As an organization scales up, it must navigate several transitions. If it fails to make these transitions well, it will stall out or disappear.
One of them happens when the company grows larger than "village-sized". In a village of about 150 people or less, it’s possible for you to know everyone else. Larger than that, and you need some kind of secondary structures, because personal relationships don’t reach from every person to every other person. Not coincidentally, this is also the size where you see startups introducing mid-level management.
There are other factors that can bring this on sooner. If the company is split into several locations, people at one location will lose track of those in other locations. Likewise, if the company is split into different practice areas or functional groups, those groups will tend to become separate villages on their own. In either case, the village transition will happen sooner than 150.
It’s a tough transition, because it takes the company from a flat, familial structure to a hierarchical one. That implicitly moves the axis of status from pure merit to positional. Low-numbered employees may find themselves suddenly reporting to a newcomer with no historical context. It shouldn’t come as a surprise when long-time employees start leaving, but somehow the founders never expect it.
This is also when the founders start to lose touch with day-to-day execution. They need to recognize that they will never again know every employee by name, family, skills, and goals. Beyond village size, the founders have to be professional managers. Of course, this may also be when the board (if there is one) brings in some professional managers. It shouldn’t come as a surprise when founders start getting replaced, but somehow they never expect it.