Entrepreneur and investor Phil Libin had already founded a small handful of companies when he began his best-known role, as chief executive of Evernote. He'd networked his way into Silicon Valley by asking smart questions of successful people, including founders of such companies as Salesforce and Yahoo. Inc. asked several entrepreneurial luminaries like Libin to share a piece of early career (or life) advice that changed everything. Here's one piece of advice so specific--and reliable--that Libin has come back to it many times throughout his career. --As told to Christine Lagorio-Chafkin
Probably the best advice I got for running a business came from Hiroshi Mikitani, who is the founder and CEO of Rakuten, which is a big Japanese internet company. Boy, he said a lot of stuff that was really amazing. A really incredible thing he advises is to pay attention to what he calls the rule of 3 and 10, which basically says that every time your company triples in size, everything breaks.
When you have one person, just you, you figure out how things work and then you hire a partner and things are OK, but then when you hire a third person, everything's broken. You've got to redo it. Then you get that working and it works until you're 10 people and then everything breaks. Then you figure that out and it works until you're 30 people and then 100 and then 300 and then 1,000.
There's this idea that with a tripling in size--and I think it refers to anything, not just people but your revenue, customers, when you triple something--everything else breaks. Startups often get into trouble because they're growing so quickly that they miss a few of these triplings.
At Evernote, sometimes we would look and be like, "Oh, wow. We haven't revamped our expenses system. We set up our expenses system when we were 10 people and now we're 300, so we actually skipped a few of these steps and so of course it's broken." The way you communicate, the way you have meetings--the way you do everything needs to get looked at with every tripling.