20VC: Notion's Founder on "Founder Mode": When it Works & When it Doesn't | Why The Way Startups Fundraise & Construct Boards is Broken | Raising at a $10BN Valuation in Peak Bubble Times and How Notion Has More Money Than Ever Before with Akshay Kothari

Akshay Kothari is Co-Founder at Notion, one of the fastest-growing companies of the last decade. Akshay has run every function in the company from sales, to marketing to finance and even led their fundraising efforts raising $340M+ from Sequoia, Index and Coatue with the latest round pricing them at $10BN. Before Notion, Akshay was VP Product at Linkedin for 5+ years, leading all of their content efforts. He joined LinkedIn when his previous company, Pulse, was acquired by LinkedIn in 2013. In Today's Episode with Akshay Kothari We Discuss: 1. Founder Mode, Veto Powers and Focus: Does Akshay agree with "founder mode"? What are the biggest downsides to founder mode that not enough people are discussing? Why does Akshay believe that the single greatest power of a founder is their "veto power"? What is the biggest opportunity that Notion jumped on that they should not have done? What is the biggest opportunity that Notion did not jump on that they should have jumped on? 2. Raising $50M @ $2BN Valuation: Why did Ivan and Akshay decide to do this raise when they did not even need the money? How did the fundraising process for this round go? Why did they choose Coatue and Index? Why did Sequoia say no to this round? With the benefit of hindsight, what does Akshay wish that they had done differently? 3. Raising $270M @ $10BN Valuation: How did Sequoia come back into the frame with this round? Why did they say yes here when they did not before? Why does Akshay believe that of all the investor brands, Sequoia is the most powerful? In what way does having Sequoia as an investor change the trajectory of the company? Is Akshay concerned about how he will be able to scale into the $10BN valuation? How does Akshay address the challenge of bringing new team members in with stock options priced at $10BN? How much of a blocker is that? 4. Boards and Social Media are F*******: How is the way in which boards are constructed broken? How does Akshay believe that boards should be constructed? What roles should founders hire for in their board members? Why is Akshay most concerned about the "Tiktokification of everything"? Why does Akshay believe that social media has never been more concerning?

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  Founder mode is really good if you have a founder who's right a lot. If they're not, God bless that company. There's more cash in Notion's bank today than the history of its race. So it's like, in some ways, like, we've produced cash, we haven't spent any of it. I think the thing I would say about Sequoia, I think it is probably the best brand. Similar to how we demand excellence from our employees, I think they demand excellence from their companies.

• 0:26Harry Stebbings?

  Welcome back to 20 VC with me, Harry Stebbings. And today, we have the man who makes the show at Notion run smoothly in the hot seat, Akshay Kothari. Akshay is the co-founder at Notion, and he has run almost every function in the company. From sales to marketing to finance, he's even led their fundraising efforts, raising over $340 million from Sequoia Index and Co. 2, with the latest round pricing them at $10 billion. Before Notion, Akshay was VP of Product at LinkedIn for five years, and he joined LinkedIn when his previous company, Pulse, was acquired by them in 2013. But before we dive in today, all of you listening use tons of software every day. Sometimes it fills us with rage, you can't figure something out.

• 1:10Harry Stebbings?

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• 1:50Harry Stebbings?

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• 2:35Harry Stebbings?

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• 3:20Harry Stebbings?

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• 3:46Harry Stebbings?

  You have now arrived at your destination. Actually, I am so excited for this, dude. We did this four years ago in COVID, when no one was getting out. And now you're in London, man. This is so special. Thank you for being here. Thank you for hosting and so great to see you in person. Now, I spoke to Ivan before the show. I spoke to many people before the show. Basically stalked the shit out of you. And what I heard was actually that you have had so many different hats across the Notion journey. From CMO to CFO to Head of Inside Sales, CHRO, Head of IR, CPO. I mean, Christ, I hope you're accumulating different salaries for this. But how did you learn new disciplines so quickly on the job?

• 4:28Speaker 00

  I didn't really think of my job as those titles. Like, my job was COO. My primary job was to like, help scale the business and the company. And let my co-founders, Ivan and Simon, stay focused on the product. And so that meant, whatever the company needed, I would jump in and try to figure it out. How did I do it? This is actually kind of interesting. So, so my background is product, right? And Ivan told me to join and take care of everything except product. And so I essentially put myself on all these new functions and just tried to learn on the job. So, one thing I realized was, even though I had never really done any of these things before, actually like first principles thinking and like systems design that you learn in product development

• 5:12Speaker 00

  actually like applies a lot to these functions too.

• 5:14Harry Stebbings?

  Can we take one, apply systems design in a way that you did? Just so we can understand that in a more contextual manner.

• 5:21Speaker 00

  Yeah, so let's say, the first job I had at Notion was actually like, there were three people who reported to me were support, customer support, right? Now, typically, as the number of tickets or as the number of requests go up, the first thing that people typically do is they just add more people. They sort of like divide the tickets by productivity and then they come up with some number of people. The product manager in me was like, well, we could build a better system, right? And so we could build better tools so that each support person can do more every day. But also, once you have enough of these customer tickets, then the next role you want to hire would be something called a product ops. Product ops would take all this feedback and synthesize it and share it with the engineers.

• 6:05Speaker 00

  So, one thing Ivan and I did in the, in the early years, we created this like canonical database of about 200 types of requests that would come, which would map to like features, right? And we trained our support team to tag every request that come in with one of those 200 tags. You have to do that, right? That was part of the job. Every morning at 6:00 AM, we wrote a script which would take all these tags from Intercom and write it against these database tags in Notion. And so, essentially what every engineer at Notion had Was a real time view of what people were talking about yesterday or the last week or the last month. And so if you could see like, oh, wow, people are talking about the Android app over the last month and it's really gone up.

