I worked for a startup like this, pure software (a website). When I started, there were ~80 employees in one office. Within two years this grew to over 400 employees in three offices, with regular outings, breakfasts, etc etc which I never attended, except for one breakfast that was held at a fancy hotel within walking distance of my home.
At one point, my department manager "volunteered" us to work on the weekend. He was quite surprised when all but one or two of us were not at all agreeable.
During the third year, the layoffs started. My department manager was in the first wave of layoffs, and the poor young man was actually in tears from the shock. By the end, after the fourth wave of layoffs when I specifically asked to be laid off since I couldn't handle the stresses in the office any more, there were around ~60 employees left, and the owners sold out for several hundred million dollars. The site did go on to become a part of a very large corporate web presence, but in a different country.
It was all done deliberately, to build the business, then "downsize" until the bottom line looked good, then sell. Meanwhile, young people had gotten married, started families, bought homes. All based on this huge lie. During one of the performance reviews, just before the layoffs began, everyone was asked "do you believe in (x company)?" Not being young and inexperienced in corporate behavior, and having researched the owner's previous start-up behavior, I baldly said "No". Their long-promised IP (I'd been given 2,500 of their vaporware shares in an effort to persuade me to stay) didn't happen until just a few weeks before the sale.
In four years they had burned through $70,000,000 in venture capital.