It’s been a year since Notion’s triumphant $275 million funding round and $10 billion valuation. Since then the landscape for productivity startups trying to make it on their own has completely changed, especially for those pandemic darlings that flourished in the all-remote world.
As recession looms, companies looking to cut costs are less likely to spend money on tools outside of their Microsoft or Google workplace bundles. Enterprise platforms are bulking up and it could spell trouble for the productivity startups trying to unseat them. But Notion COO Akshay Kothari says the company is still aiming to build the next Microsoft, not be the next Microsoft. And in a move signaling a new chapter of maturity, Notion has hired its first chief financial officer: Rama Katkar, Instacart’s former VP of finance.
Figma, which Kothari called a “sister company” to Notion, decided to join Adobe for $20 billion instead of beating them. But Notion is hungry for more. Unlike other startups that have pared down during the downturn, Notion has gone on the offensive with acquisitions of calendar app Cron and workflow app Flowdash, as well as launching a global ad campaign. Notion also retained its valuation after employees sold shares to investors in a tender offer. Kothari said he doesn’t feel Notion has to “entertain any discussions” about being acquired; there’s more room for Notion to grow, he said, both in the consumer and enterprise spaces.
“It's almost not worth thinking about the hypotheticals because there's just so much that is left to be done, that we could do ourselves,” Kothari said.
IPO or no?
Katkar’s hire is a sign Notion may even go public in the near future. The CFO has some experience in this area (Katkar prepped Instacart for its impending, and lately somewhat troubled, IPO.) When Protocol asked about Notion’s IPO plans, she didn’t commit to a “yes” or “no.” Instead, Katkar said Notion is “focused on building” and tackling the international knowledge worker market.
Whenever a late-stage private company hires a CFO, that means they’re thinking about “the next step,” Wing Venture Capital partner Zach DeWitt said. Going public is typically this next step, and so hiring a CFO with public company or IPO-readiness experience is the way to go. “Usually around $5 million of revenue is when a company starts talking about a VP of finance,” DeWitt said. “By the time the company has $50 million of ARR, they should definitely have a CFO, in the majority of cases.”
At Instacart and before that at Credit Karma, Katkar developed the financial processes and functions necessary for a maturing company. These IPO-readiness skills apply to private companies too, she noted.
“That concept of public company readiness is just a framework,” Katkar said. “But in reality, I think even large private companies benefit from operating that way.”
Katkar was the No. 2 financial officer at both Instacart and Credit Karma, and she feels ready to take on the CFO role. Notion was at the top of her list for its simultaneous consumer and enterprise focus, Katkar said.
B to C to B
Kothari describes Notion as a “B2C2B” company. Notion doesn’t target CIOs, but rather consumers who then work to formalize Notion inside their companies, the so-called shadow IT or, in Notion world, “Notion Champions.” Lately, Notion has been working on making its product more translatable for large companies, adding more admin controls and specific workspaces for teams. But Kothari said he’s not forcing Notion into the enterprise at this point.
“Eventually, we'll get to a point where we can actually go up to the CIO of a company, who's never heard of Notion, and convince them to roll out Notion company-wide,” Kothari said. “But most of the work right now is happening through the employees, through the community.”
Notion’s ad campaign, with billboards in London, Paris, Seoul, Tokyo, New York, and San Francisco, emphasizes the note-taking tool’s ability to help organize personal life, not just work. Kothari also pointed to the company’s New York City and San Francisco pop-up stands offering bucket hats and coffee as part of the broader brand campaign. This type of branding, as well as the company’s investment in and popularity on TikTok, helps target Gen Z and students who might become Notion worker-champions someday.
“We can put our energy into making sure our consumers get to use the product for free because we know that downstream, that leads to a B2B business being built in the long run,” Kothari said.
But Notion’s B2B approach is ultimately not as strong when going up against enterprise software giants with stronger distribution models. DeWitt pointed out that Notion’s valuation is similar to Figma’s at $10 billion, making it a potential candidate for a lucrative acquisition someday. “I’m sure there are some large companies, like Microsoft would be a natural buyer here, maybe even Salesforce, that are thinking about potentially acquiring Notion,” DeWitt said. “It’s a great category, a great team, a great product. It’s got a lot of momentum.”
Kothari said he feels a close kinship with Figma, as the two companies had similar growth trajectories and similar obsessive, loyal user bases. He’s known CEO Dylan Field for over a decade. The Adobe deal shows “how much existing legacy companies really appreciate the power of these new businesses,” Kothari said.
Kothari has been through acquisitions twice, with LinkedIn buying his content platform Pulse, and then Microsoft buying LinkedIn. Kothari said it’s not in the cards for Notion, at least not right now.
“When [Notion CEO] Ivan was recruiting me, he said, do you want to work at Microsoft or do you want to build the next Microsoft?” Kothari said. “I’m personally excited about continuing to build here and seeing if we can continue to remain independent.”
