Notion: Why Customizability May Be The Winning Advantage in Productivtiy
Productivity Tools, SaaS
How many apps and tabs do you have open when you are working?
Five? Ten? Thirty? Most people’s laptop today is composed of a mess of tabs and windows, forming an inescapable maze.
I used to be one of those people as well.
When I did school work, I was always frantically switching between my Outlook, Google Calendar, Excel, Dropbox, Jira, Canvas, etc.
Between getting lost in the tabs, having to constantly download/upload from one platform to another, and 2FAing for every login— it was driving me crazy.
Nowadays, I’ve drastically cut down the number of apps I use and consolidated most of them into one.
From building and launching my personal website (moved from Webflow), to organizing my meetings (moved from Outlook), to jotting down my thoughts and startup blueprints (moved from Notes and Word), to creating a reading list and associated notes (moved from Goodreads + Word)— my entire life is now organized on Notion.
The article will dive into why I, along with a whopping 100 million other users, choose to use Notion as our productivity software and how Notion gained a $10bn+ valuation as one of the most impactful startups with its unique edge of customizability. Here’s the story and my analysis of Notion.
What is Notion?
Honestly, this is a complicated question to answer.
There is what Notion is today and what Notion hopes to become.
The founders have made it very clear from day 1 that Notion is a continuously evolving product, and it is currently only v2.0 on its intended evolutionary path.
To understand the vision and roadmap of Notion, we need to go back a bit in history.
I highly encourage you to read the Notion foundational ideas here, which Mike Vernal at Sequoia called “the single best pitch I’d ever seen in my time here, a work of art.”
In short, Notion believes that today’s software tools are simply digital versions of antique methods.
Handwriting —> Typewriters —> Google Docs.
Clerks + paper —> File Cabinets —> Dropbox.
But conceptually, they evolved little beyond their Industrial Revolution ancestors. We duct-tape everything together with emails, copy/paste, and countless open tabs.
This is where Notion comes in.
It hopes to bring back the philosophies of the early computer pioneers (e.g., Alan Key, Ted Nelson, Doug Englebart)— by making computers into devices that can create software to facilitate and augment human creativity.
Notion hopes to bring together technology, art, and philosophy to help humans explore the frontiers of our imagination.
This is the vision of Notion now and has always been the vision of the company ever since its founding in 2013.
Ivan Zhao, a Chinese-born Canadian who studied computer science and fine arts, has always been fascinated by how computers can be used to make humans more creative and make more beautiful designs.
Ivan’s initial version of Notion was a no-code programming tool to help non-technical users create software. While trying to build out this product, Ivan met Simon Last. Simon started as an intern for the company and actually decided to drop out of The University of Maryland to work on Notion full-time.
The first few years of Notion were rough. The team realized that non-technical people don’t care about making software, and the company was rapidly burning up cash.
Unwilling to quit, Ivan and Simon decided to lay off all the employees, move to Kyoto (cheaper than SF) and start over from scratch. Ivan worked 18+ hours a day designing the product, and Simon, now a co-founder, worked endlessly coding the product.
In March 2018, Notion 1.0 was launched.
Notion quickly received a lot of accolades, including an article from the WSJ calling it “the only app you need for work-life productivity.”
In August 2018, Ashkay Kothari, who was a previous investor in Notion, joined as the 3rd co-founder to complete the dynamic trio.
Since 2018, Notion has experienced exponential growth to over 100m users. Despite the iterations over the 10+ years, Notion never abandoned the original vision of “augmenting human intellect.” The final evolution will be a platform where we can communicate with our computers without code and create any software we dream up with beautiful designs— this is Notion 3.0
In today’s 2.0 version, Notion is an “all-in-one productivity platform.”
Notion’s suite includes tools for writing, project tracking, document sharing, and database management, all within a flexible, modular interface that can be tailored to individual or organizational needs. This article won’t dive into the full capabilities of Notion (there are just way too many functions), but if interested, read here.
