I think you missed the point of the GP: Venkatesh Rao has written so much posts around this idea that he's now positioned himself as an authority on the topic of workplace power dynamics, regardless of if what he wrote is actually accurate or not.
He is also quite fond of using poorly defined (in this context) words like "dialectical" and "illegibility" that makes the reader doubt whether he's actually full of shit or that he is actually so brilliant that the reader simply doesn't comprehend him.
I think the main point of his principle is roughly correct. Classic companies are started by sociopaths and an initial amount of losers. Then the clueless come in the middle of the pyramid. The clueless section expands as the company grows until the company implodes.
I do not agree with his idea of promotion of overachievers into middle management and many other things. Some of his points are self-contradictory.
There are many variations on the main principle like Pournelle's Iron Law of Bureaucracy:
He is also quite fond of using poorly defined (in this context) words like "dialectical" and "illegibility" that makes the reader doubt whether he's actually full of shit or that he is actually so brilliant that the reader simply doesn't comprehend him.