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enra
Joined 3,214 karma
linear co-founder & ceo
- enra parentOzempic & Novo Nordisk contributes something like 2% of the economic growth.
- I tried to ask examples of this yesterday[1], but afaik the patterns seems to be think throwing money at the problems works in undifferentiated, maybe transactional categories like food delivery, ride share, e-commerce etc where the software is not the product, it's just the payment method or the market place. The market places are also localized so you have these countless local turf wars, until you regain some kind of dominance or balance. Then deep tech, hardware etc is harder where you need large initial investment. Social networks because they need the critical mass, and usually there isn't a direct business model available.
I'd argue most b2b/enterprise software is a new version of something that already exists or addressing a need that already has a market. Business model is also very clear, there is very little network effects usually other than reputation and customer proof. Yet most the startups not even close being profitable.
In my mind most software products are differentiated so in the end the main success comes from getting the differentiation right for the market, not outspending the competition.
- "Venture debt is like a delicious sandwich that only costs ten cents, but occasionally explodes in your face" - PG
Part of being a startup is still that there is not a lot of historical precedent and uncertainty how well your business will do in the future. The problem with any fundraise is that it's always future looking (perhaps maybe you create some kind of option structure to call on it if needed).
VCs, especially Tier 1, can be still helpful in different ways, and them owning equity aligns the incentives more than debt.
- Correct. Those raises were made when there was some uncertainty about how the business would grow, and the opportunity and timing seemed right. For example, in 2022, it was difficult to predict how deep the market downturn would be. We saw several customers churn because their companies folded. In the end, the market didn't tank as bad than some expected, and we executed better than anticipated. In hindsight, we might not have needed that funding, but at the time, the outlook wasn’t as clear.
Part of this post is to debunk the myth that can be VC backed startup, be profitable and grow fast at the same time. VCs are quite keen in this approach too.
- Karri from Linear here.
I wrote this to challenge the common dichotomy that startups are either VC-backed money-burning machines or anti-VC/profitably bootstrapped. It doesn’t have to be that binary. There’s a spectrum, a middle ground. You can retain control by being profitable while still using funding as leverage or as a safety net if things don’t go as planned.
One of the paradoxes of fundraising is that it’s easiest when you don’t need the money—and almost impossible when you do. By keeping the company mostly profitable, you never have to need it, giving you full control over timing and the ability to choose the right deal. But having that funding can enable you some more leverage or add more risk business you could afford while being bootstrapped. In our case we raised the funding for the conservative case, but the reality turned much better than expected.
Another misconception is that sustainable growth comes from spending or hiring. In reality, many great products take off first and because they take off, any amount of hiring becomes justified. Some of these companies are even profitable before they go on a hiring spree. The problem is that the typical approach isn’t nuanced or intentional enough. You might decide to hire 100 engineers before knowing how the next 10 engineers impact your trajectory. If you cut the hiring plan in half—or even to a quarter—it might not affect growth at all. But there’s often an assumption that growing the team is also good, and maybe it comes from a time in the 90s or something when you had hire people to man the phones to take orders.
What I believe is that startup’s growth is primarily driven by product superiority and market fit, not just by headcount or marketing spend. Those things can amplify success, and in some cases, they can even mask a bad market fit through sheer force of sales and marketing.
A less cynical take on VCs is that they’re not necessarily pushing companies to burn cash they just want founders to double down when they see a company working. But whether you can truly scale depends on your market dynamics. Sometimes, you need time to learn or to land the right deals in a segment before pouring money into growth.
The problem is that the current thinking is often too simplistic. Since you're startup and have cash, the spending more is always the right move. Going all the way 100 when you could dial it down to 50 or 30 and regain control and de-risk the changes of complete flare out.
- Pouring one out. I remember using Pivotal Tracker back when working in a Ruby on Rails shop and enjoying directness and how optioned it was of it.
