I think from a founder's mentality it is 100% true that more people = more problems, not more success.

However, from a consumer mentality, more employees means (potentially) more revenue and stability, but it all depends on the industry. I probably wouldn't buy an airplane from a two man shop, but wouldn't blink at going to a dentist with only two employees.

The problem comes when the founder starts looking at things from the consumer perspective and wants to use headcount for appearances or marketing.