
Linear's Way: Why Profitable Startups Build Better with Small Teams
Hu
12
6-28Startups should redefine success by prioritizing profitability over aggressive growth, as it provides founders with control, vision clarity, and peace of mind, challenging the traditional "growth-at-all-costs" mindset. This approach allows companies like Linear to build superior products with small, focused teams, proving that early profitability is achievable and beneficial for long-term success and strategic decision-making.
Redefining Startup Profitability
- Traditional thinking flawed: profitability seen as unambitious, while growth was prioritized over everything.
- Profitability grants founders control over destiny, allows focus on unaltered vision, and dictates growth pace.
- Paul Graham's "ramen profitability" (2009) highlighted survival without external funding, making startups attractive to investors.
- The author argues it's now easier to be "traditionally profitable" while also growing fast.
Linear's Model: Accidental Profitability & Small Teams
- Linear achieved profitability by focusing on building a superior tool with a small, focused team.
- Almost all 100 beta users converted to paid customers upon launch.
- Hit profitability 12 months after launch and has remained profitable since.
- Experience suggests small teams deliver better quality and faster results, contrary to the norm of massive hiring.
Intentional Hiring and Team Size Philosophy
- "Understaffed compared to benchmarks" should be a source of pride, indicating efficiency.
- Team size rarely holds back progress; clarity of focus, skill, and execution are key.
- Larger teams lead to slower progress, more overhead, and dilution of vision.
- Linear's approach: doubling the team each year, hiring the "next great engineer" rather than just filling roles.
Strategic Benefits and Practical Advice
- Profitability provides peace of mind, allowing focus on building great products and optimizing for value creation.
- Measure "Revenue per employee," targeting $500k-$1M for startups, to ensure appropriate hiring.
- Hire intentionally and slower: aim for a ceiling of 10 people before product-market fit (PMF).
- Being profitable allows startups to raise capital on their own terms, maintaining choice and attracting interested investors.