One of the most powerful frameworks I’ve come across is the Rule of 3 and 10, coined by Hiroshi Mikitani-san, founder and CEO of Rakuten. The idea is simple: every time a company triples in size, everything breaks.

As Rakuten grew from a handful of people into a global business, Mikitani-san noticed a clear pattern. At each stage — 1 to 3 people, 3 to 10, 10 to 30, 30 to 100, 100 to 300, and beyond — what worked before suddenly stopped working. And by everything, it really does mean everything: payroll, meetings, communication, budgeting, sales, even the org chart. The challenge is that many leaders blow right through these milestones without realizing what’s happening until it’s already broken.

What I Wish I Knew

I’ve been part of many really fast-growing companies — first as an employee, and later as a co-founder in two of them. And I can tell you, this rule is 100% true.

At Wattpad, I didn’t fully internalize it until we were approaching 100 people. By then, we had already missed natural breaking points where we could have rebuilt earlier. That lag made scaling harder than it needed to be.

Looking back, the stages feel something like this:

• At 3 people, you’re a tight-knit unit where everyone knows everything.
• At 10, you need to change how you communicate just to stay aligned.
• At 30, the days of everyone reporting to the CEO are long gone — a first layer of leaders emerges.
• At 100, there are layers of layers of leaders, and even well-designed systems need rethinking.
• At 300, you’re running a completely different company than the one you started.
• At 1,000, it feels like a mini-society with its own subcultures, bureaucracy, and politics — alignment becomes the hardest problem of all.

The Employee’s View

Before becoming an entrepreneur, I lived through this as an employee too. The breaking points are just as visible from the inside.

As companies scale, it gets harder to push things through. Meetings multiply, but decisions slow. Bystander problems appear — more people in the room, but fewer actually taking ownership. From the employee’s perspective, it feels frustrating and inefficient. But it’s not about capability; it’s about systems that no longer fit the size of the company.

Why This Matters

In the moment, it can feel like failure. But it isn’t. It’s simply that scale changes everything.

The good news: these challenges are solvable. Every growing company has faced them. The bad news: if you only react after things break, you’ll always be catching up instead of leading.

My Takeaway

If you’re building a fast-growing company, expect everything to break at 3, 10, 30, 100, 300, 1,000… and plan for it.

Don’t see it as failure. See it as evolution. Each breakdown is proof you’ve unlocked a new stage of growth. The chaos is part of the privilege — it means you’re building something worth scaling.

If I could go back and tell my younger CEO self one thing, it would be this: anticipate the breaks before they happen. Build a culture that embraces reinvention at every stage. You’ll save yourself and your team a lot of unnecessary pain — and you’ll enjoy the ride more.

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