• 6:50Speaker 00

  They can go in and start solving that problem. And and we use this tag across the tools we had, right? So for example, if you were working on Android, you could essentially put that tag in Intercom and you can basically see all the customer support tickets that have come. So you could essentially, in many ways, you don't even have to hire a researcher. If you put all these things together, we didn't have to hire as many support people. We did not have to hire a product ops person and we also did not have research early days. In fact, all of these were given to the engineer directly to be able to tap into that feedback and actually solve that problem.

• 7:27Harry Stebbings?

  This is a strange question, but you know, everyone is going mad over Founder Mode and the difference between Managed Mode and Founder Mode. When you listen to the way that you're talking, it really is quite a change from traditional org structures and org designs. And it's really driven by a very product driven Founder mindset. Do you think in the future and with Founder Mode, we will see completely redesigned orgs and the traditional functions be very changed?

• 7:53Speaker 00

  Everybody is starting to question things that we've been taught about this specific org structure. And the fact that, you know, Jensen has like 40 direct reports and doesn't do one on one. So I think it's it's actually kind of good that we're reopening what does this lead to? And I think every leader has to sort of question what is sort of the best way to run their company.

• 8:15Harry Stebbings?

  What things do you think we should question that we aren't questioning today?

• 8:20Speaker 00

  If you go back to Notion and sort of why we did some of these things, I think a lot of it came from Ivan really prioritizing keeping a very small team. And that part was not done just because we thought we would be profitable because of that. But I think we did it because it really meant that we can stay a lot more nimble by by doing that, right?

• 8:38Harry Stebbings?

  How did you prevent the creep? There's quite a few people that start very nimble and they're really aligned to how you built the company. And then with a hundred million round or with that big math, you know what? We can hire that extra, we can hire that, we can start that new division, we can go into enterprise early, we can do X. How did you prevent the creep with the increased brand and cash?

• 9:01Speaker 00

  The best power founder has is like the veto power. And Ivan used that a lot when I was in the early days. Like, you know, I remember, I don't know how many salespeople we'd interviewed for the first six months. And Ivan was like, well, this person is quite good, but not great. So let's keep looking. And I think for up to about 500 people, we're about 700 people today, but up to 500 people. The last interview was always with Ivan or myself. So we met literally everyone before. And because we did that, I think it already sort of forced a certain rigor inside the company. But also in general, we were okay with enduring the pain. Like, a lot of times you feel like this person needed to be hired yesterday. And we would be okay waiting a few weeks, a few months, until we found the best person for that job.

• 9:45Harry Stebbings?

  You said that back in enduring the pain. That kind of goes in stark contrast to what we're told, which is the speed of execution is the most important thing in relatively early stage companies. The willingness to wait goes against that. How do you think about that and the importance of speed?

• 10:02Speaker 00

  I think we took a slightly different approach where we did try to keep the team lean. And we felt like it might feel like short term, it's slowing us down. But in the long term, keeping the team small allowed us to move a lot faster. Today, all of Notion, with all the different surfaces we have, under 20 product managers and we have about 12 designers. 12 designers sort of designed the entire surface of Notion, including calendar. And it really allows us to move faster. Like, it's not a committee of design or committee of product managers where someone's only responsible for a very small part of the problem. And so because we have, we are a lean team, we can actually take a little bit longer because we're not trying to hire a lot more people. We're trying to hire maybe a couple of people every year.

• 10:45Speaker 00

  And it also forces a certain prioritization that makes you a lot more effective, right? Instead of just taking the fundraising money that you took, hiring a lot of people, saying yes to all the projects. I think that is actually comes at a cost. The cost is that your bandwidth is now split among so many different projects. And so I think you may feel like you're going faster by hiring more people and saying yes to more projects. But in effect, it is actually going slower. So we've actually chosen the path where we're doing fewer things and doing them better.

• 11:18Harry Stebbings?

  I love the statement you said, which is the power of the veto. What did you and Ivan veto that was the benefit of hindsight, maybe would have been better to do in the moment?

• 11:28Speaker 00

  Initially, we didn't have our values codified. And so a lot of the initial final round interviews was a little bit around our intuition, where we felt like whether this person is going to be actually a good fit for the company. After about, I think when we were 50 people, we actually like did the exercise of codifying the values. And we have four values. We are owners of the mission, we are pace setters, we are truth seekers, and we are kind and direct.

• 11:56Harry Stebbings?

  My team would be watching this going, whoa, there's a red rag. I think values are very, very challenged when you can't take the other side. So kind and direct. I want someone nasty and indirect. No one would ask for that. Is it a good value because you could not take the alternative side? So like as an example, we look for obsessed people, not like passionate, like that's, that's not, you need to be completely obsessed. How do you think about that and what makes a really good value in that case?

• 12:25Speaker 00

  To answer your question, we wouldn't take someone who's nasty and direct.

• 12:29Harry Stebbings?

  But no one would?

• 12:30Speaker 00

  There's a few nuances to this. If you take that example of kind and direct, the and direct part has an extra signal there. It's not like be nice to each other. We want people to be direct, which means that we are inviting people to be able to debate internally.

• 12:46Harry Stebbings?

  I suppose to Ivan again before, and he said, listen, he's basically hired every single leader at Notion at this point, Harry. So you have to ask him about that. When you think back over your lessons on hiring, what are your single biggest lessons on what it takes to really get the best people into Notion?

