Notion: Breakout Jobs Memo #1
“If you join a company, my general advice is to join a company on a breakout trajectory.” – Sam Altman, President at Y Combinator
In this inaugural edition of Breakout Jobs Memos, we profile Notion, an all-in-one workplace app aiming to become the hub for all knowledge work.
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Team
“We want the business to be as big as possible, but we want the team as small as possible,” — Ivan Zhao, Co-Founder of Notion, Article
History/Motivation:
As people flooded to factories during the Industrial Revolution, many tools were invented to ease the management overload.
Typewriters replaced illegible handwriting. File cabinets stored more information than any clerk could remember (and also won the gold medal at the 1893 Chicago World’s Fair!)
Tools like these paved the way for offices as we know them today.
Notion is pioneering the notion of the all-in-one workspace.
Founders
- Ivan Zhao (CEO): Product @ Inkling. Interview 1
- Simon Last (CTO): Studied Human-Computer Interaction Lab — Undergraduate Research @ University of Maryland. Software Engineer @ Nebula.
Early Hires:
- Akshay Kothari (COO): Previously at @Linkedin, Pulse, @Stanford, @Purdue
- Jamie Quint (Growth): Past: Senior Director of Product — Monetization @reddit, Growth Consultant @twitch , @everlane, 10+ more,
@ycombinator
Composition:
- Coming from a background working together at the Product Team at Inkling, the founders came from a world-class design team that spun off other design-focused startups like Mixmax.
- No one worked at companies that could be potential customers. No one worked at companies selling to potential customers. The team needs at least one senior sales hire who has experience selling to customer companies
Advisors & Board of Members:
- Josh Kopelman. Investor and entrepreneur in the internet space since 1992. In 1996, he took public Infonautics Corporation, a company he founded while he was a student at Wharton. He also founded Half.com (acquired by eBay) and TurnTide (acquired by Symantec). In 2014, he co-founded First Round Capital, one of the most active VC firms in the U.S.
Investors:
Josh Kopelman, Shana Fisher, Naval Ravikant, Ram Shriram, Aydin Senkut, Matt Macinnis, Elad Gil, Matt Macinnis, and Mike Vernal.
Culture
We’re a small team based in San Francisco, with a shared passion for design, history, and art. We work out of a sunny converted garage in the Mission that looks a lot like the software we build.
The Notion culture has a unique set of characteristics as evident on their team page.
Product
Four Use-Cases
1) To-do List
Notion can be used for both personal or group note-taking and task tracking.
2) Issue Tracker
Notion can be used as a replacement for Trello or another Kanban board.
3) Lightweight CRM
Notion can be used to track contacts or prospects as part of a sales funnel.
4) Wiki / Knowledge Base
Notion can be used to share internal or external information and faqs.
Problem:
The problems that Notion solves are varied, however, the unifying thread is summed up by the following.
“very few people had the skills necessary to build or modify their own tools.” —usefyi
Severity of the Problem:
- As more and more of the workforce become digital natives and more and more work moves into the digital realm, having tools like Notion which combine multiple workflows into a single space and allow for non-technical users to easily build pseudo-applications and customize their workflows will be a huge problem to solve.
Product(s):
Currently, Notion has a single product, which is accessible from various different platforms including web, mobile (ios+android) and a web clipper.
Core Features: Templates are a key part of the Notion secret sauce which allow for the extensibility of the product to leverage the creativity of the Notion community to explore and drive new types of adoption.
Interestingly, Templates was a feature derived from the community, who was creating a ‘desire path’ to re-use other’s Notion setups.
Science/Tech: It’s unlikely that there is much proprietary technology underpinning the Notion product.
Roadmap:
Notion gives a periodic product update on their website using a Notion document (what else).
Market
Target Market:
“The market is huge — everyone with a computer.” — Ivan Zhao, Co-founder of Notion
- Total Available Market (TAM):
Anyone using software for the following features: notes, wiki, cloud database, spreadsheets, tasks or to-do’s, product/project management, idea generation, CRMs, citation management, and web-clippers. Use could be for personal, professional or enterprise use. For remote or on-site teams. - Served Addressable Market (SAM):
Notion has tools to do all of the above, except citation management. - Serviceable Obtainable Market (SOM):
Teams and individuals looking for productivity and collaboration tools for notes, wikis, cloud database, and tasks.
Market Drivers: What is increasing the demand, what is growing the market?
- The number of knowledge workers is growing rapidly, and there is increasing fragmentation of productivity tools. By simplifying and consolidating the functions of all of these tools into a single place, Notion is saving users time.
- The need for more user-friendly software is increasing. This is where Notion really shines.
Market Size:
Top-Down Calculation: ~$1.8B
- Calculated by adding up the current revenue of 40 companies we’ve identified as possible Notion competitors.
Bottoms-Up Calculation: ~$648M
- There are no public records of the number of users, installs, downloads that Notion has, which makes it difficult to come up with an educated guess. What we know is that Evernote has had 225 million sign-ups in its life, if we assume that Notion can reach that same audience size, convert 3% of them from a freemium to pay a model and that the average user will pay $8/mo, then we can say that Notion’s market size is ~648M.
- Comparable Markets:
Currently, the market for productivity tools is a little over $1.8B* according to CrunchBase. - Based on bottom-up, top-down and comps, TAM is in the range of $648M to $1.8B.
Competition Landscape:
Because Notion’s product straddles multiple markets, it’s difficult to bucket it into a direct set of competitors.
- Notion’s Market Three Primary Markets are : “Knowledge Management” , “Note-Taking Management Software”, “Project Management” and broadly “Productivity Tools”.
Direct Competition:
- Airtable: Cloud-based spreadsheet with a database. 2012. $170M.
