And as a reader who's worked at agencies before, he's right.
The only part he's missing is that most agency owners grind on with this because of personal (psychological) limitations, and thereby get stuck. They get mentally capped out, so they can't move forward, and they form the core of the business, so they can't sell out. All they can do it stay locked in grit-your-teeth mode, until age and/or health fixes the situation for them despite their will.
Agencies cap out very much like this, because of their fundamental scalability issues, but that's also why people enter that market. Easier to enter, because no one person can dominate it like a Google or Facebook.
The number they cap out at is very tied at the intelligence, work ethic, etc, of the founder, but it always caps out in that asymptotic graph kind of way.
The only way I've seen them successfully break out is to know this effect, and to use the cashflow to cover a product company offshoot that gets traction - basically a self-funded startup. But it's a rare case, because they we're attracted to the immediate and certain money lure of agency, vs the valley of death gamble of product.