• 13:01Speaker 00

  Initially, you sort of have to get a feel for the shape of what you're trying to do in this function. And I think, so in many cases, we didn't go to hiring the leader first. A lot of these functions, maybe I started doing the job myself, sort of shaping it to sort of what we wanted to do in Notion. A lot of these functions, we also hired the ICs first, like individual contributors who can start to like do the work.

• 13:24Harry Stebbings?

  When you look back, what have been some of the biggest mistakes you've made? And what are some big lessons from those?

• 13:30Speaker 00

  I think the people who do well at Notion are builders. And we sort of expect even the execs and leaders to be builders. I think when we hire People who are VPs or CXOs at, you know, big tech firms, they have a machinery around how their work happens. And because Notion is so small and so lean, those people had a tough time at Notion because A, like that machinery didn't exist. But also, when we did have a crisis or moment of like solution that needed to be found, I think they typically sort of went to needing another headcount or sort of blaming on the systems or so forth, right? Which actually didn't work so well.

• 14:12Harry Stebbings?

  What was the hardest team to hire and the hardest function to build out?

• 14:18Speaker 00

  The one I would change a lot if I if I could, or the one that I I probably regret not doing the right way is probably sales. I was optimistic. I I thought, you know, I I think we could do sales a different way. And I thought our salespeople could be more consultative. They don't have to worry about quota. They just have to like make sure the customer is being successful and the product will grow and expand. And what I learned the hard way is that we tried to reinvent the wheel on something that has been done in a specific way, does work really, really well, that we shouldn't have. But B, like, I think the the thing that I I misunderstood was actually some of the best salespeople, they join because there is a quota, because they can hit a number, because they can outperform that number.

• 15:03Speaker 00

  And so actually not having that and not having, you know, the the attribution really hurt us, I think, the first year or two.

• 15:09Harry Stebbings?

  How did you see it hurt you? Inability to hire people, the people did not having direction? What was it that was, oh, this is hurting us?

• 15:17Speaker 00

  Well, I think, you know, the way we looked at it was just the percentage of business that is driven by sales or sales assisted wasn't growing as much as we would have hoped. But you know, there's a there's actually an interesting piece here around sales at product-led growth companies, right? Uh, which is that, you know, in many ways, product sells itself at these companies. And you think you can do sales a slightly different way because you have all these leads, right? And that actually is is also a blessing and a curse. Yes, it's a blessing because you have all these leads, but it's also a curse. Because I think your broader team starts to depend on it. It's like, oh, the product is not really signing up the right lead. This is why I'm not able to close sales, right? Which if you didn't have the product, if you didn't have anybody signing up on your website,

• 16:01Speaker 00

  you'd still be doing, going out and trying to find the lead. And so you'd be, you know, you'd be sort of complaining about that part a bit less.

• 16:09Harry Stebbings?

  And if you want to build enterprise, at some point, you've got to build outbound. And you've got to build an enterprise function. And you cannot continuously rely on product inbound.

• 16:17Speaker 00

  Exactly.

• 16:17Harry Stebbings?

  As nice as that would be for anyone.

• 16:19Speaker 00

  Exactly.

• 16:20Harry Stebbings?

  When was that moment when you realized that?

• 16:21Speaker 00

  Probably like three years in, so that that would have been like three years ago. We've obviously now moved very much into like, you know, we have an incredible new sales leader, Praveesh, who comes from like, you know, an enterprise sales background. And I think he's brought certain amount of energy and DNA that like I didn't have, right? That's the other thing. It's like you need someone who can really rally the troops and operate a slightly different way, rather than like a systems builder, product thinker. Doesn't work. I can't stand on the stage of sales kickoff and like rally the troops as much as Praveesh can. And I think if you're like a sales account executive, you need, you want to see that.

• 17:03Speaker 00

  You want to see that. You want to see that you're crushing your quotas and you're, you know, you're really, you're really building for that. And so if I had to do, I used to back to your question, if I had to do it one function all over again, I would do sales. And what the way I would do it is to not try to like overthink it, just do it the way it is run, like a proper sales machine, I think would have saved three years in that journey. So that part, that part is painful.

• 17:26Harry Stebbings?

  Slightly weird one and going off on a tangent, but I heard it before this and I was like, it's just a really thoughtful statement. And it was the hardest things in life are not iron or gold, but unmade decisions. What unmade decision does Notion have that is heavy? You can take a moment to think about it.

• 17:43Speaker 00

  I think one of the challenges for Notion has always been the fact that it's a horizontal product, right? And so I think the question people ask is like, oh, is it for consumers or is it for large enterprises? And the answer has always been yes. And I still very much believe in that sort of horizontalsness. And but one of the things I'm starting to realize is like, instead of defending the answer or trying to pick, we're much more forthright with our employees about the kind of company we are.

• 18:14Harry Stebbings?

  How so?

• 18:15Speaker 00

  I think the best way I've seen more recently is Parker at Rippling sort of calls it a compound company, which is that it is this like big mission that we're building many different products and they're all connected through the data layer. I think in many ways, Notion is a compound company as well. The building blocks that we're building really do serve consumers all the way to large enterprises. The reason the flywheel works is that we actually did this study recently and we found that, you know, something like forty six percent of our business, it can be attributed back to someone using Notion in their personal life. Everybody I spoke to who was using it at a large company with, you know, wall-to-wall usage, they all started because their spouse is using it for their home project, or they're

• 18:59Speaker 00

  using it for with their kids on something, or their niece told them about it, or I saw my uncle having their portfolio on it, and so on and so forth, right? So we know that this part is very important for us. Like, it's almost like a part of distribution that happens naturally because it's a consumery product, but it doesn't pay the bills. The bills are the business is growing on the B two B side.