- Coda: Documents as powerful as apps. 2014. $60M.
- Monday.com. Collaborative project management. 2012. $84M.
- Redbooth. Collaborative project management. 2008. $20M.
- Asana. Collaborative project management. 2008. $213M.
- Basecamp. Collaborative project management. 1999.
- Workfront. Collaborative project management. 2001. $375M.
- Freedcamp. Collaborative project management. 2011. $574K.
- Hive. Collaborative project management. 2015. $5.4M.
- Wrike. Collaborative project management. 2006. $26M.
- Quire. Collaborative task management tool.
- Backlog. Collaborative project management for developers. 2004. ¥100M.
- Paymo. Collaborative project management.
- Trello. Collaborative task management tool. 2011. Atlassian.
- Ora. Collaborative task management tool.
Indirect Competition:
- Evernote: Notes. 2000. $290M.
- Joplin: Notes.
- Google Keep: Notes.
- Slab. Team wiki. 2016. $2.2M.
- Confluence. Team wiki. Atlassian.
- GitHub wiki. Team wiki.
- JIRA. Atlassian.
- Bear. Notes.
- Todoist. Task management.
- Quip. Task management.
- OneNote. Notes.
- Slite. Notes.
- Schema. Product management.
- Dropbox Paper. Generate ideas.
- Nifty. Project management.
Potential Move to this Product from Incumbents:
- Google Apps: Though similar to Microsoft in terms of its productivity suite offering, Google’s suite of workplace apps have a key advantage amongst the same demographic Notion is targeting, since they are built off of an access model tied to Email. If Google were to more aggressively limit authentication access via Gmail or more closely integrate its product suite together into one master document management app, that could pose a threat to Notion.
- Microsoft Productivity Suite: Microsoft has increasingly been investing in its suite of cloud products, moving its traditional office suite monopoly. If Microsoft was to take this threat from Notion and others more seriously, they might be able to place a cap on Notion’s addressable market by ‘fast-following’ Notion’s feature set and incorporating it into Office 365.
Strengths Against Competitors :
- Short Term: Speed of Execution: In spite of having a small team, Notion ships faster than any competitor, Startup or Big company.
- Long Term: Community: Thousands of Notioners gather on these community-hosted forums to trade tips, answer questions, and share creations. Reddit — r/NotionSo, Facebook — Notion Made Simple, Notion Community Discord, Slack — Notion Hacks
Weaknesses Against Competitors:
- Short Term: Lack of Offline Mode — While the Notion desktop app works offline, the web and mobile apps don’t currently, which can make things like usage on Planes challenging. Especially for note-taking, this use case can be a deal-breaker for many power users.
- Long Term: Lack of Integrations — Notion’s biggest current weakness compared to its competitors is a lack of Integrations. Though they have a Slack integration, this pales in comparison to the flexibility of importing/exporting/syncing data that tools like Airtable allow for. In the Long-term, if Notion is to supplant many of the other 3rd party apps that it is trying to this might be less of an issue, but in the Medium-term when customers are selecting a tool to migrate their app data to, this could become a barrier.
Barriers to Entry/Moats/Defensibility:
- Community: Notion’s community is one of its key advantages over other competitors, not only because their enthusiasm for the product helps spread the word, but also because they are effective and outsourced ‘R&D’ team for Notion, helping them to uncover new use cases. Because the Notion product is so flexible, these different use-cases can be shared as templates which broaden the appeal over time to new audiences in ways competitors will have difficulty replicating.
- Cross-organization network effects: Because of the ‘multi-player’ nature of the Notion product and many of its use cases, it encourages information and documents to be shared across organizations which leads to a much higher viral co-efficient than many of its competitors who are focused on building tools for use within organizations.
Business
“The business side of Notion is — Can we build a tool as ubiquitous as Microsoft Office?” Zhao said. “The more romantic side is — While we’re building a tool as ubiquitous as Microsoft Office, can we bring non-programmers the computing power so everyone can customize their own tools and modify their own software they use every day?” — Source
Traction/Customers/Metrics:
Traction
Trello = -1.64%
Asana = -3.49%
Evernote = 3.17%
Monday.com = 0.73%
Airtable = 3.73%
Coda = -6.22%
Redbooth = -10.76%
Basecamp = -5.31%
Customers
Funding
Funding up to date:
- Seed: Notion last officially raised funding (an undisclosed amount) on Jan 1st, 2017 : source: https://www.crunchbase.com/funding_round/sugarbox-seed--716a2815
Risk of Further Funding:
- Considering the fact that Notion has large funds like Sequoia Capital on their cap table, they should have no problem raising further follow-on funding in the future, given they maintain their rapid growth.
- Many more VC’s are starting to become interested in the recent wave of ‘Pro-sumer’ businesses like Notion, Airtable, and others.
Exit Scenarios/Expected Returns:
- IPO: Slack may be the best analogous recent public company operating in this space, who went public at a $15.7 billion valuation.
- M&A: Avg. Enterprise Multiple (EV/EBITDA). See below.
Due Diligence Checks
From The Press
From Customers
From Industry Experts
On a personal note, at Prism.IO (Xpo.Network), we are huge fans of Notion and use it for everything from keeping track of bookmarks, managing sprints, tracking job applicants and much more.
We even published a guide to creating a knowledge ‘Brain Board’ using Notion.
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This report is part of a series of reports included in the Breakout Jobs newsletter, curated by Ankit Kumar Singh at Xpo.Network.
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About this Memo
The Author, Adam Breckler is the Founder of Prism Labs, building Xpo.Network.
You can follow him on twitter and follow xpo.network here.
Thanks to Ankit Kumar Singh and Diego Almada for help with feedback, research and analysis on this post.
