Earlier quoted context omitted.
Interesting fact - valve no longer works this way because it didn't work.
I've always been curious about claims that such an approach inevitably doesn't work. I feel like my intuition tells me it could with the right people and variation on the concept. But it's probably difficult. Even the best managers I've seen usually have blind spots on how the team is running.
Because of that such company will either stay small (probably leaving ambitious people with unfulfilled ambitions) or change along the way, because you simply will not find enough people to make it grow.