• 19:21Harry Stebbings?

  Which person do you think has had the most profound impact, maybe on you and your leadership, maybe on Notion as a company, when I ask?

• 19:27Speaker 00

  That's a good question. I would say in many ways, like Notion's kind of unique in that the company became cash flow positive pretty early on. You know, we did not have to spend a lot of money, spend a lot of time on sort of fundraising. There was very little external pressure on Notion.

• 19:45Harry Stebbings?

  What does being cash flow positive mean you have done, that you wouldn't have done if you weren't cash flow positive? What has it enabled you?

• 19:52Speaker 00

  It's a huge, like, once you get there, it's actually a huge time save. So I think I'll just talk a little bit about notions, very nuanced, but we got there pretty early. I think we got there like five years ago. What it did was it meant that suddenly you feel in control of your destiny. You don't have to think about, you don't, you don't have an end date. You, you don't feel like you're gonna run out of money in X months or X years, Y years away. Uh, and what that means is you can choose to raise money if you have a good need for it, but you don't have to. All the time spent there could be spent back into building a better product and, and selling to customers.

• 20:28Harry Stebbings?

  Do you think the way that companies are built today is wrong? Idea, raise five million on twenty five after leaving Stripe. Hire people, get to a million in ARR, you, you're an angel investor too. Get to a million in ARR, have Excel index and everyone fired over you, get to ten million there. Do you think we are building companies wrong?

• 20:48Speaker 00

  People should have a deep understanding for what long-term valuation metrics look like, right?

• 20:53Harry Stebbings?

  What do you mean by that?

• 20:54Speaker 00

  I mean, you just look at historically, what is the revenue multiple or PE multiple of SaaS companies? So like, you can raise on hope today, but in the very long run, unless you're trying to just like get acquired, you will be valued at a multiple of your revenue or a multiple of your cash flows that you're generating. And they tend to be an average of like, you know, what, five to ten X in, on the revenue multiple side? And the way that you can increase your multiple is by three things, right? I think in my view, one is you can increase it by having a faster growth rate. But you can increase it by having a better cash flow margin. And you can increase it by operating in a, in an industry or in a space where there's,

• 21:37Speaker 00

  the, the terminal growth rate can still be pretty high. So I think as long as you have a deep understanding of those, those things, I, I think as long as you have a good understanding of what you're, what you're gonna use the money for, you can build towards that, great. I think if you're hoping that we're gonna be back to hundred times revenue, a hundred times ARR valuation, I think, I think that's a bit challenging.

• 21:58Harry Stebbings?

  It's funny, I had the founders of UiPath, Klaviyo, a service titan, and none of them could raise. And it meant that they all were forced to stay very close to customers for the first few years. They didn't hire customer service teams, they didn't even hire product people because they had to do it all themselves. All three said the company would not be the success it is if they'd raised the money.

• 22:17Speaker 00

  I think it's some of it, like I I I also have to credit Ivan here because in the early days, I think, you know, you know this, a lot of investors did knock on our doors.

• 22:25Harry Stebbings?

  A lot.

• 22:25Speaker 00

  A lot.

• 22:26Harry Stebbings?

  A lot.

• 22:27Speaker 00

  And I think.

• 22:27Harry Stebbings?

  Did some crazy things to get attention from you guys.

• 22:30Speaker 00

  Correct, correct. And so literally every quarter Ivan and I would discuss is like, should we do it?

• 22:35Harry Stebbings?

  Just out of interest. What was that internal discussion? I'm fascinated.

• 22:38Speaker 00

  I think primarily Ivan was very focused on is money the constraining factor right now? It's like if we had more money in the bank, would we would we spend it on hiring faster?

• 22:48Harry Stebbings?

  Take me to the time where money was a really constraining factor and you decided to raise it.

• 22:53Speaker 00

  We raised fifty million at two billion at the start of COVID, like pretty much like a couple of weeks into COVID in twenty twenty, early twenty twenty.

• 23:00Harry Stebbings?

  Fifty million at two billion. I mean, that's a weird raise in the way, and it's brilliant raise, but in the raise that it's minimal dilution, actually. But a lot of money. Fifty million buys a lot, a lot. The traditional notion is, well, VCs wouldn't like that because they can't get the ownership that they need. How do you think about that raise, the structure of it? I'm just fascinated.

• 23:19Speaker 00

  But it came about really fast. It actually goes back to being cash flow positive and not needing it. I think you sort of are able to do.

• 23:27Harry Stebbings?

  You're allowed to break the rules.

• 23:28Speaker 00

  You're able to break the rules because there's more demand than supply. But you know, the reason we raised that round was also, I think, was an interesting one where we didn't have a need for fifty million dollars, but we raised it because we saw that the talent was flocking to safety, where all the people we wanted to hire needed some signal to say like, oh, this company is stable and I and I'm willing to work there. And so in March or April twenty twenty, again, we didn't have the cash needs, but we needed an index and CO2 stamp that I'm putting fifty million dollars in this company that is growing and that actually really helped us recruit and like break that.

• 24:09Harry Stebbings?

  How do you not let that alter your mindset towards focus? You've got fifty million now, actually. You can build that new team. You can build that new product. You can do that at a low like or higher. How do you retain that discipline when fifty million drops?

• 24:22Speaker 00

  Frankly, I don't know. I I I think this might sound weird, but I think we're just like not wired that way. Like in in some ways like.

• 24:29Harry Stebbings?

  Which makes you very rare.

