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.
This was definitely the wisdom I've heard historically. I suspect the number may be slightly higher than it was 40 years ago due to digital communication, but a lot of what I hear is that it's just really hard to deal with all the personal, and interpersonal problems that crop up.
This also makes me think if you're lucky and have a low drama team, you can do more than 10, but at the end of the day you're going to get a superlinear increase in interpersonal drama the more people you manage so this number is likely to remain small.
