Actually that point isn't necessarily obvious to me. Maybe we can create an AI which is 10% smarter than ourselves, but maybe a 10% smarter AI still isn't smart enough to create an AI 10% smarter than itself. Maybe building a 121% AI that smart is such a hard task that even our 110% AI can't manage it -- maybe the best it can do is a 115% AI.
Analogy: Out of Lego, I could build a robot arm that's capable of building a slightly larger robot arm out of Lego. But I can't just keep on doing this 'til I have a robot arm the size of the Burj Dubai, because there are limits to how big a Lego-based robot arm can be before it collapses under its own weight.
I'm not saying that AIs are like this, just that they might be.