The Rule of Three
No 8-to-15 million business runs on fewer than three stakeholders.
- Difficulty
- Moderate
- Time to result
- ~months to results
- Steps
- 4
- Confidence
- 85%
Dawson's staffing model ties team structure to revenue breakpoints. You can reach 3M on your own ability, but 8M always requires three stakeholders — a visionary founder, a trusted controller-level finance person, and an operator — because no single person can do everything. At 25M that grows to five people running the business alongside you: finance, technology, operations, sales, and you setting the direction. Crucially, do not hire brand-name CFOs and CMOs into a 6M company; those are 75M-125M jobs and the mismatch will constrain every decision.
Origin
Dawson derived the rule from never having seen a successful 8-to-15 million business that lacked three stakeholders, and from watching owners hire expensive executives who broke small businesses by importing the context of their old jobs.
Core principles
- 01What you do gets you to 3M; who you do it with gets you to 8M.
- 02No one person can do all the things a growing business needs done.
- 03At 8-15M you need three stakeholders; at 25M you need five people running the business alongside you.
- 04You cannot hire a real CxO into a 6M business — those are 75M-125M jobs.
How to run it
- 1
Reach 3M on what you do
Get to roughly 3M revenue on your own competence — the thing you are good at.
- 2
Assemble three stakeholders for 8M
Add the two people you rely on: a controller-level finance partner and an operator, alongside you as visionary.
Pro tip Choose a finance person who is easy to communicate with and trust — theft and hidden problems are real risks.
Watch out Without a controller by your side you will start making technical financial decisions that eventually break the company.
- 3
Expand to five at 25M
Add a technology person and a salesperson so you have finance, tech, operations, sales, and yourself setting the tone.
- 4
Home-grow rather than buy big titles
Develop trusted young people and bring in retired authorities for up to 18 months to train them, rather than hiring CxOs the business cannot support.
Pro tip Bring retired experts in side-by-side with your younger people for up to 18 months to transfer how a 125M CFO actually operates.
Watch out A CFO or CMO at 6M revenue is worth nothing near what you pay them — those are director-level roles at that size.
In the wild
Dawson describes owners at 6M revenue proudly introducing a CEO, CFO, COO, and CMO — titles that in reality are 75M-125M jobs, held by people who have never run a big company.
→ Owners get constrained by the limited competency of people they gave big titles to, and every cross-functional decision gets made wrong.
Common mistakes
Buying an executive to fix your problems
Most senior hires brought in between startup and 25M break the business because they import the context of their old company's problems into your small one.
Handing out big titles you can't back
Giving someone a CFO or CMO title at 6M constrains the company to their limited skill set and thinking, since they have never operated at scale.
Is it for you?
Best for
Founders moving from a solo 3M business toward 8-25M.
Not ideal for
Sub-3M businesses where the founder still does everything and cannot yet afford stakeholders.
From the transcript
“I've never seen a successful 8 to$15 million business that didn't have three stakeholders because no one person can do all the things that you…”
“There ain't no CEO, CFO, CMO that is worth their weight of anything you're paying them at 6 million of revenue. Those are 75 million…”
From the episode
Brandon Dawson: 97% of Startups Fail! How to Beat the Odds and Scale to 9 Figures
Brandon Dawson