Introducing Notion's new podcast series, 'The Pain of Scale', offering guidance and resources to our portfolio and the wider enterprise tech ecosystem on their start up, grow up, scale up journeys.
At Notion, we have the privilege to work with extraordinary enterprise technology founders from around the world, driven by a passion to solve industry-defining problems and build category leading companies.
We have invested in more than 50 SaaS businesses and while each company is different, they have much in common. They are all B2B. They are all recurring revenue businesses (subscriptions and transactions). They all have the ambition to define and dominate their markets.
With more than 40 companies in our portfolio we have the critical mass to be able to foster valuable interactions and build a strong collective intelligence, based on the stage that our companies are at and the challenges they face to help our portfolio learn faster to solve problems or exploit opportunities. This collective intelligence allows us to connect our founders and senior teams with their peers in the portfolio and experts in our wider network.
This is why we’ve decided to launch our ‘Pain of Scale’ podcast series; by using this collective intelligence, we’re able to take the challenges members of the Notion network have faced, address the lessons learned, and put these into an engaging and insightful series, accessible to both the network and the wider ecosystem.
The Pain of Scale is a framework for the enterprise tech start up, grow up, scale up journey.
This is not a playbook and there are no rules to be followed. And the best entrepreneurs have a healthy disregard or even disdain for anything that pretends to be such.
But the value of this framework is that it provides us with a point of reference and a starting point for discussion and it allows us to learn, improve and progress. So we can focus on distilling knowledge and connecting people (and keeping out of the way).
By its very nature we maintain an open mind to the nature of technology and the ways our companies grow – there will always be a different or better ways to achieve a given outcome.
It’s this acceptance of ignorance, combined with a willingness to learn that will – hopefully – allow us to make constant improvements and create a powerful collective intelligence to drive ever greater success.
The point of this framework is that we are committed to learning how success does and doesn’t happen, and so create an environment within which we can learn and collaborate, connecting the people in our portfolio facing the same challenges with each other and with ‘best in the world’ experts on their topic in order to fulfill their potential, while holding on to as much equity as possible.
Over the coming months (and years) we will be sharing the Pain of Scale Framework looking at the challenges we face from two different perspectives :
Start up, grow up, scale up
As the company grows, the fundamental challenge changes.
Each phase is a step to the next level in the game and, without being over simplistic, if you don’t win each level, you don’t get to play the next, at least not on your own terms.
There is no one journey, and in reality there is no definitive time to each level, nor an explicit point at which a company moves from one level to the next. Particularly at the very early stage, things can move very slowly indeed and then really work out and start to scale very fast indeed. However there is a different philosophy that consumes each of these three levels.
Start-Up: Are you solving a problem worth solving?
I think of this as the “solving a problem, building a product’ phase. Typically lasting from 1 to 3 years; growing from less than $1m to $5m ARR and from maybe 10 to 50 people.
The Goal is to answer a simple question; Are you solving a problem that is truly worth solving and worth putting your life on the line for the next decade to build an iconic world leading business?
The focus is on discovery, on finding product market fit, on validating the scale of the market on laying the foundations for an entirely new category.
Grow up: Can you solve that problem repeatedly and predictably?
Think of this as the "company building” phase, years 3-5, annualised revenue doubling and more than doubling again from $5m to $25m, people from 50 to 200.
Goal? Can you build a business that scales, solving that problem in an increasingly economically viable manner.
The focus initially is on repeatability in sales and in product and turning both of those into machines narrowed in on the ideal customers with investable payback, retention and revenue expansion. As the company grows building high performing teams, brand and culture take on a critical importance.
Scale up: Can you get really big, really fast?
The emphasis here is on market dominance - covering years 5 to 10, growing from $25m to $100m plus and from 200 people to perhaps more than 1,000.
Goal? Can you dominate your market and build a company that endures?
To move fast to dominate your category, establishing an unassailable lead and competitive advantage. Growing with ever increasing capital efficiency due to the network effects, economies of scale and brand. This is also a period of reinvention: many of the processes that worked in previous phases are no longer fit for purpose. With scale also comes the ability to overcome technical debt and re-invent platforms and core architecture. With scale comes the ability to re-invent and so grow bigger and bigger.
The SaaS Scale Up Fundamentals
These are the common challenges that we see are portfolio wrestling with and while by no means a complete or even comprehensive list
We will be exploring each of these nine topics over the coming 12 months through expert podcasts, blogs, insights and reports.
More to follow...