In its own words, Notion is “a single space where you can think, write, and plan. Capture thoughts, manage projects, or even run an entire company — and do it exactly the way you want.”
The “do it exactly the way you want” is really the ethos of the company. Inspired by Lego, Notion is comprised of individual building blocks (e.g., text boxes, pages, tables, photos, databases, etc.), allowing users to organize and create them however they want. While Notion provides templates to get started, it also intentionally removes the limit of human creativity.
With over 100m users that include individuals, startups (e.g., Pinecone, AngelList), SMBs (e.g., Code Academy, Headspace), and enterprises (e.g., Toyota, Matchgroup), Notion is beloved by all.
Despite having been around for more than a decade, Notion is still ranked #2 for productivity tools on Product Hunt. Today, Notion is also seamlessly embedding AI by simply pressing the space bar to automate tasks like improving writing, making tables, and finding information.
Over the past 5 years, Notion has been the darling of Silicon Valley. After overcoming the initial hardship and building out a working prototype, investors pulled a 180 and started banging on its doors.
However, the key question remains. Will Notion continue to appreciate and win in the productivity market, or will it get drowned out by competitors in this highly crowded industry?
Productivity Tools: Consolidating or Fragmenting?
Before we dive into what is happening to the productivity market, let’s first take a brief look at this industry.
First of all, the productivity market is MASSIVE. It was valued at $54.8 billion globally in 2022 and is expected to grow at a 14% CAGR to reach $203.4 billion by 2032. In the US, companies spent $521 per employee on SaaS subscriptions in 2021, a figure which had reached $3.5K per employee by September 2023.
Secondly, the market is incredibly fragmented. A recent report estimated that the average business used 371 SaaS tools in 2023; ranging from 253 for SMBs to 473 on average for enterprises.
Here is the interesting part. There are two opposite trends happening simultaneously in the market: fragmentation and reconsolidation.
In the first camp, best-in-class applications that serve one particular use case really well have emerged. For example, Slack for communication, Asana for project management, and Figma for design.
In the second camp, incumbents are trying to build all-in-one ecosystems to reconsolidate the market by introducing new functionalities through internal development or acquisitions. For example, Microsoft has massively invested in Teams to compete with Zoom & Slack, and Google acquired Appsheets to compete with no-code app development platforms.
Notion occupies an interesting position in the market. Designed as an “all-in-one platform,” it naturally falls into the second camp. Therefore, its functionalities, like Notion Projects and Notion Database, need to compete with the likes of Trello and AirTable.
However, it also faces pressure from incumbents. Notion needs to convince customers why its all-in-one platform is better than the well-capitalized Microsoft 365 or G-Suite, especially as Microsoft has built out Loop to directly challenge Notion.
So, Notion needs to i) convince customers that its functionalities are good enough that they can use it instead of dedicated point solutions and ii) convince them to choose it over Microsoft or Google with more funding, engineering talent, and distribution.
All in all, Notion is in a very tough position in this hyper-competitive market.
The Only Way Out Is Through
Normally, there are a few things that make a company attractive to me. But in this case, I see only one edge for Notion, but it’s a damn good one:
Customizability.
To understand why customizability is important, we first need to understand why customers churn.
Almost 100% of the time, it is because the customer wants something that the alternative offers that the original provider doesn’t. A more intuitive UI, better integration, more innovative features, etc.
Notion understands that everyone’s needs are different. Hence, it purposefully provides a blank page to organizations, supplemented by powerful building blocks.
A good comparison is Excel, which the entire financial world depends on.
When you open Excel, it is literally just a blank page. If you want to only use its basic functionalities and sum up your monthly expenses, great— it can do that. If you want to build complex financial models to predict the price of wheat futures, great— it can also do that.
Notion is the same. You can use it just as a note-taking app or you can use it to build out a complex project management dashboard or a knowledge center for your company.
