Sep 18, 2024 · 48m · news
Akshay Kothari: How Notion Has More Money Than Ever & Why Startup Fundraising is Broken | E1203 · 20VC with Harry Stebbings
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this 20VC episode, host Harry Stebbings interviews Notion's co-founder and COO Akshay Kothari about the company's unconventional, lean operating philosophy, capital-efficient growth, and unique approach to scaling a global compound product. Kothari explains how rejecting traditional corporate playbooks in favor of first-principles systems design and strict spending discipline enabled Notion to achieve early cashflow positivity and outpace competitors.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 21.5% of the talking time here. How this is scored →
Harry as informed peer 5.1 Guest teaching 5.4 Guest disagreement 2.0 Harry pushing back 4.5
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 44:32 Challenging the quality of social media creation
Kothari pushes back directly on Stebbings' optimistic view that everyone is becoming a creator, questioning the actual substance and quality of what is being created.
Hardest push from Harry ▶ 9:46 Calling out table-stakes corporate valuesStebbings forcefully rejects Notion's value of 'kind and direct', arguing that real values require a plausible alternative that someone could take, rather than basic baseline expectations.
Biggest teaching moment ▶ 2:16 Automating customer feedback to replace middle management rolesKothari educates Stebbings on how applying software engineering systems design to customer service tickets allowed Notion to scale rapidly without hiring product ops or dedicated research teams.
Harry holds his own ▶ 46:39 Analyzing platform monetization and incentive alignmentStebbings demonstrates clear expertise in digital media dynamics by explaining how ad-funded platforms inherently incentivize outrage and how changing user feeds requires altering underlying subscription monetization structures.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Welcome and Wearing Many Hats at Notion | 3 | 6 | 1 | 2 | Stebbings introduces Kothari and asks how he rapidly learned multiple operational disciplines. Kothari explains how he applied product systems design to customer support, establishing a 200-tag tracking system that eliminated the need for product ops or early research hires. | |
| Founder Mode and Redefining Org Structures | 5 | 6 | 2 | 6 | Stebbings pushes back on Kothari's concept of enduring hiring pain, noting it directly contradicts the standard startup mandate for maximum execution speed. Kothari defends keeping teams small, noting that 12 designers handle all of Notion and that long-term velocity increases with a lean headcount. | |
| Codifying Notion's Core Values | 6 | 5 | 3 | 7 | Stebbings forcefully challenges Notion's value of kind and direct, asserting that legitimate corporate values must have a plausible counter-position rather than basic table stakes. Kothari counters by emphasizing that the direct phrasing explicitly encourages internal debate and truth-seeking. | |
| Reinventing the Sales Machine | 4 | 5 | 1 | 4 | Kothari openly shares his mistake in trying to eliminate traditional sales quotas and commission structures during Notion's early days. Stebbings notes that enterprise growth fundamentally requires structured outbound sales rather than relying entirely on inbound product interest. | |
| Notion's Horizontal Identity as a Compound Company | 3 | 5 | 1 | 1 | Kothari describes Notion as a compound company serving both personal users and large enterprises. He reveals that 46 percent of Notion's enterprise adoption originates from personal or consumer usage. | |
| The Power of Being Cashflow Positive | 6 | 6 | 3 | 5 | Stebbings questions whether the traditional VC fundraise trajectory is broken, citing examples like UiPath and Klaviyo that benefited from early capital constraints. Kothari outlines SaaS valuation fundamentals, including revenue multiples, cash flow margins, and terminal growth rates. | |
| Capitalization and Spending Discipline during the Bull Market | 6 | 6 | 3 | 6 | Stebbings questions why Notion raised $50 million if it was already cashflow positive and challenges Kothari on why they didn't go aggressively on the offensive when competitors pulled back. Kothari explains using funding as a hiring signal and details FP&A unit-economic test budgets. | |
| Growing into a $10 Billion Valuation | 5 | 4 | 2 | 5 | Stebbings challenges Kothari on whether a $10 billion valuation creates executive recruiting and upside problems. Kothari acknowledges internal stock growth expectations but reiterates Notion's massive TAM. | |
| The Sequoia Partnership and Pat Grady's Impact | 5 | 5 | 1 | 2 | Kothari recounts how Sequoia initially passed on Notion before co-leading later rounds. He highlights Pat Grady's long-term orientation, recalling how Grady reframed a missed quarterly target toward the broader mission of reaching 100 million users. | |
| Notion's Unique Approach to Board Construction | 6 | 6 | 2 | 5 | Kothari details Notion's strategy of avoiding investor board seats, choosing instead to design a board mapped specifically to executive coaching roles. Stebbings points out the inherent conflict between board fiduciary duties and executive coaching. | |
| Quick Fire Round & Societal Reflections | 7 | 5 | 3 | 6 | In the quick fire round, Stebbings and Kothari debate short-form video content creation versus consumption ratios. Stebbings demonstrates strong domain understanding of algorithmic incentive structures, feed curation, and subscription-based business models. |
Statements from this episode (24)
Kothari: Founder mode only works if the founder is right a lot
“Founder mode is really good if you have a founder who's right a lot. If they're not, God bless that company.”
