Karri Saarinen: How to Grow Capital Efficiently in a World of BS Growth | E1221

Karri Saarinen 0:00 I've never been happy with a 20% dilution. I would rather see it at, like, 10% or less than that. The only, huh, real protection you can have as a startup founder in your business is to be successful. If you're not successful, there's a lot of ways investors can exert their control.

Harry Stebbings 0:15 Ready to go?

Narrator 0:21 (intro music plays)

Harry Stebbings 0:27 Kari, I am so excited for this, dude. I've wanted to do this since we first started working together, so I'm thrilled that you joined me today. Thank you for joining me.

Karri Saarinen 0:36 Thanks for having me.

Harry Stebbings 0:37 Now, I was chatting to, uh, Miles at Accel beforehand, and he said, "You've just got to start with context." And so I didn't want to do like the, oh, how did you come to found Linear. Uh, he told me I had to ask about potato farming in Finland. Why?

Karri Saarinen 0:49 (laughs)

Harry Stebbings 0:51 (laughs)

Karri Saarinen 0:51 Uh, I- I think i- this- this came to be, like, I think, like, Linear also came to be from- from, like, my frustration, so... So I think, like, my frustration living in, uh, U.S. or in California in the last decade is that potatoes here are not very good or there isn't that much of a variety of things. So when you go to a grocery store, you usually have four different kinds. You have the large one, the- the, um, golden one, the small one, and- and, like, a red one. And, like, growing up in Finland, that's not the case. Like, those are, like, the- the main categories, but then within these categories, you might have different kinds of varieties. And some of them are more, like, seasonal and- and some of them are more specific to a region in Finland where they're grown. So in, during summer in Finland, you go to a grocery store, there might be, like, five different kinds of, like, different varieties of the same kind of potato, like, the same category. And then, like, some of them m- might be picked this morning and they're, like, really fresh and the- the taste and the texture is very different. It's, they're, like, very buttery and the potato flavor is much more stronger. Like, e- even if you just boil them, you can taste a lot versus, like, if you boil normal potatoes, I- I think, like, you get on a grocery store, they don't generally taste that much anything. So I'm- I'm just sad that, like, there isn't good potatoes in- in the U.S., or at- at least haven't been able to find. So I, uh, like going to Finland in the summer to buy some of those potatoes, but I've been also, like, growing my own. We have a little cottage and it has a, it's, uh, some space to, like, farm things, so- so I've been, like, growing my own as well.

Harry Stebbings 2:34 I've never met a potato nerd. (laughs)

Karri Saarinen 2:37 (laughs)

Harry Stebbings 2:37 That is the nerdiest description of potatoes I've ever heard. All I'll say is I hope you didn't use that when you were dating your- (laughs) your partner.

Karri Saarinen 2:45 (laughs)

Harry Stebbings 2:45 Clearly you didn't 'cause it converted well. Um, but moving the potatoes

Harry Stebbings 2:50 forward, y- before f- Linear, you worked at Airbnb and you worked at Coinbase, two of the most transformative, kind of, product talks in the business. When you think about impact, which one had a bigger impact on how you think about product?

Karri Saarinen 3:03 With Coinbase, I was there much earlier, so it was, when I joined, it was only, like, only 12 people or so. And then when I left, it was less than 100 people, so it was more of the early stage experience. I think the main thing I saw there and learned there that how much you can do with very small teams. A lot of the features we built, and they were used by all kinds of companies and very large groups of people, or very much, um, revenue went through them, and those features were maybe built by one person or two people or three people. There was, like, for example, Coinbase Exchange, which is the trading platform they have, that initially was built by one guy. Uh, like, he was in a room and then he was building it for maybe six months, but it was built by one guy. And then when it went live, it- it already, like, transacted maybe millions or tens of millions of dollars, and today, it's probably transacting, like, billions of dollars. So that- that was, like, one lesson I learned there. And I think with Airbnb, it's much more about the... I think Brian Chesky is very driven or passionate about the experience, like, how does this feel and, like, how- how we want the company or the product to feel. That was, like, really great to see that you can run a company that way, that you can actually focus on the experience and you don't have to focus on some of the other things, like metrics or- or, I don't know, s- something else that people tell you to, but the experience is the- the most important thing you can

Karri Saarinen 4:37 focus on.

Harry Stebbings 4:38 Can I push you? Which one's a better leader, Chesky or Armstrong? Come on.

Karri Saarinen 4:43 Yeah, no. (laughs) I don't know if I wanna answer this and, uh, like, you know, again, I would say they're very different kind of personalities. I- I also think that they're probably, like, a really good fit for the company they're operating.

Harry Stebbings 4:57 If both of them were to start a company again, and you have one angel check, which one would you invest in?

Karri Saarinen 5:03 If I really had to choose, I would really choose Brian Chesky because I think he's really this, I don't know, power of nature that he can- he can- he can drive through anything. I think Brian Armstrong has- is as well, but I think, like, if you- if you put Brian Chesky to do something, like, he will really do it and he- he will have all the energy to do it, so I would- I would bet on him.

Harry Stebbings 5:29 Are you kidding me? Have you seen his weightlifting days?

Karri Saarinen 5:32 (laughs)

Harry Stebbings 5:32 This is a man who, when he sets his mind to something, he fucking goes for it. (laughs) Uh, unbelievable. Uh, so totally understand and get you there. Li- listen, he was the, you know, inspiration behind founder mode. I have to start giving your answer there.

Harry Stebbings 5:45 Hey, I had Zach on from Plaid, um, and he was like, "Actually, I think founder mode is gonna be incredibly dangerous for a cohort of founders and it's gonna allow for a lot of, bluntly, bad behavior." How do you think about in a SaaS founder mode, given your contacts with Brian and also now being one of the hottest founders in the Valley?

