For an $n$-vertex digraph $G=(V,E)$, a \emph{shortcut set} is a (small) subset of edges $H$ taken from the transitive closure of $G$ that, when added to $G$ guarantees that the diameter of $G \cup H$ is small. Shortcut sets, introduced by Thorup in 1993, have a wide range of applications in algorithm design, especially in the context of parallel, distributed and dynamic computation on directed graphs. A folklore result in this context shows that every $n$-vertex digraph admits a shortcut set of linear size (i.e., of $O(n)$ edges) that reduces the diameter to $\widetilde{O}(\sqrt{n})$. Despite extensive research over the years, the question of whether one can reduce the diameter to $o(\sqrt{n})$ with $\widetilde{O}(n)$ shortcut edges has been left open. We provide the first improved diameter-sparsity tradeoff for this problem, breaking the $\sqrt{n}$ diameter barrier. Specifically, we show an $O(n^ω)$-time randomized algorithm for computing a linear shortcut set that reduces the diameter of the digraph to $\widetilde{O}(n^{1/3})$. This narrows the gap w.r.t the current diameter lower bound of $Ω(n^{1/6})$ by [Huang and Pettie, SWAT'18]. Moreover, we show that a diameter of $\widetilde{O}(n^{1/2})$ can in fact be achieved with a \emph{sublinear} number of $O(n^{3/4})$ shortcut edges. Formally, letting $S(n,D)$ be the bound on the size of the shortcut set required in order to reduce the diameter of any $n$-vertex digraph to at most $D$, our algorithms yield: \[ S(n,D)=\begin{cases} \widetilde{O}(n^2/D^3), & \text{for~} D\leq n^{1/3},\\ \widetilde{O}((n/D)^{3/2}), & \text{for~} D> n^{1/3}~. \end{cases} \] We also extend our algorithms to provide improved $(β,ε)$ hopsets for $n$-vertex weighted directed graphs.