If WFH is a good deal for both sides (in a particular industry), I would expect new entrants to use it as a competitive advantage against existing businesses (likely hiring away talented staff). I agree that web-tech business formation seems depressed, but WFH should eventually win the day if it is all that advocates say.

I expect WFH will expect, while remaining relatively niche, much like worker co-operatives.

Small companies use it as competitive advantage against existing businesses.

The market is fully captured and you do not win by having better productivity or by being able to attract better people. You win by attracting a lot of capital and by being able to eventually create quasi monopoly. You think hot AI companies are somehow productive? They are in massive looses. Or that all those corporations have super productive workforce? Anyone who worked there knows they dont.

The econ 101 thought experiments are just that - thought experiments about ideal world. They have much less to do with how actual companies operate.