Karri Saarinen 6:04 Yeah, I mean- I mean, I agree with Zach that it- it is, it can be dangerous or, uh, I think the SA itself, it- it's not very...... clear what it means, and like, the standard advice is, like, you hire really good leaders in the company, and then you let them do the, the things. I think the, the thing with the founder mode, I believe, was about that you should do that, you should hire some leaders. It's not that, like, as a, as a founder you should be operating ev- like, doing everything, operating everything by yourself. But you shouldn't also sit on the bench while everyone else is on the, playing on the field. But you are allowed, as a founder, to still be on the field. You can still play some roles in there, like some position there.

Harry Stebbings 6:50 You said about kind of sitting on the bench when someone should maybe be on the field. If I were to push you and say, "Where did you sit on the bench too much and you should have been on the field more?"

Karri Saarinen 7:00 The first, or the last, two years I, I was maybe too much on the bench when, when it came to, like, the go-to-market function and the marketing or the sales function. And now, maybe less the last six months, or the last year, I've been focusing on it much more. We have weekly chats about it with the, with the, like, the leadership team there. I think the reason for that is that I don't ... My background's in, InDesign, and for example, Airbnb and Coinbase, they weren't very, like, go-to-market driven companies. They're not sales cult- like, you, you didn't have salespeople in the company. But when you are building more of an enterprise business and selling to enterprises, it, it can ... The, the go-to-market function can be more complicated, or it can be more nuanced, or there's something more in there. And to me, I have to learn about it. I have to learn about these things and in o- in order to be more effective

Karri Saarinen 7:53 there.

Harry Stebbings 7:53 You know, we mentioned kind of growth and different periods of growth (laughs) uh, there. I, I have to start, you said something to me before the show about quality growth over hypergrowth. What do you mean by quality growth and how does that differ from hypergrowth?

Karri Saarinen 8:07 So with, with Linear we been growing much more this sustainable way, or, like, I like to call it more, like, a quality growth way. And what, what it means, that the growth is based on something real that is working in the company, and it's not something that is overly artificially juiced, or, or, uh, it's not like the growth is on steroids. It's like, the growth is coming from the fact that you go to the gym, and that, that's more sustainable than, than using steroids. You can, maybe not ... You should, probably shouldn't use steroids, but maybe you could ... Some people might use it at some point, but it's not sustainable. So similarly, I think startups, we have this culture of growing fast, scaling fast, doing every, like, growth hacking, trying to hack our way to the growth. And to me, it, it feels dangerous because it's artificial. Some companies, they put a lot of money into the growth, and they can get that money, th- they can get the growth, but they're also spending more than they're making. And eventually that function just doesn't work. Like, you, you, you need to keep raising more and more money, and it might be really hard to actually turn the function now to actually make money versus, like, spend it. So for us, like, the, the quality of growth has always been the product, that we almost spent no money on marketing. We, we didn't even have sales for the first three years, that we just wanted to see that the, the growth is coming from the fact that people find our product better than anything else out there, and they will pick it up and they will buy it. And that's, like, what the real growth to me means and not, not something like you, you spend your money on.

Harry Stebbings 9:46 Founders listening will be going, "Great, I get it, but I need to raise money again. I need a series A, I need a series B, whatever that is. Uh, I am looked at in a comparative stack of companies, and if my growth rate is 2X and there are companies who are growing 4, 5, 6X, AI revenues are unbelievably different to what we've seen before, I'm just not gonna raise money." So like, it almost feels like quality growth is a luxury product, and I need hypergrowth 'cause that's the only way I can get the next round. What would you say to that thought process?

Karri Saarinen 10:19 Well, I mean, I, I think that's exactly right, that, that (laughs) you need the growth to, to raise the round. But there is the other option, if you just think about this problem, is that, like, what if you don't need to raise the round? Like, what if you can sustain without raising a round? Or you raise some round, and then you just try to focus on making the, the business function work, the, actually trying to make money and not spend that much money. And then you're no longer kinda tied to those metrics because you don't need, you don't need to raise. And if you can get to, to profitability then you probably, you don't necessarily need to raise ever again. You can if you want to, but you don't have to. I think it, it definitely depends on your market dynamics how fast, like, how hard or fast you need to go. But that's, I think, like, what I advise founders is that you should think about what, (sighs) what, what game you're playing, like, what market you're entering. What do you need to do there? What, what's the dynamic there? Like, our market, it was kinda clear from the beginning that the way we win in this market, it's, it's not like a fast-moving market. There's basically one solution every company uses and it's been there for 20 years, and it's kind of the legacy solution. It seems like nothing has happened in the last t- 20 years. I don't think there's a lot happening the next t- five or 10 years unless we make it happen. So for us, it's creates this market where we think it's, it's not necessary to go the fastest as we can, but we actually need to focus on being the best as we can. And I think there is that cost of trying to grow too fast, or growing too fast, is that you, you will, um, the cost there, or what, what you sacrifice, is the quality or the, like, not actually focusing being the best in class, um, for the product.

Harry Stebbings 12:12 Uh-And for any founders listening, do not listen to Karri. You should absolutely get on the VC treadmill, otherwise I will be unemployed. Uh (laughs) ... but no, I, I completely

Harry Stebbings 12:23 agree with you. And I think the thing that's so interesting, you mentioned kind of, you know, bluntly, making money from your customers as well there, and being more proactive in doing so earlier. You made money year one, you were profitable year two. How do you think about shipping, like, feature products that can be monetized quicker, versus the founders that say, "Well, that's fine, but like, I need to do a platform approach"? And actually, it's not possible to do that, really, until 24 months in.

