One principle of good management is that no one can properly manage more than roughly a half dozen direct reports (10 is the absolute limit, and at that point y

One principle of good management is that no one can properly manage more than roughly a half dozen direct reports (10 is the absolute limit, and at that point you're stretched way too thin). At 40-50 people you're hitting the point where you have 6-7 managers reporting to the CEO and each responsible for 6-7 direct reports. If you hire more people after that, you basically either have to severely overload someone's management capacity or start hiring a third layer of management. The company still feels too small for that much hierarchy so instead of adding management it increases the number of reports either of middle management or the CEO until the situation is untenable.