The beauty of this is that organizations can shape Notion into whatever they want to be, with the only limitation being their imagination.
For example, Wealthsimple replaced Quip with Notion because Kathleen, their head of knowledge management (former librarian), wanted to organize corporate information just like how they would do at a library. Quip couldn’t do it. Notion, which offers a blank canvas and quality paintbrushes, allowed Kathleen to create whatever her imagination desired.
Instead of using features that productivity tools provide [passive], Notion customers can create features that they want [active].
There are, however, 2 main issues with complete customization:
Some stuff is really hard to build. Companies would just prefer someone giving them the basics of what they need instead of having to build from scratch. This is why SaaS became more popular than self-service software 30 years ago.
Some stuff is impossible to build. The platform could just simply lack the capabilities to power users in achieving what they want.
Notion has done a fairly good job of mitigating those two concerns.
Notion does offer a basic starting point for companies instead of having to build them from scratch. Notion offers its own templates, which are supplemented by private template vendors like Easlo and Nick Lafferty making $100k+ annually. In fact, the templates have gotten so popular that Notion created a marketplace to discover and purchase the best user-generated templates. (It’s generally indicative of a healthy ecosystem when there are creators making a living from platforms).
Additionally, Notion is now integrating AI everywhere in its product. Instead of requiring customers to build out every single block of its Notion page, they can simply press the space bar and command Notion AI to do so. With AI, visions become reality at a much faster pace.
As for the second concern, Notion has demonstrated its ability to rapidly ship new features that customers demand. For example, in Notion’s recent conference, Make with Notion, the company announced many highly anticipated features like Notion Mail, Forms, and Automation. The team is relentless in pushing out new capabilities to enhance user’s creativity.
This is especially true for enterprises. As Notion moved to compete with Microsoft and Google, it rapidly created features that are essential to enterprises, like admin controls, HIPAA compliance, audit logs, etc.
Once Notion is implemented into an organization, its weakness becomes its strength. Because Notion offers so many functionalities, organizations would need to find 4 to 5 amazing point solutions and learn how they work to justify churning away from Notion. All the while Notion is expanding its capabilities to eat other point solution providers.
Most importantly, everything that Notion is doing right now is aligned with its vision and roadmap to Notion 3.0.
In an interview with Sequoia, Ivan Zhao said:
“Notion’s mission is [still] about software tool-making. We want to empower people to make their own software and create a customized relationship with their computers.”
In today’s world, only 0.34% of us are software developers who can truly create anything that we want using the computer in front of us. Notion believes that the ability for people to create their own software is integral to their ability to truly customize their workspace.
Hence, Notion ultimately wants to be the platform where people can easily create software to accomplish whatever they desire, just like the typewriter allows people to express whatever thoughts they have.
If this can be achieved, then Notion will have solved the two current limitations and become truly customizable. With new product launches, API integrations, and AI capabilities, Notion is marching steadily toward its final evolution.
The Risk: Competitors Everywhere
At this point, Notion has proven itself to be a high-capability organization that can ship products that customers want.
However, the biggest and by far most important risk is competition.
Notion faces competition from 3 fronts: a) the point solutions that they are trying to consolidate, b) the incumbents that are pursuing a similar strategy, and c) close alternatives that are purpose-built to challenge Notion.
Point solutions can be very sticky, especially when they are generally working well. Once point solutions win recurring contracts with enterprises, train the employees on how to use them, and deliver a satisfactory service (which they generally do because they are very good at ONE thing), it’s quite hard to convince the enterprise to abandon them and build out a new system on Notion.
Incumbents are pushing hard to consolidate functionalities and onboarding customers to a single ecosystem. Microsoft, for example, has achieved significant progress with Teams (beating out Slack + Zoom), OneNote (beating out EverNote), SharePoint (beating out Dropbox), and Loop (challenging Notion) as a part of its Microsoft 365 Suite. Customers may opt to choose these large incumbents due to strong trust and reliability, best-in-class enterprise control management, and belief in its deep engineering talent and pocket to build out cutting-edge products.
