The Product Review: Notion
Unpacking the hype behind a $2B valuation that surpassed Evernote's $1.2B peak
Last time I wrote, I covered Airtable. This triggered my latent curiosity in other recent collaboration and productivity breakouts: Notion, Coda, Superhuman among others. Each has raised significant amounts of venture capital at ‘high’ valuations. My perspective is partially shaped by my previous work at Yammer/Microsoft (~2012), Do.com (~2014), and Amazon (~2017) working on various collaboration products.
Let’s start with Notion. I’ll be honest. After spending more time with the product, I still don’t get it. I get it like I got Evernote: great note-taking app with passionate users. I don’t get the astronomical valuation or long term vision other than it has traction and if it succeeds how Slack and Atlassian have, it will be very valuable. It will be even more valuable given the macro-trends of remote work and public market valuations and how those can trend in the next 5-20 years. Indeed, if it supersedes those companies and becomes the next Office, there is even more potential. But I am not a market analyst, so I’ll focus on product here to understand the substance more.
What is Notion?
It is a note-taking app. But if it succeeds, it can become the next enterprise operating system. That is mostly what every productivity (single player) and collaboration app (multiplayer) hopes to become. It’s what gets VCs excited. It’s where revenue growth and a moat can come from. This is what O365 and Google Workplace are. It’s what Windows was pre-cloud. It’s what new collaboration market entrants in messaging (e.g. Hipchat and Slack), note-taking (e.g. Evernote) and files (e.g. Dropbox and Box) often intended to become. This is why Evernote forced “teams” on everyone and added chat. It wanted to move from being a productivity player to a collaboration platform. This is why Dropbox tried Paper. Same thing. It’s not what customers were asking for but it’s what the investor market demanded. Here’s what one armchair speculator (me) said in 2015 about Dropbox’s path to $100B and its dependence on evolving from a file sharing product to a collaboration company.
The Microsoft ‘commercial cloud’ did $13.3B in revenue as of April 2020, so if you win the broader space, it really matters. Note: Microsoft’s commercial cloud includes Azure.
“Notion’s stark black-and-white product offers “templates” of checklists and projects for, say, bringing on new hires, tracking product development, or managing editorial calendars for marketers. People use Notion in place of note-taking apps, collaboration services or writing software, and they pay a monthly fee of $4 to $20 each for extra features like more security and storage.” - NYT, April 2020
How do people use it?
It seems like people use it the same way the use the combination of Google Docs, Apple Notes, Jira, Trello, and the full range of other productivity tools. This could be a grossly reductive misunderstanding but I am merely sharing my subjective take from having heard about the product and now spending a couple hours using the product.
“At MetaLab, a 140-person design agency in Vancouver, Notion has now replaced 12 different tools, including Google Slides and Trello, a list-making service. MetaLab said it used Notion to present work to clients and to collect their feedback all in one place, among other tasks.” - NYT, April 2020
How much is it growing?
“By early last year, Notion had nearly one million users. That has since quadrupled, Mr. Kothari said." - NYT, April 2020
Napkin math time.
4 million users. Likely much higher now. Let’s say the blended price per seat is $6. Let’s say the conversion-to-paid in first 6m is super high at 10% (Evernote was 1% — but using that comp could be misguided like using the taxi market as a TAM for Uber).
4m X 10% X $6 = $2.4M MRR / $28M ARR (and likely growing 100%-400% YoY). On the lower end of the range (1% conversion), it would be $2.8M ARR. </ armchair analyst>
Now, let’s dive into the product.
1.Homepage screams use cases and social proof
But what good product marketing does not do that?
“What is it? Is it credible? Do people like me use it?” These are the questions Notion answers on the homepage to convince you it will make your team more productive.
Shout out to the writer who crafted those concise use cases. Notice not only the concision but the aesthetically-pleasing symmetry of the text. Gives the icons a run for their money. My favorites are ‘Catalog logos, fonts, and assets’ and ‘Share a single playbook’. Brief but specific.
That said, if you scroll through the homepage, it’s a) use cases e.g. team wiki b) social proof e.g. logos and tweets c) calls to action e.g. sign up buttons. But in my view, it’s not telling a cohesive story right now because it jumps back and forth between those communication goals randomly. That may not be a big problem but it’s inelegant.
2. It is a tool designed from first principles, rather than a technology built to move tools to the cloud
This is what makes me most optimistic about Notion.
Docs was built to replace Word. It happened to make teams more productive.
On the other hand, Notion appears to be built to make teams more productive.
Does that mean Notion has a better chance of providing more fundamental value? Yes.
It’s a subtle but important difference in aim even if the approach hasn’t borne out in results yet. Approaches are leading indicators of future outcomes.
Google Docs was built to replace Word. Through real-time collaborative editing and other features, Docs became a superior solution to sending redlined Word docs back and forth. Google Docs was a previous generation of tools built to replace what came before it. Look no further than the dropdown menus: it was built to substitute Word — not to build a document editor or a tool for teams - from first principles, ground up.
The best Notion example of this is the curated workspace for product managers; no other tool would give you a custom document structure for roadmaps, docs, and notes in one. It’s too specific and therefore too risky with too little reward for Google Docs. But for a product like Notion it makes sense and is a competitive advantage in the classic sense of Innovator’s Dilemma where new entrants better service a niche to win.
