I don’t know the source of this maxim. But it is one a subscribe to fully and one I preach to entrepreneurs. Very early stage companies tend to focus far too much on headcount – how many people they have hired and not enough on other metrics, such as customer acquisition, engagement, retention, etc. In my high tech company the largest operating expense category is personnel and talented engineers and sales/marketing people are expensive. Expenses can easily out run revenue if hiring is ramped up to quickly.
Firing an employee (vs. a contractor) can be very difficult. If you are not careful in can even result in legal action. But if someone is not a fit with the organization, is made aware of the problem, and it can’t be solved quickly ,better for them and you to let them go quickly. That’s not to say inhumanely by marching them out the door the day you tell them they are terminated, but to avoid having problematic employees damage morale and hurt the company by continuing to underperform.