Lastly, Notion is being directly challenged by very close alternatives like Coda. For example, Coda brands itself as “Notion on steroids” and has entire web pages explaining why it’s the superior product. To be honest, as a non-enterprise user, they seem exactly the same to me. However, I am sure that these competitors identify specific weaknesses that Notion has and can be effective in convincing its customers to switch. At the very least, they will complicate the sales process and further fragment this already extremely fragmented market.
Final Thoughts and Recommendation
To justify an investment in Notion, there are a few things we have to believe.
1. Users are sick of point solutions and want to consolidate tools
I think this is largely true. Organizations are using, on average, 200+ tools, and employees are not happy switching between applications every time they want to do something. Incumbents are taking advantage of this trend and have been good at convincing customers to join holistic platforms like Microsoft 365.
2. People switch between different products because they have different needs. A customizable solution will offer tailored solutions and decrease churn.
This, I believe as well. The #1 reason why people churn is because they cannot get what they want. However, if a company can provide the building blocks to create anything you want, no matter how simple or complex, then that complaint cannot hold.
3. Notion is good at creating customizable experiences.
I think this is partly true. Firstly, Notion is really only as good as the person using it. Great Notion users love the tool, and bad Notion users fail to see its capabilities. Secondly, there are still a lot of things that Notion cannot do or is very complicated for customers to create from scratch (big learning curve). Notion has done a fairly good job at addressing this issue through templates, API integrations, and recently, AI. But it’s not perfect.
4. There is something irreplicable about Notion’s customizing experience.
I’m not super sold on this. Whilst Notion does offer a simple and beautiful platform, it really isn’t all that unique compared to Coda or Loop. It will become very differentiated if it is able to achieve Notion 3.0, but I think that will require a major revamp and is quite a long way to go from the status quo.
All in all, I like to evaluate companies on 4 key criteria: runway for growth, ability to execute, product-market fit, and defensibility.
Runway for growth: 3/5. Notion can expand into different functionalities beyond its core capabilities, as outlined in its product roadmap. It will continue to challenge different point solutions in the consolidation trend. However, the next phase of growth will likely be focused on enterprises with harder sales processes.
Ability to execute: 3/5. The Notion team has demonstrated a strong ability to ship products that consumers want and are highly experienced in the productivity market. However, there are still some doubts about its ability to go from a productivity tool to a no-code software builder as outlined in its company vision.
Product-Market Fit: 5/5. It’s pretty clear that there are a lot of people that love Notion and it has a very loyal base of users. Ranked #2 on ProductHunt 10+ years after its founding is a testament to its long-lasting appeal.
Defensibility: 2/5. As discussed, Notion faces competition from a lot of different angles. Whilst it has done a good job keeping up with competition and growing market share, the industry will only get more and more competitive in the future.
Overall score: 5/10 (Invest with caution).
Sandwiched between best-in-class point solutions like Asana and incumbents with massive distribution power like Microsoft, Notion is in a very tough spot.
To win, Notion not only needs to offer the capabilities of hundreds of productivity tools it also needs to maintain its unique edge against deep-pocketed alternatives.
However, I do believe that customizability can be the winning strategy in this war between productivity tools.
When you give users the building blocks to create, the responsibility for making a quality end product gets passed onto them. As long as the building blocks are solid, the customers will only be limited by their imagination and ability to execute.
Additionally, Notion is actively helping its customers to unlock the tool’s full potential currently through templates and AI integration, but eventually through launching Notion 3.0 to become a software builder.
Notion only gets more powerful the more that you use and understand it.
I am very excited to see how Notion continues to grow and what functionalities it will introduce next. As a Notion power user, I certainly hope to see it succeed and achieve its product end goal in the near future.
In the meantime, I will continue to run my entire life on Notion. Thanks for building a great product :)