The Exchanges

Q What did you say? Was it a really detailed, long, and thoughtful email about how you love the product intricacies?

A No. The first email, I hope, was thoughtful. I always aimed to say how much I love the product, which I'm sure I did, and it was true, but it was definitely not the magnum opus that I have sent to the company on multiple occasions since. So I think it was definitely a more generic note, if I'm honest, and no response, which many other investors had tried, and I thought, okay, well, I'll talk to the existing investors. That was not going to be a channel for me either, but And I just really have never felt this way about a product and the little bit I could learn about the culture of the company and Jason Spinelli should give him credit. I realized he was the one who said, well, why don't you just go to their office? And I was like, I can't do that. And he said, well, why not? And so we looked up, we couldn't find the address. It was obscured. One of our assistants had someone, I don't know, found the address in the mission and I decided to go over there and I brought with me an invitation for Ivan, I could glean that he was interested in photography by what I could read on the internet, on Twitter. He asked me how I figured this out, but it was on Twitter, and I'm a lover of art myself, and have gotten very involved in the art scene in San Francisco, and there's an art gallery called the Frankel Gallery that has a lot of great photography, so I showed up at the office with an in…

AI assessment note: “No. The first email, I hope, was thoughtful... definitely a more generic note”

Q there is a plethora of companies in the space of, they're Terrible catch all phrase, but you know, remote tools, collaboration tools. There are so many companies now in this space. Do you think we're going to see a consolidatory period with the large incumbents acquiring heavily, especially in this time where fundraising for the majority will be also much more challenging? Do you think we'll enter this consolidatory phase?

A I absolutely think we will see consolidation. So I think there has been kind of an unbundling. There's an unbundling of Microsoft Office's suite into like best in class, I think the same is happening for Adobe and for Atlassian, and I think what we're seeing is kind of next-generation, best-in-class products in each category, so Slack taking on Teams, Notion taking on Docs, Zoom obviously providing video conferencing, and I think the key elements of those next-gen players are that they're design-first, collaborative, and integrated with others, so I think there's only So many. I think there will be a leader in each product category. I mean, zoom and slack now, especially in these times seem obvious. And our view is that notion is really the third great collaboration platform. And I think there are a number of others pitch air table, quill figma linear in that bucket. And I think what you'll see after that will be a rebundling. So I think you're going to have these best in class products. And I think notion is very well positioned to do that.

AI assessment note: “I absolutely think we will see consolidation. So I think there has been kind of”

Q Can I ask, in terms of the profitability element, it is such an interesting kind of piece because it's, it's bluntly so rare. I guess, Sarah, my question to you here is like, how do you think about the levers of growth and profitability? Are they opposed? How does one make the balance healthy and really work in tandem so well from your perspective?

A I don't think they're opposing. I think this is the fundamental premise of why venture capital exists is that for companies that are growing remarkably fast, even no matter how profitable they may be, even if they're small scale, they need capital to grow more quickly. So the example I was thinking, you know, if you have a business that has product market fit and has five million in revenue, even if they have 80%, let's say EBITDA margins, you're going to get four million to invest in the business. And when you're on an Opportunity. That's as large as let's say the ones that notion is on. It makes sense to invest behind that growth and you're not gonna be able to get loans from traditional banks. So this question you ask at the very core of why venture exists. So I often think it's sequential that you're growing first and then you become profitable. Roles are made to be broken and notion is certainly an exception and being so profitable so early with such high growth. But I think as a growth investor, The question you're always trying to answer is, is this a good business to be in? It doesn't need to be profitable usually at the earliest stages, but you need to understand that the business is on a path to that profitability, but more importantly, that they're in an industry where their margins will be really attractive at scale, so it'll continue to be a valuable business for g…

AI assessment note: “I don't think they're opposing. I think this is the fundamental premise”

Q and this is a little bit unfair of me, but just putting like an LP hat on, if you think about fifty million and reported two billion valuation, let's just say, this needs to be like a 40 X to return a two billion dollar fund. Can I ask, how did you think about the structure and mechanics of the deal, and how it converts back to fund return potential?

A Fundamentally, my job, or our job as venture capitalists, is to find exceptional businesses and partner with them, and you know, our business is one of outliers, and so when you have the opportunity to partner with people like Akshay, Ivan, and Simon, you take it, is my view. But specifically on valuation, you can think about it from both, or I did think about it from both absolute and relative Valuation. So relative is how we typically think about businesses. It's a multiple on revenue. And we certainly looked at that and notion is growing very quickly and had engagement similar to Slack. So those are some of the data points that we thought about on kind of what is the business worth today and five years from now. And then from an absolute perspective, you're absolutely right. You only want to enter companies at this level of valuation when you feel the absolute size of the market is incredibly large. And there are That could sustain, I mean, to your forty-x math, an 80 or a hundred billion dollar business, and I think this market actually can. There are more than a billion people who use Microsoft Office every day, and if they pay a hundred dollars a year, that's a hundred billion in revenue just for Office, not to mention the potential to expand in a lot of ways that Akshay outlined earlier. I will say, though, I mean, a forty-x, I would be delighted, uh, with no pressure, A…

AI assessment note: “specifically on valuation, you can think about it from both, or I did think”

Q there is a plethora of companies in the space of, they're Terrible catch all phrase, but you know, remote tools, collaboration tools. There are so many companies now in this space. Do you think we're going to see a consolidatory period with the large incumbents acquiring heavily, especially in this time where fundraising for the majority will be also much more challenging? Do you think we'll enter this consolidatory phase?