• 24:30Speaker 00

  Yeah, in some ways, like, there's more cash in Notion's bank today than the history of its race. So it's like, in some ways, like, we've produced cash. We we haven't spent any of it. And some people might look at me like, hey, you're not really utilizing the cash that is in hand.

• 24:45Harry Stebbings?

  Are you being aggressive enough?

• 24:46Speaker 00

  Yeah, so that's a question people ask. One of the things I learned, this was actually one of my favorite tools of duty inside Notion was when I was running finance for a year. First of all, I thought finance, like, at least before I actually worked on it directly, I thought this is just like bookkeeping, stay out of trouble, like, stay compliant. But only as I worked for a year and I I sort of got introduced to the whole world of FPNA, biz ops, and I was like, wow, this is so strategic. And once you get to a certain scale, the notion got to about hundred million in ARR a couple of years ago. And you realize like, oh, there's all these interesting comps you can look at, public comps that you can measure your performance against as well, right? So it's very, if you think about your job as like, well, there's all these different projects you need to fund and you need to resource allocate. Finance becomes such a strategic partner in that.

• 25:31Speaker 00

  So I remember talking to, as part of like me going to hire our CFO, I talked to a lot of CFOs in the valley as a way to learn. And I remember one of the conversations was actually quite interesting, where I asked, like, what's the ideal, like, rule of forty? Like, you know, should it be this? Should it be that? Like, you know? And this person said, like, you know, basically, you should have test budgets for everything you want to try out. And you should just look at each part of your business through that unit economic lens. If you want to do performance marketing, give people fifty thousand dollars, hundred thousand dollars, doesn't matter. Tell them to test whatever they want to test. And if they can prove the unit economics for that channel and the the channel is working, then you should load up the truck.

• 26:13Speaker 00

  You shouldn't worry about rule of forty at that period of that quarter or that month, because you you've seen an opportunity that pays you back. You can do the same with sales. And so one of the years, we did actually spend a lot of money on billboards. It was a way for us to learn that, okay, well, this does improve your brand awareness, but doesn't actually do a lot to signups or, you know, deal closing sort of completion rates, right? And so that's a theory we have right now with with sort of being aggressive versus being too defensive is that.

• 26:43Harry Stebbings?

  What percent of budget should be allocated to tests across those different disciplines? Is it like ten percent or is it like fifty percent?

• 26:50Speaker 00

  Well, the budget could be pretty small. You just need enough of a budget to be able to get signals back, that channel is working. And in many cases, you don't need it to be very large, right? I think maybe like sales is might, might, might have a longer period for you sort of see what the paybacks are. But I think anything you're doing with performance marketing or some partnership deals or other things like I think those things, you know, you can, you can do it.

• 27:14Harry Stebbings?

  So we do the fifty at two billion. And then how much did we raise at ten billion?

• 27:19Speaker 00

  We raised around two hundred and seventy million at ten billion.

• 27:22Harry Stebbings?

  Around two hundred and seventy million, to not be precise. Talk to me about the thinking there. What were we unlocking with that fundraise?

• 27:29Speaker 00

  So this was second half of twenty twenty one, pretty crazy time. And the reason we did this raise was because our peers, our competitors were getting very aggressive in going to market, both from the marketing lens as well as from the sales lens. And we saw an opportunity to not only raise this money, but also to sort of play the game on the field. And so, so we did this in October twenty twenty one. And I think the plan was to sort of go more aggressive on go to market.

• 27:59Harry Stebbings?

  Did you decide to play the game on the field and go aggressive?

• 28:02Speaker 00

  Yes, we did. For about a year or so before the markets turned.

• 28:06Harry Stebbings?

  Was it the right decision?

• 28:08Speaker 00

  You have to. I mean, there is no other choice, right? I think at the end of the day, you do have to play the game that is being played on the field. And in this particular case,

• 28:16Harry Stebbings?

  Do you? Or can you just watch others burn money in go-go times and stay disciplined?

• 28:22Speaker 00

  Probably nuanced. I think you don't want to like burn your company down, but I think you, you do want to like compete and see if you can capture more of the customers that your, you and your competitors are both trying to get.

• 28:34Harry Stebbings?

  And so we go aggressive for this year and then harder times come and we pull back?

• 28:38Speaker 00

  That's what happened in twenty twenty two. In fact, the harder times came much faster than most had imagined. And so in many ways, the pullback happened quite a bit early in our journey.

• 28:48Harry Stebbings?

  Just thought, thought exercise here. Is that not when you get more aggressive? Your competitors, they don't have actually the cash supplies that you do in a lot of respects. You could have gone aggressive then when they pulled back. Did you think about that?

• 29:01Speaker 00

  We did do some of that, and I think the reason we were able to do some of that was because we were already cash flow positive. So we saw all the companies around us all trying to get fit, all trying to get back to cash flow positive. And we were like, we're already there. So what do we do? Through all of these things, one thing I realized, it's actually there's there's like 99 ways you can burn money. There's only one good way to like effectively like make money, right? There's just like so many bad ideas out there. You can like throw money on the billboards, you can throw money on YouTube. But I think it's like, it's actually very few ideas that actually can like continue to scale well. And even when it starts to do well, like you put more money in and it starts to be a bad channel, right?

• 29:40Speaker 00

  So it's actually kind of an interesting exercise of like, if something works for X, like how do you get to 10X? And still have the same unit economics is pretty hard.

• 29:50Harry Stebbings?

  I have a question for you. On the 10 billion, it's a big, big valuation. How did you think about that? And how do you think about the growing into that over time?