Karri Saarinen 12:52 I think startups should always pick a- like a more focused angle or like some kinda niche that you hit first, like some kind of smaller group of people that you can serve as soon as possible. And even if you have this idea of a platform, like you might also find some use case which y- you can do today with a simple feature that get people into that platform, and you can start building a platform with them. So I don't think it's- i- it's- it's like this kind of binary choice that either you build a platform or you build this like feature product. I think there is a always a way to, to focus what you're doing to some group of people, build something really great for them, and then like expand from there. And I think generally, that's the right approach for any startup. You shouldn't try to boil the ocean. You need to just boil the pot and like get- get someone in the pot and like cook with them.

Harry Stebbings 13:51 I think the biggest reason why companies I work with don't find product market fit is founders get really nervous pre-launch, they expand the ICP too much, and then it doesn't resonate with anyone, they don't get a thousand true fans, and no one really gives a shit about it. And to your point exactly, like find the 1,000 people who will really care and pay and love it, and expand from there. Totally agree with you and get you that. Profitable in year two, uh, this is a very rare thing, Karri, being profitable. Um, what is wrong with you? Uh (laughs) ...

Karri Saarinen 14:19 (laughs)

Harry Stebbings 14:20 Uh, my- my- my question to you around that is t- the counterargument would be, why didn't you spend more on acquisition? Like have higher CACs, the retention's great, people love Linear as a product, just pay more and get more people faster.

Karri Saarinen 14:34 I mean, there are... again, like it- it goes to the strategy we have is we want to be the best tool and, and there's cer- certain beliefs what we think get us there. One is that the team should be more, like smaller and more focused. And, um, if I look back to my different jobs and different companies, I always felt that the, the smallest teams always made the best results. Not, like not all the time, but usually, when you put- put this special team together that are really talented, like maybe it's only three people or five people or something, they could make really big impact in a company very fast, and that's something we believe in. So one of the main sources of expenses obviously is hiring. Like if you have a large team, you- you spend a lot of money every month. And we- we took the different approach where let's just find- try to find highest quality people we can, and then not grow the team too much because it can cause additional problems. It can dilute the culture, you spend more time managing things, and like you have to kinda onboard people more. So what generally our growth rate on the- on the team size has been about 2X per year. So part- part of that was like hitting profitabilities is that the revenue grew faster than we were able to hire the team. And then like when it comes to the marketing expense or some other expenses, part of it, it is that I want to see that the- the growth is there even without the spend. And then secondly, the product hasn't been ready for everyone from the day one. Again, like going back to the focus of like finding your first group of customers, like our first group of customers for startups, like small startups, early stage startups, those people don't even look at ads. Like they, I don't think they- they pick products because they see ads like out- out there somewhere. They pick products because they hear about it from their friends or like other founders. So I think the word of mouth and- and connecting with those founders are much more important than- than spending money on ads. So by the time of series B, we only had spent like $30,000 in- in advertising. And 30,000, I think went to, I think to your podcast at some point, and then it went to another podcast. So we basically did two podcast sponsorships with that money and nothing else. And but now, we are spending a lot more money in advertising because now the com- like the products is actually working for a wider audience and it's- it's working for larger enterprises, larger companies. And those people need- we need to influence them a little bit. Like they need to see that we are there, we are round, we- we are like a serious company. So there, I think the advertising makes more sense. But in the beginning, I don't think it-

Karri Saarinen 17:25 it made sense.

Harry Stebbings 17:25 Do you wish you had gone more enterprise earlier?

Karri Saarinen 17:28 The- the way I look at this is that I- I see that you kinda have- you have the product and you have marketing and then you have sales. And in order to move to the next segment of the mar- market, each of these functions are gonna have to elevate at somewhat equal pace. So when you're selling to enterprises, obviously, you need to have the sales team to like figure out wh- know how to do that, like how- how do you work like an enterprise account? How do you get to talk to people there more and like how do you- you influence them? And then like the marketing has to be there that people have to know- know about you. They're not gonna engage in a sales process if they never heard of you and they don't understand like what you do or why it's better or something. And then the product has to be there that like eventually, if they actually buy the product, it actually has to work to them well. We started getting some of these enterprise customers like maybe a year ago, like just before our series B, and that- that was kind of the-... story there. It's like, "Hey, we are seeing now that, uh, enterprises are buying this product." It just doesn't happen very often right now. It's a little bit special companies do this, that they, they see the value earlier some others. And now, one year later, we have the switchers every month, so it's like, it has gained a little traction. But we needed this year to figure it out and, and improve the product and get few of those customers in so we could see, like, where the product breaks down and then we can fix it. And then we can see, like, in our sales conversations what do we need to do on the marketing side. And then on the sales side, we need to obviously see, like, what do we need to do on the sales side. So, so I think there's this, like, you need to kind of keep elevating each of these functions, and you can't just jump in and, like, hope for the best.

Harry Stebbings 19:11 You mentioned a Series B there. I'm intrigued. When you're profitable, why raise another round? Why dilute more?

