I was listening to Tim Ferriss’ podcast with Phil Libin the other day and wanted to share a small insight I found valuable.

Hiroshi Mikitani (CEO at Rakuten) has a hypothesis that almost everything breaks when a company triples. How you communicate, how you manage your product, who makes decisions, and even small things like handling payroll.

When your team is three people processes work and are ok. When you get to 10 people things start to break. And again at 100 people things breakdown. And the breakdown continues to 1,000 and 10,000, etc. But if you know this (or at least know things will degrade) you can be prepared and change rapidly. 

The alternative is to do the same things you were doing as a 10-person team as a 100-person team. This is when you get into big trouble. You wake up one morning and are forced to slow down because your processes are not scaling.

It seems the best technique to avoid such a problem is to be diligent about planning process reviews and audits of your time. For example, every 6 months look at what is painful and what requires a lot of time. Of course, you strive to improve every day as well, but having it on the calendar forces you to focus and make it a priority.

Know that things change daily, but be mindful that things may break every time you triple in size.

Via Tim Ferriss podcast with Phil Libin - definitely work a listen.