• 29:59Speaker 00

  Well, I think the, I think going back to what we discussed, right? I think in the very long term, it will be a function of the company's sort of multiple, the function of, you know, multiple of revenue. And the premium we'll get is based on us being able to grow fast or continue to grow fast and do it in an efficient way. The great thing about Notion is that we just operate in a very large market. The different categories that we play in has like, I think we've barely scratched the surface on it. And so there's, you know, we're pretty excited to sort of like keep building towards that vision.

• 30:31Harry Stebbings?

  Does the valuation even matter if you're cash flow positive? If you're being blunt, valuation matters a lot if you're not cash flow positive because there's crunch time in 18 months when you're going back to the VC and your judgment day comes on your valuation. If you don't need to go back to the VC.

• 30:48Speaker 00

  Well, valuation matters internally, I think to employees. I think it matters that the the stock that they did get is able to be valued that much and continue to grow in value over the years.

• 31:00Harry Stebbings?

  Is that a challenge with leaders today? You bring them in at a 10 billion price, it's high. Like seeing like, you know, 10X on that is hard.

• 31:09Speaker 00

  I think it is a challenge for a lot of companies.

• 31:11Harry Stebbings?

  Yeah.

• 31:11Speaker 00

  When you can't show them a path. And I think it was a bigger challenge in two thousand and twenty two. I think some companies have been able to sort of like show a path or have gotten there. But I think they're probably more rare than the number of unicorns that were sort of made during that time.

• 31:26Harry Stebbings?

  When you look back at your fundraising, what would you have done differently?

• 31:30Speaker 00

  I wouldn't do anything different.

• 31:32Harry Stebbings?

  How did Sequoia come together?

• 31:33Speaker 00

  When we did the COVID round in two thousand and twenty, we really, really wanted Sequoia. Again, like if you think about the the goal for that round was to get a stamp of approval so that we could recruit. And people feel like this is a safe company. And there isn't a better stamp than Sequoia's. And so so we pitched them and actually we we we we got a no that that time in March two thousand and twenty.

• 31:56Harry Stebbings?

  Was this from Pat Gready?

• 31:57Speaker 00

  I think it's from the partnership. I think the person we had talked to there was Mike Vernal then, who was an early personal investor. And I think they actually wrote a very thoughtful note for why. In many ways, like it worked out in terms of us like getting to know even each other even more over the next eighteen months.

• 32:15Harry Stebbings?

  And then with the next one, you came back and said, hey, we still want you.

• 32:18Speaker 00

  Next one, we came back, we we asked them first and them and Co Two, because I think Co Two had put a smaller check in the in the fifty million dollar round. And so so they came back and did a larger one and Sequoia was the co investor in that.

• 32:33Harry Stebbings?

  Do you find having Sequoia as an investor is a needle mover for a company?

• 32:36Speaker 00

  I think, yeah, I think it is probably the best brand. Their record speaks for itself, I think.

• 32:42Harry Stebbings?

  What does it help most? Talent, customer acquisition, pure brand and market and ego? What is the thing that is the needle mover for?

• 32:51Speaker 00

  I think the thing I would say about Sequoia, having gotten to work with them more in the last few years, is that similar to how we demand excellence from our from our employees, I think they demand excellence from their companies. And so if you like that pressure, if you like wanting to build a generational company, I think you get the best, you know, set of questions from them. You get a lot of really nuanced feedback and data. Points from them. You know, right now we work with Pat Grady. I mean, Pat has seen literally every like generational SaaS company closely, like really closely.

• 33:29Speaker 00

  And everything is memory. So he can essentially tell you, you are where, you know, ServiceNow was like 12 years and two quarters ago, right? And I think that's, I think it's like, he's seen the movie so many different times. And so.

• 33:42Harry Stebbings?

  His mind is so structured. That's what I, for me with him, like whatever problem you have, he'll break down it to like core component parts and then play it back in incredible clarity and structure.

• 33:52Speaker 00

  And actually, one of the things that I've also realized is like, it's not just like business performance. One of the, I remember one quarter where we missed our, this was maybe like a year and a half ago or something where we missed a quarter, where we, we sort of like missed our number. I remember, you know, saying like, oh, you know, here are like seven things we're doing to like, close the number gap. And I remember both Mike Vernal and Pat said, I think you guys are thinking about this wrong. The question is not whether you can hit this quarter or not. The question is whether you can actually really scale this product to 100 million users and beyond. Because that's, that's the future we see with Notion. It was a good reminder where it's like, wow, they sort of believe in this long-term mission.

• 34:33Speaker 00

  And they're sort of, the long-termism is sort of like helped us recalibrate in terms of what we should do.

• 34:40Harry Stebbings?

  We mentioned Pat, we mentioned Index, we mentioned Code Two. When investors invest and lead and write big checks, they generally get board seats. You did boards a little bit differently. How did you do a board differently, actually?

• 34:53Speaker 00

  These rounds were low dilution. I think there's essentially two to three percent ownership that we, that we, we gave out. You know, we were able to essentially not give out board seats. We were able to do it in a way that, that sort of like felt like we could almost recruit a board in the future. Which we wanted to do, not just because someone is investing money, but someone who could be a long-term sort of board, board member for us.

• 35:18Harry Stebbings?

  What do you want in the recruits that you have to your board?

• 35:22Speaker 00

  So actually, like, this is something we've been thinking a lot about, and actually, it's actually not that different from thinking about recruiting an executive team. There's like five seats that we would want to fill. I think I would want one person to be like a CEO whisperer, almost like a CEO coach. Ideally, like a former CEO who's done that job. I think CFOs always would like a partner in having an amazing audit chair. Then there's probably a person who's in go-to-market. And this could be like either someone who's deep in sales or deep in marketing, and you can pick whichever one you need, you're gonna need help with in the long run. Then there's the other, like, the governance and like the compensation committee is typically a person who you could match with your head of people.