Karri Saarinen 19:19 I think it's still something, like, we, we are definitely, I would say, like, I'm still figuring out. Or a- and I've been talking with people about this, like, "Do we need to raise more money?" Like is, is that ... Like what happens? And I think there is some, some ... there are some basic reasons. Like one is that it is, m- useful to mark up the company every now and then. Like we were ... We raised Series B maybe almost t- three years after the Series A, and it, it's annoying when you talk to candidates and, and you say, like, "You're a Series A company," and, and then they like, they think that, like, you're technically a Series B, uh, A company but technically you are more like a Series B company in terms of your revenue or, or something. And then, like, there's this, like, disconnect of, "Hey, we, we can't give you, like, 1% of the company like a Series A company could, because we are just, like, much further along." So there's this, like, disconnect between the, I think, like, the equity value, and so marking up the company is, is useful. You can do it other ways too. You don't necessarily need a round for that. But it's one function. I think there's also, like, signaling with the customers as well that you're no longer a Series A company. That's, uh, like if you're a Series B company, it sounds more serious, um, because there is a lot of, like, Seed or Series A companies but not, not as much Series B companies.

Harry Stebbings 20:37 How impactful is having Sequoia for hiring?

Karri Saarinen 20:40 Let's say, like, we didn't have Sequoia or any of the ... Like we didn't have any VCs. We would be just bootstrap. I think, like, what you're signaling with VCs or Sequoia is that you are really aiming high. Like you have a high ambition. You wanna make this big. And for the candidate, it can feel like it's ... I don't think it's a major thing that people pick companies just because they have this VC invested in them, but it can be one of those, like, safety things that at least the company is not horrible. Like hor- It's not, like, terrible what they do because someone believed in them and, and like a tier one VC believed in them. So I have, like, little bit of signal there. So I do think it's, it is meaningful. I, I wouldn't say, like, it's the main driver, but I think part of this round, raising a round, is about the signaling with the candidates and the markets. And then I think there's ... Each time we raised a round, there was definitely, like, some level of uncertainty. Like with the Series B, we raised it at the time where the market was quite bad or looking to be quite bad. Like companies were doing layoffs. They were shutting down. It was hard to tell, like, is it gonna get better or worse? And it's, it's, it's one of those, like, safety things that we, again, like, we wanna be here for the long term and we wanna be a sustainable company. So raising a round now versus waiting until we are kind of, the market has really tanked and everything is bad and, and we have to then go out there to, to raise because our revenues dropped and we are no longer profitable and such.

Harry Stebbings 22:12 How much-

Karri Saarinen 22:12 Yeah.

Harry Stebbings 22:12 ... did you raise in the B?

Karri Saarinen 22:15 It's about 30 million.

Harry Stebbings 22:17 Why did you decide that was the right amount?

Karri Saarinen 22:21 So usually with the, with the rounds, I always, always focus on the dilution obviously. I think that's, like, the main thing you wanna control ideally and-

Harry Stebbings 22:31 What dilution are you happy with per round?

Karri Saarinen 22:34 Uh, well, I think it changes (laughs) per round, but I think it's, it's, uh, as low (laughs) as I can get it, um, or as low as it makes sense. So, I mean, I think, like, I've never been happy with a 20% dilution, for example. I would rath- Like even in the earlier rounds, I would rather see it at, like, 10% or, or less than that.

Harry Stebbings 22:53 Can you get at Sequoia for 10%?

Karri Saarinen 22:55 I don't know. Like you have to ask Sequoia (laughs) that but I think that you ... I, I think it's possible if you have the leverage to do that. The, the thing with Sequoia is that they, they did invest in Seed and Series A. And, like, one of the reasons we did the Series A with them is that we could push the dilution lower because they already have ownership. So it, it's like one of those things you can optimize for. I don't go super hard on optimizing on any of these things. So often it's a matter of, like, what, what do we think is, like, reasonable valuation in terms of our progress? So I'm not trying to aim, like, get the highest valuation possible. I think it's dangerous and what we seen in the past couple years that it can lead to down rounds, and those are really annoying or unmotivating to people. So I want the valuation to be good but not, not something that it adds, like, over- overly a lot of pressure or, like, we, we get ourselves kind of locked into this valuation cage, uh, and we can't do anything anymore. Um, but I rather see, like, a good progress on the valuation that, that, and then, like, push down the dilution to the level that it makes, still makes sense to the investor. I want the investor still to be engaged in the business and not just like, "Well, I bought 1%. I don't really care." But I think it's, depending on the round, it, it, I think it, it should be enough for them to care but as, as low as possible we

Karri Saarinen 24:22 can get it.

Harry Stebbings 24:22 Should founders have a board from Seed, from A?

Karri Saarinen 24:25 I would ... Personally, I think, like, you shouldn't have a board at Seed, and I think probably...... you can raise a price round. I don't think you need to. You can do a safe round at seed. At a series A, you can think about it. I, I do think it's, like us, like we added a board seat at series A. I feel like it's, it's kinda like a standard thing where it... I think it's... I don't know, i- in some ways it feels good governance to, to have someone outsider there. And then I think with the series B we added a- added another board member to, to kind of get two different perspectives in the board meeting so we just don't have us, like us and then one investor, but we now have two investors and then, then us. Um, but I would say, like, on the board seats, I would definitely think about controlling them or having a little bit more. If you're a solo founder, you probably should have more seats or, or some kind of more voting on those seats. Uh, we have three founders, so it's, it's been, like, kinda working out that way. Like, we can have three... We negotiated to have three seats from the beginning and then the VC can have one, and so we can, like, retain the control of the board. But me and, like, even our legal counsel, I don't think... (sighs) Some of these tricks don't really work that well anymore and I don't think... I saw this interview from Parker Conrad and I think, like, he, he said that the only (sighs) real protection you can have as a startup founder in your business is, is to be successful. Um, if you're not successful, there's a lot of ways... It's not about the board control, it doesn't really matter. Like, there's a lot of ways investors can exert their control than their profession-... Like, they are like... They have much more experience in that than you have as a founder. And so the, the real protection you can have is to s- be, be successful and not overthink these different terms or controls you can have in the legal, like, framework.

