Hiring more people than necessary is, in my mind, akin to gambling. I, personally, hate gambling, and that's probably where my bias comes in on this topic.
Tying it back to my original response: when I say reasonable team size, my implication is reasonable growth based on real results, not just rolling the dice.
To turn the perspective from an engineering leader to that of an engineer (the other half of my career), if I could practice and LeetCode my way into a FAANG and make more than I've ever made to be part of the headcount machine, why would I stretch and innovate? I'd just sit back, do what's expected, and collect.
It's a weird dichotomy, and I fully appreciate that I'm biased in my perspective, which may be detached from reality.
And, again, in the imaginary world where I'm an investor, why would I want a large team built of folks just looking to collect a huge paycheck by being part of the machine?