It's not so much a theory as it is a colorful way of explaining basic entrepreneurial accounting.
He's talking about the difference between paying yourself and not, in a round about way of getting to this concept: not paying yourself a sustainable wage leaves nothing for investors (even if the "investor" is just you.)
If you have five separate entities that combine to pay you a salary, you win. Any extra money can be used to grow one or more of those businesses. ..if they are all tied together in ownership (for example, they are all owned by one person).
If those 5 entities are not tied together in some way, then no, they are not sustainably profitable on their own. That is, each entity does not throw off enough cash so that there is some left over for reinvestment unless you combine them all together.