Harry Stebbings 26:22 What was the single best investor meeting that you've had, Kari?

Karri Saarinen 26:25 To me, it's always if people come in informed and they, they kind of get us and they are w- willing to go deep or talk about things, and, and that, that's something, like, I do with this fundraising process is that, like, I don't like going very broad with the, with the process. When, when we see that there's a good time or reason to do a fundraise, I usually have a list of people that I know or heard from, from folks.

Harry Stebbings 26:57 How long is the list?

Karri Saarinen 26:59 I mean, the list can be longer, but usually when I start the process, it, it can be only, like, five people that I wanna talk to. And they can be a little bit different kind. Some of them maybe are solo investors, some of them are tier one investors, some of them are some, some... It's a specific person I, I've heard about.

Harry Stebbings 27:16 So when you have that list, a lot of people are told, "Always be raising. You need to continuously build relationships between rounds." How do you feel about that?

Karri Saarinen 27:24 I mean, (laughs) I would say, like, absolutely not to be always raising. I do think that as a founder or CEO, you should always think about the next round or what would make it good or what would... Like, what kind of... Ideally, what would you wanna get out of it? Like, what kind of person would you want get in? Um, and, and obviously if, if you do need the money, then you also need to think, like, when is a good time to do that that, that, like, you still have good amount of leverage and, and, uh, the momentum in the business is good. So I think, like, there is this background process that you need to run every now and then. Like, you don't have to think about it every day, but maybe every quarter or every month or something that... Just think like, "Is there something I should do or think about about the next round? When is this gonna happen? Like, what should I prepare for that?" And I do meet with some of these investors even though I'm not fundraising, but they're often very casual chats and I, I just wanna get to know the person a little bit. So when, when the time comes that I wanna run this process, I already have some level of relationship there, and then we can just go deeper into the what kind of investor they are and, like, their questions and my questions and, and, and

Karri Saarinen 28:32 that kind of stuff.

Harry Stebbings 28:32 Which investor do you not work with today that you would most like to work with?

Karri Saarinen 28:37 There's definitely the question even in my head still. It's like, "Do we, do we need to raise? Like, uh, is this it? And, and is there some..." I've been kind of, like, researching. Are there, like, different ways of doing this? And, um, and I think, like, for example, if you don't need that much primary capital, you could do more, like, a secondary capital. You can actually build this more into... A little bit like public companies where your... like, the team's equity in the business is a little more liquid, that you could have more of the secondary opportunities with the team, and that could be a good thing for the team that they, they can actually feel like the equity is worth something and not, not just like a paper ticket they have that maybe one day will turn into something. So, so I think there's that question of like, "Do we even need more investors in the business?" We actually have quite a lot and, like, the... They, they

Karri Saarinen 29:30 are good and so...

Harry Stebbings 29:31 You said earlier about the kind of investor shortlist. When we chatted before, you said about putting VCs to work and giving VCs homework. What did you mean by this? I'm not often given homework, Kari.

Karri Saarinen 29:41 I make a separate Google Doc for each investor and I say like, "Hey, here's a memo and here's a Google... Wait, at the end of the memo, there's some questions for you that I would like you to think about." And then they should write them down and then we should talk about those answers. And to me what it gives me, it's, it's a little bit like simulating the relationship of working with them. And I can see... The answers themselves might not matter that much. It's more about that I can see how they think and what their style is. Are they more tactical? Are they more high-level thinker?

Harry Stebbings 30:13 What are you looking to see?

Karri Saarinen 30:15 Yeah. (laughs) Actually, I don't, I don't think there's, like, a specific thing I want. Um, it's, it's, it's more like, do I like this style? Like, um... I would say, like, for example, what I don't like is, is overly benchmarking or following, like, playbooks from other companies. Um, I feel that's...... that's, it's, it's almost like, it's, it's templating the business, like you are not really thinking about our unique challenges. You are, you are applying this template from somewhere else. So that's one thing I don't wanna see. But in terms of, like, what they actually do, I think it can vary a lot. It, uh, i- in the end, it's more just when we go through it, it's more like the feeling I have. Do we speak the same language? What do we think? It doesn't mean, like, we have to think about the things the same way, and that's not the goal. It's more that, like, it's does this, does this way of communicating or thinking seem productive? Like, do they get our values or w- how we do things or do they not, and did they completely miss that? So, it's like, it, it's, I'm just looking, like, for a fit, and that fit can look different.

Harry Stebbings 31:21 Kari, what advice do VCs give that founders listen to that you think is most dangerous?

Karri Saarinen 31:26 VCs tend to push you to hire more leadership people, but then it's not always the right time, or it's also tough to find the right person to, like, at least for me, I'm, again, looking for a fit in that leadership role. So, I think there's way too much push on, like, hiring, like, uh, especially, like, business roles, like hiring a VP of sales, hiring a CRO, or hiring something where it's, it's never... I always ask, like, "What are they actually gonna do? Like, what are they actually gonna change?" And then usually there's no answer because they don't know what they're gonna do and, and the people themselves don't know. They come into company, they start doing some stuff, and maybe, hopefully, they will

Karri Saarinen 32:08 do something productive.

Harry Stebbings 32:09 Are there any questions that you ask when identifying talent that are common across different functions? And so, like, I always ask, like, "Talk to me about your relationship with your siblings." It tends to be the opposite of how they view themselves.

Karri Saarinen 32:22 I like to ask people, like, what they're really proud of, like, what they, what is something they built that they're real proud of.

Harry Stebbings 32:27 What do you want to see in that answer?