A I absolutely think we will see consolidation. So I think there has been kind of an unbundling. There's an unbundling of Microsoft Office's suite into like best in class, I think the same is happening for Adobe and for Atlassian, and I think what we're seeing is kind of next-generation, best-in-class products in each category, so Slack taking on Teams, Notion taking on Docs, Zoom obviously providing video conferencing, and I think the key elements of those next-gen players are that they're design-first, collaborative, and integrated with others, so I think there's only So many. I think there will be a leader in each product category. I mean, zoom and slack now, especially in these times seem obvious. And our view is that notion is really the third great collaboration platform. And I think there are a number of others pitch air table, quill figma linear in that bucket. And I think what you'll see after that will be a rebundling. So I think you're going to have these best in class products. And I think notion is very well positioned to do that.

AI assessment note: “I absolutely think we will see consolidation.”

Q you said, such a unique time. I, I do want to flip it on you, Sarah, and kind of maybe going a little bit more macro perspective, but as I actually said, such a unique time. COVID's had such a kind of dramatic behavior change. What behavior changes, I guess, do you think will remain post-COVID? And in your mind, I guess, what are much more purely short-term pandemic responses?

A Yeah, absolutely. So I think the thing that is very unique about this crisis is that it's a global shared experience. I mean, in the past, A lot of these crises have been limited to geographies, or at least happened in sequence. I was talking to a good friend of mine who's Senegalese originally living in London, and she said, you know, this is the first time my family in Dakar, my coworkers in London, and my friends in San Francisco are facing the exact same thing at the same time. So I think this is moving us into kind of a new equilibria of behaviors around the world. And to your question, you know, what will stick? And my hypothesis is that we will go back to kind of 80% of what we were doing beforehand. Obviously this varies very much by the behavior that we're talking about, but I think the most obvious, which actually had talked about and what they've seen at notion is digital collaboration. Like we had all of us to learn to collaborate as distributed teams. We had to start using the tools if we weren't already. And we also developed the behaviors, norms, and workflows around them as organizations. So I think you're going to see a lot more people being Or businesses open to work from home, which by the way, I'm very supportive of because I think it allows for a far more diverse workforce when companies open their mind to having some fraction of work being distributed. Sec…

AI assessment note: “what will stick? And my hypothesis is that we will go back to kind of 80%”

Q Can I ask, in terms of the profitability element, it is such an interesting kind of piece because it's, it's bluntly so rare. I guess, Sarah, my question to you here is like, how do you think about the levers of growth and profitability? Are they opposed? How does one make the balance healthy and really work in tandem so well from your perspective?

A I don't think they're opposing. I think this is the fundamental premise of why venture capital exists is that for companies that are growing remarkably fast, even no matter how profitable they may be, even if they're small scale, they need capital to grow more quickly. So the example I was thinking, you know, if you have a business that has product market fit and has five million in revenue, even if they have 80%, let's say EBITDA margins, you're going to get four million to invest in the business. And when you're on an Opportunity. That's as large as let's say the ones that notion is on. It makes sense to invest behind that growth and you're not gonna be able to get loans from traditional banks. So this question you ask at the very core of why venture exists. So I often think it's sequential that you're growing first and then you become profitable. Roles are made to be broken and notion is certainly an exception and being so profitable so early with such high growth. But I think as a growth investor, The question you're always trying to answer is, is this a good business to be in? It doesn't need to be profitable usually at the earliest stages, but you need to understand that the business is on a path to that profitability, but more importantly, that they're in an industry where their margins will be really attractive at scale, so it'll continue to be a valuable business for g…

AI assessment note: “I don't think they're opposing.”

Q on the deal itself, because obviously, Index recently led the most recent round into Notion and partnering up. And it's always an interesting story in terms of how it came to be. This is the deal that every VC in the Valley wanted for so long. So it How did it come about in terms of the deal? And whoever wants to take this one can roll with it first.

A I'm happy to start since I was the one in pursuit. So I first discovered Notion's product in early, and it really was kind of love at first sight. As I've told the team, it's the first product I open in the morning and the last I use at night. And so really was kind of fell in love with the product. And I was very fortunate to be a board observer at Slack at the time. So I both fell in love with Notion itself as a product, and at the same time realized the market opportunity, given the perspective I had at Slack. Really there being a need for, if Slack was the flow of information, Notion was the stock, or if Slack was kind of synchronous communication, then Notion was the place for asynchronous communication. So it was those two things. So I naturally, as an investor does, reached out to the founders, and of course, no response.