Then several years later, after working in large Silicon Valley tech companies, and seeing how they run with Jira, I decided to start https://linear.app
So much team's time and effort went in to configuring their tools instead of actually working on things. We do more than PT did, but aim to keep the experience straightforward and focused, regardless of the size of your team or company.
- Linear founder here.
We look at AI as capability similar to any other technology. Instead of jumping on the AI bandwagon or thinking AI is a feature, we look if there is opportunity to reduce friction or help the user well in the workflow they are doing. Today like the AI can inform if there is duplicate issues being reported or improve the titles you submit from Slack conversion.
- As long as I been around startups, about 15 years, the advice always have been had more success getting warm intro. Even more back in the day than now. I think PGs essays lays out the fundraising process this way too.
The advice is never just send deck to a VC. Same as just applying to a company. Private organizations have no need for any kind controlled process, you're always better having or building of personal relationships and convincing people directly first. It's often even about the pitch or pitching skills. It's more like relationship or case you build, then the pitching is just formal step to close the deal.
I think the cold approach only works start the relationship if you have proven business, great potential and can tell that story well. But also by then VCs might already know about you and come to you.
Otherwise it's always about building some level of personal connection first. Essentially you're asking to someone personally believe and bet their internal and external reputation on. They are not going to hand you the money after one hasty email and deck.
The anti-VC crowd often try paint this as some kind of exclusive country club, but it's not true. So many new founders raise capital all the time. VCs are always looking for new founders and companies.
But it's also true that if you just crawl out of the woods one day and go meet a VC and ask them for $2M is likely not going to happen. If you don't get a single person in the world with some kind of VC connection to make a warm introduction to you, it often considered as a filter that you're not serious enough about your business.
- We have companies moving to Linear daily, so it’s possible.
And these can be anything from a 10 person company to 2000+ person companies.
We have jira sync that helps with transition. https://linear.app/integrations/jira
- Great on work creating an alternative to Linear which is a carbon copy of Linear [1].
Linear also been powered by local first sync since 2019, we have AI features shipped and in the pipeline.
As YC alumni/design founder of Linear disappointed to see that design/ui/product is treated this way and something to completely rip off from other products.
Last 5 years we’ve been iterating on the Linear design and product. We are still a small team. We also like to share how we build and design to improve inspire others.
But this is no inspiration or inspiring.
Just some days ago Garry Tan was talking about how to get founders learn and value design and this is the opposite of that.
- Finland’s largest land border by far is with Russia which is not generally viewed as that of a friendly neighbor.
The border between Finland and Russia is 1,340 kilometers (832 miles). The border between South Korea and North Korea about 250 kilometers (155 miles). Also 5.5M people vs 55M people.
- To me it was having just one powerful upgradable desktop computer with Windows and MacOS. So I don't have to have devices on my desk.
Now I have solved with PC desktop, MacBook Air, and Apple Display. PC also has usb-c display output so I can just switch which cable connects to the display.
Downside is still that M1 is not as fast, especially something that is GPU intensive as the PC I have.
- It's is but that's the issue. The term is misused and misunderstood. Meaning variety of things and activities. How the definition has emphasis on building something quickly and cheaply, can do more harm than help.
When that happens maybe it's just time to retire the term and move on. These days it's common to validate products as you build them. You can critically think what a good product looks like in your space and aim for that. Then iteratively improve from there. Not sure what the MVP term really contributes to the practice.
- > As the minimum viable product approaches the complexity of a complete product, the difference between the two shrinks to the point that the concept of MVP isn't all that useful anymore. That's the actual case against Lean Startup in 2024.
I think this is an excellent way to summarize this.
I'm one of the anti-MVP persons out there, and my point is that more often than not people tend to use MVP as practice ship something half baked, not truly trying to build something viable or trying to validate anything. Then the response is crickets. In many professional domains, people are busy and not willing to spend time or evaluate solutions that are half way there to provide any value.
For startups with limited resources, more practical advice would be focus on building great core experience for a specific user group. You narrow the scope, build less but something better and different and shows the value for that group fast, whatever it takes.