Karri Saarinen 32:29 Uh, first of all, I, I would like to see that they're proud of something, that they actually care about something, and they could articulate why they, like, care, why they care about it. And then, I think, again, it's n- it's n- it's not what it is, but it's about, like, how they think a- talk about it. So I think the, the people who really care about their craft, whatever role they're doing, they always want to go beyond what is expected or want to do it better than expected. Um, and that's what I'm looking for in that answer. People who really are passionate about their craft or wanna do it well, usually their answers start to sound more like they almost... this, these projects are almost their children. They start kinda lighting up. They get emotional, or they get much more nuance on, on, on, like, what they build and why. And the people who don't, I think, care about the craft as much that their answers are more flat or more factual, where it's, it's more of a, "I did this, and it worked well. The impact was there. It was successful." So, to me, that's, like, the interesting thing to look at. Like, do they wanna go beyond? Can they think beyond what is expected or standard in this job or role? Uh, can they come up with something even better? Um, and do they have that motivation to do that? And so, so it's like I look for that craft in that, in that question.

Harry Stebbings 33:54 Kari, what are the biggest hiring fuck-ups you've made?

Karri Saarinen 33:57 feel like we have, actually haven't made that because we, we do take our time, uh, of do- doing this vetting, and we do have interviews, and we do have this work trial. And I think it works really well. There's only a few people we had to let go. There's only a few people who had left c- the company in this, like, five years. So I think it's, it has been working wi- quite well. I think every now and then, it, it is, uh, it s- it probably always comes down to hiring someone that you weren't kind of, like, strong yes about. You, y- it's, it's a little bit of that pressure of, "Hey, this seems good enough. We should go forward with it." And then usually you end up regretting it. The moments we had to p- let people go was that we kind of forgot that and, and just hired someone because they were fitting for the role but we didn't actually feel their special sauce in there.

Harry Stebbings 34:50 What do you say to founders who say, "That's great, but, like, I need the role today. I, that's super, super idealistic world. I need this seat filled."

Karri Saarinen 34:58 If it's your first ten people or even, like, first 15, 20 people, like, it's much more important in the early stages. Every role you hire, it affects the c- i- i- con- it, uh, impacts the culture a lot. It potentially sets the standard for the whole function. So if you hire your first marketer, that first marketer is gonna be at the standard of what marketing is, uh, for that, I don't know, 30 years to come in the company. And if you hire the f- your first engineer you hire, that's, that's also sets the culture onto engineering or, or the first designer you hire. So I think I would definitely not ever do that in the very early chases. Like, you, you just, as a founder, have to do the job until you find someone who, who is really good at it or, like, you find that right person. At the later stages, when the team is a little bit more there and it, it's maybe, like, less impactful role, I, I think there's more of a... I, I, I like to think there's more, like, upstream roles and downstream roles, like how much those people might be affecting. Like, if they're more upstream, they affect everything downstream. So obviously, like, leaders or some, like, for example, product people that are affecting the whole product organization or the whole product quality or direction or something, those people have a lot of downstream impact on the business or d- on the company versus someone who is more on the end of the spectrum or, like, at the end of the, like, more like the downstream, where... For example, support is, it's, it's, like, it, we wanna do support really well and we wanna hire really good support people, but there's also, the support doesn't impact everything in the company. So, so I think there is some...... nuances you can find that, like, why maybe it makes sense to sometimes fill the role, versus, like, just wait until you find the right person.

Harry Stebbings 36:48 Kari, why are you insecure in your role today?

Karri Saarinen 36:51 It comes down to the CEO role that I feel like you can be insecure all the time because it never... That role is never the same. You can never be... I think, like, you can never be the best at it. Uh, uh, the company's always changing, the team's changing, the, I don't know, the market is changing. Everything's always changing. So what you did maybe well in the past and it was good or well done, it's not enough anymore. The company's now bigger, you need to do something differently, you need to do something better. To me, the incir- insecurity is always about that, that, am I doing enough? Am I doing it well enough? Should I be thinking about the next thing? Should I be focusing on today? Should I be focusing on the future? And the answer is both. And so, I think there's this constant... Li- and it's not every day, but every week, I'm thinking about, is like, "Am I doing a good job?" Like, "Should I be doing something less? Should I be something, doing something more?" So, I would say it's just like a nature of the, the CEO job that I would say, like, nothing is ever enough. There's always more you could

Karri Saarinen 37:54 do.

Harry Stebbings 37:54 Do you think becoming a father changed who you are as a leader?

Karri Saarinen 37:58 I think there are some aspects probably, like, I think about more as, like, your influence on, on, on your children and, like, what you say or do is... They might learn that same thing. And, uh, if you do something, if you say something or talk in a certain way, they might, it might influence them to become something or they, they kinda like pick it up. So I- I'm maybe, like, more conscious now of what do I say to the company that... Because, like, the, whatever I say or do might influence them in certain way. It, it's not like I'm telling them to do something.

Harry Stebbings 38:33 My mother always used to swear in the car.

Karri Saarinen 38:36 (laughs)

Harry Stebbings 38:36 And so as a result, I have one of the worst mouths ever, and I just blame her in perpetuity for it.

Karri Saarinen 38:42 (laughs)

Harry Stebbings 38:42 Uh, so c- I completely agree with you for being concerned about that. Um, final one. I, I'm intrigued.

Harry Stebbings 38:47 How do you feel about angel investing as a founder? A lot of other founders do it. How do you feel about it?