The left pane is a product manifestation of a business and market-positioning strategy i.e. customize tool for power users; use them as a wedge to more and more personas.
3. Nails single player at the expense of multiplayer
I signed up for the team version, not the personal one, because my view is the ability to succeed for teams is what will determine this company becoming a massive success. That said, it’s already valued at >$1B so in most normal ways… it already is a massive (financial) success. Notion invests less in direct onboarding than Airtable. In other words, after I signed up and clicked a couple tooltips, I was in. As a savvy user, I preferred this but I wonder if it decreases user activation. It may reflect a difference in product philosophy e.g. self-directed activation vs. guided activation.
But none of that is the point. I signed up for a teams product but other than the well-trodden viral text fields to invite coworkers and table-stakes features like @ mentioning, the product is not inherently designed to solve group collaboration. It has a lot of features but I don’t sense a glide path from signup to team editing and problem-solving. This is my biggest concern about the product and therefore, growth.
4. Wrapping group features around solo products
This is a big risk. Adding features for a different scenario without changing the DNA of how you build product — once the core product is baked — is rarely effective.
Building on my previous observation about nailing single player but not multiplayer…
The core product is a note-taking app. Features like @ mentions and the “Inbox” are clearly meant to enable more group collaboration. Neither is needed by yourself.
But one problem is that it’s a lot easier to get a multiplayer product to be used by a single person even if it’s not custom-built for their use case than the other way around. Think about how Google Docs can be used by 100 people but works equally well if you just want to use it for personal journaling or organizing thoughts before a talk. On the other hand, a single player product, like personal note-taking apps or a calendar app or the iPhone camera, have a much harder time becoming ‘social applications’ ex post facto. Indeed, the path to doing so may unravel the single player product experience.
I wonder if this is very similar to what happened with Evernote when it added chat - not in terms of the disastrous reception but the fundamental strategic error.
5. Better as no-code wiki than group collaboration
This is where Notion shines: wikis. The note-taking is fine. But I have seen so many people use Notion for simple webpages: a Notion URL and simple list of links. Yes, you can use a Google Doc to do the same basic thing, but not as well organized.
And then here’s the kicker: integrations. This is where it becomes the best wiki tool.
I have seen Notion documents that embed Airtable grids. So all of a sudden a document becomes a workspace e.g. a webpage for an incubator program that embeds visual cards of the people involved with organized metadata so you can directly reach out to people or navigate online presences.
It’s a more powerful document. How does that position it relative to Airtable as a more powerful spreadsheet? Or is that the wrong way to think of them? The optimist would say that this is how each replaces Word/Docs and Excel/Sheets — and somehow also grows beyond those products without completely colliding to be the work OS.
Conclusion: A Note-Taking App
I used it, but I don’t get it. I am likely wrong about the potential for Notion — after just a couple hours of use and at most a couple minutes of deep thought. It’s a beautiful, fun note-taking app. My main concern is that it’s far better at single-player than multi-player, and the latter is where the most revenue and growth come from in the broad productivity / collaboration space. It’s the difference between Wunderlist (productivity) and Asana (collaboration). However, I also think the entire world and how we work is shifting right now, so the key thing to watch is the surrounding context and how Notion adapts to that world and seizes new opportunities.
Thanks for reading!
Appendix: Corners-to-look-around
What is the implication of new entrant <> new entrant integrations? Years ago we didn’t expect any of these integrations given the Microsoft and Google duopoly. It was all bundled: Outlook with Tasks with Skype. That dam broke. We started with things like Slack and Google Docs. But now we already see things like Notion <> Airtable integrations where the main two suites aren’t even needed for some primary integrations. What other new use cases will emerge and what other dynamics will form?
What happens when best-of-breed starts competing against other best-of-breed — rather than bundled incumbents? It’s already happening. It seemed plausible that users would stick with O365 or Google Suite instead of take a chance on a vertical best of breed like Slack or Airtable or Notion — but that was wrong. That ship sailed and people are adding unbundled best of breed solutions to the bundled suites like O365 and Google Workspace (formerly G Suite). Think about companies who use Google Workspace and Airtable or Slack. So now, does Notion need to position itself in competitive sales deals not just against MS and Google but other ‘next-generation’ collaboration solutions like Airtable, Roam, and others? It’s a different positioning than as a complement to a suite. It probably is already happening in consumers’ minds not to mention verbal sales calls if not written collateral. This is a major shift in competitive dynamics, product marketing, and sales enablement — not to mention product strategy and platform philosophy. How does a strategy shift when it’s a given, not a fantasy, when it’s the rule, not the exception, that customers bolster workplace foundation technology with best of breed solutions, and those solutions compete against each other?
What happens to pricing? The drag in the collaboration space has often been that it’s hard to charge more than $5 or $10/mo because that’s the ballpark for the large suites like Office 365. Founders in the collaboration space have always rightly said that the value delivered is far greater than such prices. However, it didn’t change what the market was willing to pay. I bet this will change at some point and it will create a large expansion in the revenue and margin opportunity.