• 36:07Speaker 00

  And what you could do, if you design it this way, you could also, let's say, you know, fifth one is an investor who actually gives you like a macro perspective or how things are going on. But if you design this well, you could almost have a, like, a one-to-one coach for your executive team to your board that you, that you sort of put together. Where they, as they're growing in their careers and they're sort of like figuring out the next phase and the next phase after that, they have an incredible board member who's investing in them. And so, I don't, actually, this is probably pretty rare. Like, I don't know another company that has done that, but I think a lot of this sort of came from first principles, thinking, what would we need?

• 36:42Harry Stebbings?

  Do you think we build boards the wrong way? I lead your A, board seat. Someone else leads your B, board seat. Someone else leads your C, board seat.

• 36:50Speaker 00

  People are rethinking what org structures should be and like how many people should report to you. I think people should rethink what boards should be. There is an element of, if you had to like recreate what a board meant, I think just writing it down. But people don't get to do that, right? Because I think, I think we, we got lucky in that the ownership and some of the, the cash flow positive really helped like not dilute as much and not need as much capital. I also think like, you know, some of the investors I know, someone I really respect is Jeff Weiner, who was my old boss at LinkedIn. I even actually tried very hard to get him to be a board member.

• 37:32Speaker 00

  At uh you know, first board member at Notion and and he said no, because in deep down, he wanted to be, you know, the CEO's coach. And he said, some of the board stuff around, I think, requires him to think about the company before he can think about the CEO.

• 37:46Harry Stebbings?

  Sure, you have a fiduciary duty to shareholders.

• 37:48Speaker 00

  Correct.

• 37:49Harry Stebbings?

  Which can be in direct conflict with your CEO coaching.

• 37:52Speaker 00

  Exactly. So it's tricky.

• 37:53Harry Stebbings?

  I want to do a quick fire round. So I say a short statement, you give me your immediate thoughts. Does that sound okay?

• 37:58Speaker 00

  Let's do it.

• 37:59Harry Stebbings?

  Okay, so what do you believe that most around you disbelieve?

• 38:02Speaker 00

  I think AI will create more jobs than it will kill.

• 38:05Harry Stebbings?

  I stalked your Twitter, so I know that you thought this was quite a good question. What's your favorite book written before nineteen fifty six?

• 38:13Speaker 00

  You know, with the kids, sort of reread some of the Indian epics. And so there's a part in Mahaparat called the Bhagavad Gita. And some of those principles in Bhagavad Gita are so timeless that I think are worth reading again.

• 38:26Harry Stebbings?

  What's your favorite essay, blog post, or memo written post two thousand?

• 38:30Speaker 00

  By the way, these two questions are really awesome questions that I think I found them in Lulu's application. I think job application is fantastic. So there's a essay, I think one of the inspirations for Notion has been Alan Kay and his work. He's like one of the computing pioneers. He actually wrote a essay in two thousand eight where he said why the computer revolution still has not happened. And he sort of talks in detail about why, you know, a lot of the computing devices are mostly used for consumption. It's not used for creating things that the pioneers had thought about. It's worth a read.

• 39:06Harry Stebbings?

  Best board member that you would most like to have if you were to choose one other than Jeff Weiner?

• 39:12Speaker 00

  I personally would would have loved Charlie Munger. Talk about like long term thinking, long term business building. Sad that he passed away, but him and Warden are sort of like my my heroes.

• 39:24Harry Stebbings?

  Did you ever go to the Berkshire Hathaway event?

• 39:26Speaker 00

  Then many times.

• 39:27Harry Stebbings?

  Was it amazing?

• 39:28Speaker 00

  It's amazing.

• 39:29Harry Stebbings?

  I've always wanted to go. Uh, most memorable first investor meeting?

• 39:33Speaker 00

  So for me, I think I graduated 2010. I won't go into too much detail, but I built this like small little app in my class project at Stanford that became a company called Pulse. And I remember meeting an investor, Emily Melton, was at Mayfield then, the D F change. Now she runs her own fund. And one of the things I realized as a student, the superpower of meeting investors is that what I saw in Pulse was like just another RSS reader. And what she saw in Pulse was this next generation browser for the iPad. And it really sort of made my idea like hundred X stronger, just like having that meeting and having her talk about like someone seeing the vision even before you do it. I think that was incredible.

• 40:17Harry Stebbings?

  What's the most contrarian or unorthodox advice that you'd have for founders listening?

• 40:21Speaker 00

  I think in general, I would say like almost all advice is genius for a subset of people and completely rubbish for the rest of them. I think you can take literally everything. Like, I mean, even Founder Mode. Founder Mode is really good if you have a founder who's right a lot. If they're not, God bless that company. So I think, I don't know, I think I've moved away from giving advice to more share my experience with what happened at Notion or Pulse, because I found that to be like, I think hopefully you can take the right learnings from them and apply it to what your situation is.

• 40:55Harry Stebbings?

  What have you changed your mind on in the last 12 months?

• 40:57Speaker 00

  One of the things, I think my wife was right on this one. One of the things I used to do about a year or two was try to like pack up every hour of my kids' weekend with like activities. And I was like, oh, they can be bored. Like they gotta do this, they gotta do that. And then, you know, we just spent like a month in India this summer and they had no programming and they were just like sitting around with family. And in many cases, my, my daughter complained she was bored, but I think both of them grew so much with all these interactions. And I've realized that, I don't know, boredom is good. Like, I think it's okay for them to like not be like occupied every hour of the, of the day.