Karri Saarinen 38:55 I've done it a little bit and, uh, maybe I would like to do it more. Um, I think as many other founders, eh, say that it, it can be very time-consuming just reading the email and trying to, like, evaluate this business, like, "Is this something I should be focused on?" So my cri- criteria is now just very simple or clear is that, do I know this person? And then, do I believe what they do or in this, this, this kind of product category or something? And then I might, like, invest, or I might not. But it's, like, what I like about it is that you can see how other people are doing building their companies. You get this investor updates, you can see, and sometimes you talk to the founders. You can kinda learn a little bit of how other people are doing things and that, that can give you some ideas too. Like, even if they're, like, earlier in the process than you are, like, in the, in stage of the company than you are. So I like that aspect. I don't like the deal flow, uh, filtering or figuring out which companies to invest. So now I just try to focus on, do I already know this person and I wanna support them? Or, do I really believe in what they're building and I wanna support that?

Harry Stebbings 40:05 And after this, you get a flurry of angel investment requests. (laughs)

Karri Saarinen 40:09 (laughs)

Harry Stebbings 40:09 Sorry, man. (laughs) That, that was a really unfair one.

Harry Stebbings 40:12 Uh, listen, I'd love to do a quick fire round with you, Kari. So I say a short statement, you give me your immediate thoughts. Does that sound okay?

Karri Saarinen 40:17 Let's do it.

Harry Stebbings 40:18 What are the biggest ways that companies fuck up remote work today?

Karri Saarinen 40:22 Not thinking that it is a way of operating and just thinking that it, it's something, like, you can keep flipping back and forth. Like, you have to build the whole company around being a remote culture and not just decide one day that, "Okay, today we are remote," and then year later, like, "We are not, no longer remote."

Harry Stebbings 40:41 In the Linear journey, what did you not do that, with the benefit of hindsight, you wish you'd done?

Karri Saarinen 40:47 I actually think, like, we did the right thing, but for example, like, bringing in sales earlier. And this is credit to the investors. The investors were saying, "You should bring your sales in. Like, this is the time to bring the sales in." And for us founders, we were like, "No, we don't want, like, I don't think it's right right now." And I think we had to go through that pain of we re- started realizing, "Oh, there's a lot of people, actually, companies wanting to talk to us." And, and realizing, "Do I wanna be (laughs) the salesperson, like, 100% of the time? Or should we, like, hire someone to do that?" And then we realized, "Yes, we should hire someone to do that." So, I think in the end, we could have done it earlier, but in hindsight was also that I think it was important for us to, like, learn that lesson through pain and not just do it and then constantly think about if the sales is the right thing or not.

Harry Stebbings 41:34 What do you believe that most around you disbelieve?

Karri Saarinen 41:37 I think it's just that the quality and doing things well still matter. It's, it seems to be when I look at the market or just me personally buying things, that today it's really hard to find quality things. It... A lot of things or products are marketed really well, and they can seem like they're high-quality, but then when you actually use them, you're disappointed. And I think there is some, some kind of power that if you actually do things really well, it is rare, and people will notice, and people will talk about it. It's, it's like all that viral products on Instagram or something, like, I think usually there is some quality aspect to them that people get interested about. Sometimes they're not, but, but sometimes there is.

Harry Stebbings 42:18 What thing of quality do you do today at Linear that you will not be able to do at scale?

Karri Saarinen 42:25 I think one thing is, is me personally looking at every project, uh, the design or the, um, um... When the, the team is building different features or different projects, I follow along and I, and when I start seeing them appearing in the app, I, I, internally I start ch-... playing around with them, I start trying them out. And before we ... it's, it's like we don't have very complicated processes, but usually before we launch anything to everyone, um, I or the other founders will do some kind of check on it. It's like, is ... does this feel good? Does it feel right? Are the animations correct and, like, those, like, little details are correct? So I don't think it's ... I don't ... I'm not sure if it, we can keep doing that or it, it fully scales, and even now it's hard. So I feel like it might be something hard to do in the ... when you scale the company more.

Harry Stebbings 43:14 What product other than Linear do you use and go, "Oh, quality"?

Karri Saarinen 43:20 I think something I use a lot is, is Superhuman. Um, I think it, it gets the right things right. Uh, it's, it's fast and, and has the features that I need. Like, I think there's the ... it's like (laughs) the intro thing where you just hit the Shift+I or something and it, it's kind of does the PCC for you. And those kinda things that you, you do constantly, uh, like at ... in this job is there, and no other email client really has it. It's ... to me, it's similar to Linear. We ... they, they built it ... it's more purpose-built. It's purpose-built for people like us, and it's not maybe the best email client for every single person out there. But I, I do think it's, like, the best email client for me or maybe for you as an investor.

Harry Stebbings 44:05 What recurring event on your calendar do you wish you did not have?

Karri Saarinen 44:08 I actually went through my calendar and I couldn't (laughs) find anything. I, I, I think it's ... it was, like ... it was interesting to, to see that. Um, it ... I think seems like we're pretty good at not doing things that I, (laughs) I don't wanna do or that, that recurring events I, I don't wanna, wanna go to, so I actually couldn't find anything.

Harry Stebbings 44:29 What blog post written post-2000 is your favorite?

Karri Saarinen 44:33 I like a lot of Paul Graham's essays. I, I think they're the classics, and, um, I think going t- ... back to just, like, profitability, I do like his, his blog post about ramen profitability. And this ... I think this was written maybe, like, a decade ago, and I always thought, like, that's the, that's the ideal way of building a startup that you can ... You ... With being profitable gets you the highest leverage you can have in terms of when it comes to talking to investors because it gives you the leverage of not needing them. That's his point in the essay too. And so that's always (laughs) the highest leverage if you can walk away from any deal. So I always loved that. Like, it wasn't an explicit goal when we started Linear, but when we started seeing is like, oh, this is actually possible and we can kind of project or forecast how is this gonna happen, we, we did get excited about it. It's a very motivating and freeing to, to be in that position.

