Notion's offices in 2021 may lack some strappings of Silicon Valley startup culture, but not canine friends.Notion
Early this year, Notion experienced a problem unusual to enterprise software startups: it went viral on TikTok. On January 4, millions of users logged on to Notion to check their note-taking, to-dos and calendars to start the new year, only to find the service was down. A month later, it happened again. Twitter buzzed with “panicked” users.
Notion wasn’t new to growth – the app quintupled its user base of knowledge workers, note takers and personal organizers in 2020 as the pandemic pushed more work online. The company reached a $2 billion valuation that April. But it wasn’t prepared for Gen Z which, it turns out, loves a minimalist note-taking tool and workspace – to tune of tens of millions of views, and hundreds of thousands of likes. Each video led to thousands of unexpected signups pouring in. Notion was caught by surprise.
And with business users at customers like Adobe, Headspace and Figma suddenly restless, Notion faced a big problem, too. The startup spent the next six months overhauling its infrastructure to combat slow loading times and handle the next surge. “It has been an interesting challenge,” says Akshay Kothari, Notion’s chief operating officer. “But we also found ourselves in a very fortunate position.”
Notion’s popularity, and the online culture forming around it, continues to stoke interest from investors. After years of raising relatively small amounts, CEO Ivan Zhao, Kothari and team are now looking to pick up the pace. Notion has raised $275 million in a new funding round led by Coatue Management and Sequoia, with participation from Base10 Partners. Not counting the new money poured in, the investment values Notion at $10 billion.
In an interview, Kothari and Olivia Nottebohm, who joined Notion as chief revenue officer in June, said the funding would go towards Notion’s “platform” push to offer, and connect to, more applications, as well as staffing up its operations to meet its international and big-business demand. Based in San Francisco, Notion now maintains offices in Dublin, New York, Tokyo and Hyderabad, where it recently acquired startup Automate.io.
Notion did not share revenue numbers, but points to user growth that might be the envy of some consumer businesses. The company boasts more than 20 million users today, up from one million in 2019, and four million last April. Its subreddit community on social platform Reddit has 150,000 subscribers, nearly ten times the number of Slack’s, and six times the comparable group for Zoom. And with 80% of its users based outside the U.S. – and 70% of sales – its Korean language Facebook group counts more than 30,000 members, versus 50,000-plus for its Arabic-focused group.
Supporting that is a team of just about 200 people, up from 40 or so last spring. While Notion aids a growing number of independent consultants building their business on helping users navigate its tools, the company doesn’t plan to add professional services any time soon. Instead, the funds will help it add more local account support and salespeople, as well as staff to help expand its products to work better in large-sized businesses. Notion still has most of the $50 million it raised last year, says Kothari; the company may look to make more acquisitions as well.
Akshay Kothari (right, from 2016), says he's channeling a favorite quote from his former LinkedIn boss Jeff Weiner (left) to move on from Notion's new $10 billion valuation: "Next play."© 2016 Bloomberg Finance LP
For the funding round, Notion turned to Coatue, the hedge fund with a growing startup investment practice that has recently emerged as one of venture capital’s most prolific players, and Sequoia, one of Silicon Valley’s more storied traditional firms. Coatue wrote a small check in Notion’s previous funding round led by Index Ventures; in subsequent months, its team ingratiated itself with Notion through coaching and introductions like Nottebohm, a former Google executive and Dropbox COO whom the firm connected to Kothari initially as an expert contact.
According to Coatue general partner Caryn Marooney, her firm was impressed that Notion not only had what Coatue’s investors believe is a beautiful product, but executed on what its leaders said they would do. “We saw that across the board with hiring and identifying important actions, then executing,” she says.
Sequoia held a small piece of Notion through its Scout program, but partner Mike Vernal also knew Notion’s team personally from his days as an angel investor. Vernal also overlapped with Marooney for a number of years at Facebook, where he was a product and engineering leader, and she led global communications. Notion met Base10, the other new institutional investor in the round, through general counsel Hasani Caraway. The startup was impressed by a commitment by Base10, which is Black-led, to donate half of the carried interest from its most recent fund to support scholarships at historically black colleges.
While its valuation and backers stand out even in a moment of prolific funding and high valuations for buzzy software startups, Notion still competes in a crowded field that includes tech giants and other startups like newly-minted unicorn Coda and challenger Roam Research. (It also rubs shoulders with a number of other businesses like Airtable, a database-inspired productivity tool also backed by Coatue.) To Kothari, who says he counts the leaders of many of those peers as friends, the biggest difference today is Notion’s community. “There’s this real love and passion for the product that comes from people feeling like they can create things,” he says. “Notion is becoming a product where people are creating amazing things and building businesses on top of that.”
But Notion’s business prospects will hinge as much upon an age-old enterprise software issue: its ability to scale within large organizations without becoming unwieldy or more productivity drain than boon. Notion’s acquisition of Automate came as the company has recognized that in larger organizations, different teams were connecting Notion to tools specific to their work, such as a marketer connecting Marketo, or a support staffer integrating with Zendesk. In the future, Notion hopes to be a hub empowered to push new content and updates out to such apps from within its own software using APIs.
That will mean even more scrutiny for Notion’s load times, a concern voiced by customers in the past, and ability to handle the strain of new waves of users from TikTok or elsewhere. The company’s already planning for pandemic-fueled usage growth to continue. “A year ago we were wondering, ‘is this going to be permanent?’ And I think we’re a bit on the other side of that at this point,” says Nottebohm.
And after revamping its infrastructure, Notion’s prepared for more spikes of users now, Gen Z or otherwise, Kothari insists. “I feel like the last 18 months have been something like Black Swan [event] after Black Swan. But I feel good about the next phase of scale,” he says. “We’re ready to take on more TikTok virality.”