Kothari: Notion holds more cash than its total funds raised
“There's more cash in Notions 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.”
Notion avoided hiring product ops and researchers early on via feedback automation
“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 pr…”
Kothari: Nvidia CEO Jensen Huang has 40 direct reports and no 1-on-1s
“Jensen has like, 40 direct reports and doesn't do one-on-one.”
Kothari: Notion founders personally conducted final interview for first 500 hires
“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.”
Kothari: Notion employs under 20 product managers and 12 designers total
“I think even if I think about today, like all of Notion, with all the different surfaces we have under 20 product managers, and we have about 12 designers.”
Kothari: Hiring more people and expanding projects actually slows startups down
“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.”
Notion waited until 50 employees to codify four core company values
“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 a mission, We are pace setters, we are truth seekers, and we are kind and direct.”
Stebbings: Company values are invalid if the opposite stance is unusable
“I think values are very, very challenged when you can't take the other side.”
Kothari: Omitting sales quotas hurt Notion's early growth
“Some of the best salespeople They join because there is a quota, because they can hit a number, because they can outperform that number. And so actually not having that and not having, you know, the attribution really hurt us, I think the first year or two.”
Kothari: Reinventing Notion's sales machine cost the company three years
“If I had to do it one function all over again, I would do sales. And 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 it would have saved three years in that journey.”
Kothari: 46% of Notion's business stems from personal use
“We actually did this study recently, and we found that you know, something like 46% of our business in in, you know, it can be attributed back to someone using Notion in their personal life.”
Kothari: Notion became cashflow positive around 2019
“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.”
Kothari: SaaS companies average 5x to 10x long-term revenue multiples
“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 10 X on the revenue multiple side”
Kothari: Expecting a return to 100x revenue valuations is unrealistic
“Hoping that we're gonna be back to a hundred times revenue, a hundred times ARR valuation, I think that's a bit challenging.”
Kothari: Notion raised $50M at $2B valuation in early 2020
“So we did we raised fifty million at two billion at the start of COVID like pretty much like a couple of weeks into COVID in 20, 20, 20, 20.”
Kothari: Notion reached $100 million in ARR around 2022
“So Notion got to about a hundred million in ARR a couple of years ago”
Kothari: Notion raised $270M at a $10B valuation in late 2021
“We raised around two hundred and seventy million at ten billion.”
Kothari: High valuations matter internally for startup employee morale and stock retention
“Well, valuation matters internally, I think, to employees. I think they, it matters that, like, you know, the stock that they did get is able to be valued that much and continue to grow in value over the years.”
Kothari: Few 2021-2022 unicorns can show leaders a path to growing into valuations
“I think it is a challenge for a lot of companies when you can't show them a path. And I think it was a bigger challenge in twenty-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 m…”
Kothari: Notion missed its quarterly financial target about 1.5 years ago
“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 sort of like missed our number.”
Notion gave up only 2-3% equity and granted zero board seats
“I think there's essentially two to three percent ownership that we gave out. And so, you know, we were able to essentially not give out board seats.”
Former LinkedIn CEO Jeff Weiner declined offer to join Notion's board
“Jeff Wiener, who was my old boss at LinkedIn. Ivan and I actually tried very hard to get him to be a board member at you know, our first board member at Notion, and he said no, because in deep down, he wanted to be, you know, the CEO's coach.”