Harry Stebbings 45:28 What was the worst investor meeting you had?

Karri Saarinen 45:30 I don't love the ... I don't wanna name names, but I feel some of the larger funds. Like, going in there, do the pitch meeting, everyone's silent, no one has any questions. Those kind of meetings, there's like ... there's maybe 10 people in the room. You don't know who you should be even focusing on. Like, it's not, it's not very foc-

Harry Stebbings 45:51 Human.

Karri Saarinen 45:53 Yeah. It's, it's like you, you come to this audience, and then that audience is passive and they don't have anything. Like, they don't give you any signal, they don't say anything, they don't ask much anything. So it, it just feels very, like, why am I even here? It's like, I probably ... which makes me think (laughs) , like, I shouldn't be here. It's like-

Harry Stebbings 46:11 (laughs) .

Karri Saarinen 46:11 ... this is not where I should be. And so-

Harry Stebbings 46:14 (laughs) .

Karri Saarinen 46:14 ... I, I don't like those kinda ... like, I had some of those and, and, and I don't, I don't like them.

Harry Stebbings 46:19 Would you sell the company today for $3 billion?

Karri Saarinen 46:22 There's a good chance I would, or/and- and then there's probably, like, a good chance I wouldn't. Um, I think today ... I mean, I think the default ... it's, it's ... I think it would depend a little bit of what happens after, like, who is buying, like, what is the ... what's the story there, can I get excited about that story? But if it's just that, okay, sell the company, shut it down for 3 billion, I don't know if I wanna do that. Um, so I think the answer today would be, by default, would be no. But if there would be some reason that, uh, we could see that, oh, this is really exciting and we could actually do this thing better or, or something with some, some other organization, it could be, like, interesting to look at.

Harry Stebbings 47:03 I'm asking the really spicy questions.

Karri Saarinen 47:05 (laughs)

Harry Stebbings 47:05 I saw that Jira started advertising against Linear searches. I think you tweeted it or someone in Linear tweeted it. Does the company benefit from having a common enemy, someone to go, like, "We're fighting against you"?

Karri Saarinen 47:19 I, I think it, it does.

Harry Stebbings 47:21 Yeah.

Karri Saarinen 47:21 To, to ... It, it gives you a little bit of s- ... Uh, it, it, it's, it's ... Sometimes if you don't have that, you may be ... you're not sure where the ... which, which directions are bad directions. So I think, like, when you have a ... more of a enemy in, in the market, you can kinda think like, "Well, we should do differently what they do. Like, we should actually go the different direction from them 'cause we ... uh, th- ... Anyway, I don't think it's worth building the same product again. So there's this product out there, it's very well used, so what we should do is we should still solve the same problems, but we should do it very differently from them." Not everything differently, but, but some things differently. And that's, like, where the value can be. The value is not there if we just try to, like, copy what they do and do it, like, slightly better.

Harry Stebbings 48:09 Final one for you, Kari. I've so enjoyed this, but final one for you. What question are you not often asked by employees, by interviews, by investors that you feel you should be asked?

Karri Saarinen 48:22 Maybe ... A lot of times it's the, the why. I li- I like why questions and, and they're di- in different topics, but I think the, the one question I would like to ask more is the why building a product that people wanna use in a enterprise is meaningful. Um, because there's, like, lot of focus in the market or even the buyers or the customers or ... They, they ... there's always, like, looking at the features or looking at the...... and I know something else. And that it's more about the, what can I easily see, uh, on a website or something, or in, in my comparison chart that some product does more or less. But it's, it's hard to, people don't ask about like, what is the most important thing actually? And to me, I think the enterprise tools or cooperation tools and enterprise, that the most important thing is do people actually wanna use this tool? And if they don't wanna use this tool, uh, like if they do wanna use it, they will use it more. All of the things will work better. If they don't want to use it, it's almost like, almost like you don't have the tool anymore, like you, it's, the value is not there if no one is using it. So I think people, yeah, don't ask that why question enough.

Harry Stebbings 49:40 I think the fastest way a company can lose credibility in a fundraiser is when they do the quadrant on what features they have versus competitors don't. And it's like Microsoft and it's got cross, cross, cross, cross, and then them f- green tick, green tick, green tick, like, I don't know. (laughs)

Karri Saarinen 49:55 (laughs)

Harry Stebbings 49:56 It seems like a stretch. Carrie, listen, I- I- I'm so in-

Karri Saarinen 50:00 Yeah. Uh, yeah. The last thing I-

Harry Stebbings 50:00 Sorry.

Karri Saarinen 50:00 Maybe... Yeah, the last thing is, is I really hate those comparison pages companies do. Like if, if, we never done those, because I don't... I, I feel like it's not honest to (laughs) do these pages, like they're never objective, like Linear versus X Tool, and the X tool is obviously making it, so they're always wrong in even on a factual basis, like the features we have or, or don't have. And it's, it's this comparisons charts are, I just feel like it's so dishonest practice in the industry, but everyone is doing it. But s- that's something, like we don't wanna do.

Harry Stebbings 50:37 It's also predicated on the wrong things, like d- you're not explaining wh- why you should even need them. Maybe you don't have the features because you don't need them, and it's feature creep. And th- I mean, uh, so I totally agree with you. Karri, dude, I, I so appreciate you, uh, working with me now, uh, accepting my money. Um, I know a- n- not many people have the luxury of being Linear investors, so I'm so grateful. Uh, and you've been fantastic. So thank you so much, man. This has been such a joy.

Karri Saarinen 51:03 Thanks, Harry. It was great to be here.