AI assessment note: “I'm happy to start since I was the one in pursuit. So I first discovered”

Q you said, such a unique time. I, I do want to flip it on you, Sarah, and kind of maybe going a little bit more macro perspective, but as I actually said, such a unique time. COVID's had such a kind of dramatic behavior change. What behavior changes, I guess, do you think will remain post-COVID? And in your mind, I guess, what are much more purely short-term pandemic responses?

A Yeah, absolutely. So I think the thing that is very unique about this crisis is that it's a global shared experience. I mean, in the past, A lot of these crises have been limited to geographies, or at least happened in sequence. I was talking to a good friend of mine who's Senegalese originally living in London, and she said, you know, this is the first time my family in Dakar, my coworkers in London, and my friends in San Francisco are facing the exact same thing at the same time. So I think this is moving us into kind of a new equilibria of behaviors around the world. And to your question, you know, what will stick? And my hypothesis is that we will go back to kind of 80% of what we were doing beforehand. Obviously this varies very much by the behavior that we're talking about, but I think the most obvious, which actually had talked about and what they've seen at notion is digital collaboration. Like we had all of us to learn to collaborate as distributed teams. We had to start using the tools if we weren't already. And we also developed the behaviors, norms, and workflows around them as organizations. So I think you're going to see a lot more people being Or businesses open to work from home, which by the way, I'm very supportive of because I think it allows for a far more diverse workforce when companies open their mind to having some fraction of work being distributed. Sec…

AI assessment note: “to your question, you know, what will stick? And my hypothesis is that”

Q and this is a little bit unfair of me, but just putting like an LP hat on, if you think about fifty million and reported two billion valuation, let's just say, this needs to be like a 40 X to return a two billion dollar fund. Can I ask, how did you think about the structure and mechanics of the deal, and how it converts back to fund return potential?

A Fundamentally, my job, or our job as venture capitalists, is to find exceptional businesses and partner with them, and you know, our business is one of outliers, and so when you have the opportunity to partner with people like Akshay, Ivan, and Simon, you take it, is my view. But specifically on valuation, you can think about it from both, or I did think about it from both absolute and relative Valuation. So relative is how we typically think about businesses. It's a multiple on revenue. And we certainly looked at that and notion is growing very quickly and had engagement similar to Slack. So those are some of the data points that we thought about on kind of what is the business worth today and five years from now. And then from an absolute perspective, you're absolutely right. You only want to enter companies at this level of valuation when you feel the absolute size of the market is incredibly large. And there are That could sustain, I mean, to your forty-x math, an 80 or a hundred billion dollar business, and I think this market actually can. There are more than a billion people who use Microsoft Office every day, and if they pay a hundred dollars a year, that's a hundred billion in revenue just for Office, not to mention the potential to expand in a lot of ways that Akshay outlined earlier. I will say, though, I mean, a forty-x, I would be delighted, uh, with no pressure, A…

AI assessment note: “specifically on valuation, you can think about it from both, or I did think”

Q on the deal itself, because obviously, Index recently led the most recent round into Notion and partnering up. And it's always an interesting story in terms of how it came to be. This is the deal that every VC in the Valley wanted for so long. So it How did it come about in terms of the deal? And whoever wants to take this one can roll with it first.

A I'm happy to start since I was the one in pursuit. So I first discovered Notion's product in early, and it really was kind of love at first sight. As I've told the team, it's the first product I open in the morning and the last I use at night. And so really was kind of fell in love with the product. And I was very fortunate to be a board observer at Slack at the time. So I both fell in love with Notion itself as a product, and at the same time realized the market opportunity, given the perspective I had at Slack. Really there being a need for, if Slack was the flow of information, Notion was the stock, or if Slack was kind of synchronous communication, then Notion was the place for asynchronous communication. So it was those two things. So I naturally, as an investor does, reached out to the founders, and of course, no response.

AI assessment note: “So I naturally, as an investor does, reached out to the founders”

Q What did you say? Was it a really detailed, long, and thoughtful email about how you love the product intricacies?

A No. The first email, I hope, was thoughtful. I always aimed to say how much I love the product, which I'm sure I did, and it was true, but it was definitely not the magnum opus that I have sent to the company on multiple occasions since. So I think it was definitely a more generic note, if I'm honest, and no response, which many other investors had tried, and I thought, okay, well, I'll talk to the existing investors. That was not going to be a channel for me either, but And I just really have never felt this way about a product and the little bit I could learn about the culture of the company and Jason Spinelli should give him credit. I realized he was the one who said, well, why don't you just go to their office? And I was like, I can't do that. And he said, well, why not? And so we looked up, we couldn't find the address. It was obscured. One of our assistants had someone, I don't know, found the address in the mission and I decided to go over there and I brought with me an invitation for Ivan, I could glean that he was interested in photography by what I could read on the internet, on Twitter. He asked me how I figured this out, but it was on Twitter, and I'm a lover of art myself, and have gotten very involved in the art scene in San Francisco, and there's an art gallery called the Frankel Gallery that has a lot of great photography, so I showed up at the office with an in…

AI assessment note: “No. The first email, I hope, was thoughtful... it was definitely a more generic note”