You could call this a MVP but I'd just call it building a product people want to use. The MVP term is unnecessary.
Some ways maybe the success of Lean Startup also means that it's just a normal to build things iteratively. I don't think anyone is recommending here go back to the days shutting yourself in a basement for 5 years and then shipping 10,000 copies of it on a CD to all the RadioShacks.
- I’m CEO of Linear who raised the alarm on this.
I have to commend them for making this decision and removing the conflict of interest.
However they didn’t address the fact that sales people had convenient access to data and how long & broadly that access was abused.
Edit: fixed “Linear CEO” to “CEO of Linear”
- 4 points
- I'm Karri the Linear CEO who is involved in this. I posted this on Twitter but several points in this post are not true:
- I have 7 Linear investors now confirming they were contacted with the same solicitation in the past months. I have screenshots. So the violations (so far) stopped on Friday, but started months ago.On Friday we had an internal policy violation that affected three companies.- I have heard from close to 10 companies who had this happen to them months or years ago.
- They also did not answer my request of sharing how many of our investors were affected and also hasn’t tried to make any amends during this whole time
- The issue is not resolved. This blog post or Henry never gave me any concrete information, actions, or promised this wouldn’t happen again.
- At this point, as I haven’t received any assurances that this is not the case, I have to assume our cap table and other information has been free for all within Carta entities to be used however they can, at least months, maybe the past 4 years with no real controls in place.
I'd compare this to security incident. I've told them and expect them to do a full investigation and a post-mortem what data has been exposed, who was affected, how it was possible and what will be done in the future to prevent it.
- Don't feel bad. The issue here is the relationship with the company & Carta and overall corporate concerns, not much about employee equity.
Briefly:
- In a startup you're granted options. Contract that allows you to buy certain amount of company shares at a specific price (”strike price”, also known as “exercise price”), which is usually the fair market price at the time when your options are granted. Options do not give you ownership of stock, instead they provide you rights to purchase stock at a favorable price.
- Fair market price is the price of the stock based on the company’s current valuation (set by an outside evaluator). Early stage companies the fair market valuation 20-30% of the valuation investors pay.
- Exercising your options means purchasing all or some of your shares and becoming a shareholder in the company. For example, if your strike price is $1.50 and you exercise your option for 1,000 shares, your exercise will cost $1,500 (1,000 x $1.50) plus any potential taxes, and you will be a holder of 1,000 shares. Now if in the future the company IPOs with a stock price of $100 you can sell those shares and get $100k or gain $98.5 per share.
- Exercise window is the time you can buy your options. Commonly in US startups required you to purchase the shares within 90 days of you leaving the company or you lose it. More employee friendly startups have extended exercise windows that let you keep the options for 7 or 10 years.
- Early exercise. Employee friendly startups allow early exercise for your options to avoid paying taxes along the way. Say you join the company when the strike price is $1.50. You exercise the shares at $1.50 now you own the shares and since there was no gain, you don't have to pay taxes at that time. If you don't early exercise then, but wait until the next funding round when the strike price is now $4.50, your now have to pay tax on the gain of $3. In both cases in the end if you one day sell the stock for $100 you still pay the same amount of taxes (gain from $1.50 to $100 or from $1.5 to $4.5 + $4.5 to $100). It just lets you to avoid taxes until you have actual liquidity and also lets you to pay long term gains, sometimes get it even tax free if your company and holding is QSBS eligible.
Some guides that we share with our employees:
https://medium.com/swlh/understanding-startup-stock-options-...
https://www.holloway.com/g/equity-compensation
https://blog.alexmaccaw.com/an-engineers-guide-to-stock-opti...
- This one of main points too.
We also do or plan to do these all 3 items.
We haven’t done a coordinated secondary (tender offer) yet since our team is relatively small and people haven’t been with the company that long that there would be that many shares to offer. Usually most people don’t want to sell or sell that much.