How This $20B Company Nearly Died 4 Times - But Survived

Credit and Thanks: 
Based on insights from Lenny's Podcast.

Deep Dive

Ivan Zhao's journey in building Notion is a compelling narrative of vision, perseverance, and the intricate dance between product development and user needs. Initially, the vision for Notion was ambitious: to create a platform that allowed anyone to build their software easily. However, this vision was not immediately aligned with market demand. The early years, which Zhao described as the "lost years," were marked by trial and error, where the team experimented with various iterations of their product, only to find that most users were not interested in creating software but rather in using effective productivity tools. This realization came after two years of development, during which they learned that the world was not filled with developers and designers but rather everyday users who needed simple, effective solutions for their tasks. Founders should take this lesson to heart: understanding the market and aligning their vision with user needs is crucial. They should engage in continuous user feedback and be willing to pivot their ideas based on what they learn.

The rebuilding phase of Notion was characterized by perseverance in the face of adversity. After realizing that their initial product was not resonating with users, Zhao and his co-founder Simon decided to pivot towards a productivity tool, coining the term "sugar-coated broccoli" to describe their approach. They recognized that while users might not be excited about the underlying complexity of their product, they could present it in a way that was appealing and user-friendly. This shift required them to discard previous code and start anew, a process that many founders might find daunting. However, Zhao's experience illustrates the importance of resilience and the willingness to rebuild when necessary. Founders should embrace the idea that failure is often a stepping stone to success and that rebuilding can lead to a stronger product.

During this tumultuous period, the team faced the difficult decision to lay off employees to maintain financial stability. Zhao recounted how, at one point, the team was reduced to just him and Simon, which inevitably affected morale. They had to navigate the emotional landscape of saying goodbye to teammates while also keeping the spirit of the company alive. This experience highlights the importance of transparent communication and maintaining a positive culture, even in challenging times. Founders should prioritize fostering a supportive environment where team members feel valued and engaged, even when tough decisions must be made.

Zhao's advice for startup founders centers around the importance of staying lean and efficient. Notion's early years taught them to operate with minimal resources, which ultimately contributed to their profitability. They did not hire a salesperson until they reached over $10 million in annual recurring revenue, demonstrating that a small, talented team can achieve significant results without unnecessary overhead. Founders should focus on building a strong core team and leveraging their existing resources effectively, rather than expanding too quickly.

Creating a unique office culture was another key aspect of Notion's success. Zhao emphasized the importance of designing a workspace that feels inviting and conducive to creativity. By fostering a cozy atmosphere, they encouraged employees to spend more time in the office, which in turn enhanced collaboration and innovation. Founders should consider how their physical spaces can reflect their values and enhance team dynamics, as a positive culture can significantly impact productivity and morale.

At the heart of Notion's philosophy lies the concept of craft and values. Zhao believes that the intersection of personal values and technical skill is essential for creating meaningful products. He likens building Notion to crafting a beautiful piece of furniture, where aesthetics and functionality must coexist. This perspective encourages founders to infuse their personal values into their products, creating something authentic that resonates with users. By doing so, they can cultivate a loyal customer base that appreciates the thoughtfulness behind the product.

Navigating trade-offs in product and business building is another critical lesson from Zhao's experience. He acknowledges that there are no free lunches in business; every decision comes with its own set of trade-offs. For instance, while building a feature-rich product may attract users, it can also complicate the user experience. Founders should be prepared to make difficult decisions and prioritize what truly matters for their users, ensuring that their product remains both functional and user-friendly.

Zhao's leadership journey has also been one of personal growth. As Notion has evolved, so too has his role as a leader. He has learned the importance of storytelling and communication, recognizing that as the company grows, he must adapt his approach to connect with a larger audience. Founders should embrace the idea of continuous learning and be open to developing new skills that will help them lead their teams effectively.

Throughout Notion's journey, challenges and crises have provided valuable lessons. One particularly harrowing moment occurred during the COVID-19 pandemic when the company faced a potential shutdown due to database limitations. This crisis forced the team to rally together and find a solution quickly, ultimately leading to a successful resolution. Founders should view crises as opportunities for growth and innovation, using them to strengthen their teams and refine their products.

Building horizontal software - filled with both joys and pains. The joy lies in creating a versatile platform that can cater to a wide array of user needs, allowing for immense creativity and flexibility. However, the challenges are significant; navigating the complexities of user segmentation and ensuring that the product remains intuitive while offering powerful features can be daunting. Founders must be prepared for a long road to product-market fit, as the breadth of functionality often requires extensive iteration and user feedback to truly resonate with diverse audiences.

Zhao's philosophy of tools and human potential emphasizes that tools should serve as extensions of human capabilities, enhancing creativity and problem-solving rather than constraining them. He believes that the best tools empower users to express their ideas and streamline their workflows, ultimately shaping a more productive and fulfilling work experience. This perspective encourages founders to design products that not only meet functional needs but also inspire users to unlock their full potential, fostering a deeper connection between technology and human creativity.

Actionable Insights

• Regularly solicit user feedback to ensure your product aligns with market needs and expectations.

• Be prepared to pivot your business model or product focus based on insights gained from user interactions.

• Design your workspace to reflect your company values, creating an environment that inspires and motivates your team.

• Focus on building a small, talented team that can wear multiple hats, reducing overhead while maximizing output.

• Leverage storytelling in your marketing to connect with users on a deeper level, making your product more relatable and appealing.

Key Quote

"Tools are extensions of us. And once they extend us, once we shape them, once we bring them to the world, they can come back to shape us."

Future Trends & Predictions

As the landscape of productivity software continues to evolve, there will be a growing emphasis on tools that integrate AI capabilities to enhance user experience. The trend towards bundling software solutions will likely accelerate, as businesses seek comprehensive tools that address multiple needs in one platform. Founders should prepare for a shift towards horizontal software that not only serves specific functions but also adapts to the diverse requirements of users, ultimately creating a more cohesive and efficient workflow.

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Thanks for reading, have a lovely day!

Jiten-One Cerebral

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