• 41:36Harry Stebbings?

  What concerns you most in the world today?

• 41:38Speaker 00

  I think this like general Tik Tok-ification of every social app, I'm really worried about that. Every social app has become like one or two clicks away from infinite stream of viral videos, which I think is like just really sad.

• 41:53Harry Stebbings?

  Has it not helped Notion? Yeah, like you have amazing community on TikTok and on a lot of short form platforms. I agree with you, but has it not helped?

• 42:02Speaker 00

  Similar to this podcast, I think there's definitely better content out there. I'm not saying necessarily like Notion content is better. But how many people have controls over this information that they're consuming? They didn't have that even when they're watching TV or something. But I, the thing that I worry about is like, is just the consumption to creation ratio has gone out of whack a little bit like.

• 42:27Harry Stebbings?

  Do you think so? So you think there's now more consumption than ever lately? Because there's also more creation. Everyone's a creator. You can't walk down the street in London without seeing everyone creating.

• 42:37Speaker 00

  Yeah, but creating what though? I think.

• 42:39Harry Stebbings?

  Oh crap, I agree. But the ratio is not the problem.

• 42:43Speaker 00

  You are right that I think more people are creating than ever before.

• 42:46Harry Stebbings?

  Hundred percent.

• 42:48Speaker 00

  I think the question, I guess, I don't know, maybe, maybe I'm being cynical here, but I, I, I wonder what people are creating and what people are consuming and whether it's actually.

• 42:56Harry Stebbings?

  So I actually tweeted this this morning. The top eight enterprise valuations of ed tech companies amounts to about nineteen billion. OnlyFans enterprise valuation, eighteen and a half billion.

• 43:09Speaker 00

  Yeah, I would love to see in some ways, how do we make learning and education more what people want to do? And I actually think like, I don't know, people watching this podcast, hopefully learn a few things and.

• 43:21Harry Stebbings?

  Well, I actually view it as like our job and our role to package that more efficiently for today's society. This gets taken and put into a hundred different clips for four different platforms. And like I have to move with the times to deliver my content in a better package.

• 43:36Speaker 00

  Yeah, you have me convinced that it's not all bad.

• 43:39Harry Stebbings?

  Well, your feed is what you make it. It's like life. If you go on my feed, actually, my feed is protein, recipes, gym, Tony Robbins and inspirational speeches. Mine's quite uplifting. The trouble is that most people are perpetually like magnetic to crap, violence and sadness.

• 43:56Speaker 00

  Yeah, that clearly sort of resonates, but also like, like if you're just maximizing attention time, which these social apps are doing, it does sort of, just sort of like spiral down to that.

• 44:08Harry Stebbings?

  You have to change the incentive mechanism of the app.

• 44:10Speaker 00

  Exactly.

• 44:11Harry Stebbings?

  And so you have to change the monetization mechanism.

• 44:13Speaker 00

  Yeah, exactly. And so.

• 44:14Harry Stebbings?

  Which will go to an Elon view of the world though, which is actually moving to a subscription based social network model and saying fuck you to advertisers.

• 44:21Speaker 00

  Yeah, I just sort of worried that I think the incentives right now, at least for these companies that are primarily ad based are just like it's gonna be a hard one to like move to subscriptions.

• 44:32Harry Stebbings?

  Would you let your children have social media?

• 44:34Speaker 00

  No, at least not till when they're a lot older. Actually, one of the best things that happened this year in the last couple, last month, my daughter's school sort of banned devices in school. I I'm just really glad because once a month I would have a conversation with her about some of her friend wearing an Apple Watch or and and I had to explain like, sorry, but we're not getting it at this age. And but now now I don't have to explain that, which is nice.

• 44:57Harry Stebbings?

  Um. A final one for you. What question are you not asked by hires, by team members, by investors, by people that you feel you should be asked more?

• 45:07Speaker 00

  One of the things that I've been reflecting on is a little bit sort of like that, you know, the Steve Jobs speech around how you connect the dots, looking back. I didn't appreciate it when I was growing up in this small city in Gujarat in India, how sort of growing up there and surrounded by friends and family there, how it would have shaped the things that I do today. And so I think some of those, some of that exploration is super fun to, especially as I get closer to forty. It's like, wow, like all my creative genes probably comes from my mom and all my business genes probably comes from my dad and and like all these different things that I did when I was young. In some ways has made what I do today possible.

• 45:45Harry Stebbings?

  Actually, listen, I so appreciate you putting up with my meandering. You've been fantastic to have on the show. So thank you so much for joining me.

• 45:51Speaker 00

  Thank you for having me.

• 45:53Harry Stebbings?

  So I would love your feedback. I would love to hear, do you think shows are significantly better when recorded in person in the studio? Let me know on Twitter at Harry Stebbings and you can watch them on YouTube at twenty VC, that's two zero VC. But before we leave you today, all of you listening use tons of software every day. Sometimes it fills us with rage. You can't figure something out. The chatbot in the bottom right is useless. You keep getting bombarded with these useless pop ups. And for those of you who build products, no one wants their product to feel like this. Thankfully, a company exists to help users without annoying them. Command bar, it does a couple of very helpful things. It's a chatbot that uses AI to give users extremely personalised responses and deflect

• 46:36Harry Stebbings?

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• 47:20Harry Stebbings?

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• 48:04Harry Stebbings?

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• 48:47Harry Stebbings?

  and use the code 20vc to save 10% off your first purchase of a website or domain. As always, I so appreciate all your support and stay tuned for an incredible episode coming this Monday. It is one of the best investing shows we've done with David Frankel at Founder Collective.