That's pretty simple but it doesn't explain how or why low quality startups will get weeded out. It explains why there will be fewer startups but it says nothing about their quality.
I think you're defining quality of startup to be "has known good unit economics" and that's certainly one determinant of quality, but part of why investors have been throwing money at Adam Neumann and others is that it's not the only way that a startup can become a huge success.
The thing about Facebook is they were widely profitable and quickly growing quite early on if I recall correctly, so not sure that's a great example, but I get what you're saying anyway.