I'm always surprised when other people are surprised that flat organizations don't scale. Honestly, unstructured organizations only work in two situations. If the teams is 4 or fewer people, or if you have specifically curated a team of very experienced people whose personalities are exactly correct.
In literally any other situation, an unstructured org is corrosive to domain expertise, weakens code ownership and responsibility and creates a byzantine, implicit power structure that breaks down the decision making power of the organization.
The fetishization of flat orgs was in response to the unwieldy bureaucracies or large corporations. However the problem with bureaucracy is not the hierarchy, but the lack of agency in the individual teams. This leaves teams dis-empowered and unable to act on their core competency, their direct knowledge of the company's product. Instead, development teams should be well organized with clearly delineated roles. Most importantly, development teams should not exist merely to do work, but also to make decisions and take responsibility for those decisions.
