The lower boundary of the 99 percentile goes up as 1/sqrt(N) and approaches the average member intelligence, but never reaches that level. At the same time, the upper boundary of the 99 percentile goes down at the same speed. However the number of super smart members, with IQ higher than say 160, grows linearly.
I think there is some math behind that statement. The average IQ of a crowd remains the same when the crowd grows, but the variance of that IQ, or more precise, the standard deviation, is stddev(crowd) = stddev(person) / sqrt(N). This is the central limits theorem. Now, if we assume that the intelligence of a crowd equals the intelligence of its most stupid member, and translate the latter into the lower boundary of the 99 percentile, we'll indeed observe how this lower boundary goes up as sqrt(N).