas: Right. The free tier is a classic freemium funnel. You start using it personally, fall in love, then bring it to your team and upgrade to the Team plan at $10 per user per month. That's how they grew from individual users to enterprise accounts without a sales team. Luna: And that's a model many B2B startups try to copy but few execute well. Because you need a product that's genuinely addictive on an individual level. Lucas: Exactly. Notion's product-led growth was built on product-market fit at the individual user level first. They didn't try to sell to the CIO; they made a product so good that employees demanded it. By 2024, Notion had over 100 million users and was generating over $200 million in annual revenue. And they did it without a traditional enterprise sales force. Luna: So if we step back, what's the big lesson for founders? That sometimes not fitting into a category is not a weakness — it's an opportunity to create one. Lucas: Exactly. Notion didn't fit neatly into 'notes' or 'wikis' or 'databases'. But by combining them, they created a new category: the all-in-one workspace. And that category is now worth billions. The lesson is: don't listen to investors who want you to simplify your vision. If your product solves a real pain point for a passionate group of users, you can build a category around it — one block at a time. Luna: And that's the story of Notion: a company that almost died multiple times, but held onto its conviction that flexibility matters more than simplicity. It's a real testament to founder grit. Lucas: It really is. And if today's episode moved your own thinking forward in some small way — maybe it helped you re-examine a product idea or gave you a new perspective on category creation — honestly, if it was worth a coffee to you, you can support us at buy me a coffee dot com slash fexingo. It's the smallest ask for the deepest value we can offer. Luna: And we really appreciate that. It's what keeps this show ad-free and focused on the stories that matter. Lucas: So with that, let's keep going. One more interesting angle on Notion: their AI features. In 2023, they launched Notion AI — an assistant built directly into the editor. It can summarize notes, generate action items, write first drafts. And it's become a major revenue driver. Luna: Yeah, because it addresses a new need: helping users overcome the 'blank page paralysis' even within Notion's flexibility. Lucas: Exactly. It's a natural extension — Notion's philosophy has always been about helping you organize and create, and AI accelerates that. They're not adding AI as a feature; they're weaving it into the fabric of the product. And early numbers show that users who adopt AI have higher retention and upgrade faster. Luna: So Notion continues to evolve. But the core lesson remains: build for the user who loves what you do, even if the market doesn't have a name for it yet. Lucas: Perfectly put. That's the Notion story in a nutshell — a company that refused to be categorized, and in doing so, created a category of its own.