I don't think that necessarily true. I am friends with a couple of my direct reports, but we have a distinction between work relationship and personal. When we are at work it is business, they understand my job duties and I am clear with my requirements as a manager. I have even had to fire a work friend before and we are still real life friends. I think the main distinction is to set boundaries from the get go. Work is work, personal is personal.

Overall, however I would say that my personal relationship with my reports has led to phenomenal gains on both sides. On the personal side its always great to have people who understand your job and can relate. On the business side it brings a touch of humanity so that you're not just a rote machine making decisions, (contrary to some people's belief I see this as better). I think a lot of manager believe they can't make exceptions to rules for any reason, but I find that workers are far more productive and loyal to the company when they are treated with compassion and understanding.

This really gravely misunderstands how teams are formed in a lot of growing companies.

5 new engineers start fresh out of college. They work directly under some VP of engineering. They become friends, as young people of like interests who work together every day are wont to do.

The company grows! Now you need to organize into an actual team. So someone becomes a team lead, and others stay ICs.

Do they now divorce themselves of friendship, since one is a manager and the others are not? No, that's stupid. They are friends where one is a manager.

Source: myself, and hundreds of thousands of other people who have been friends with their manager.

Our careers are longer games than a single job. We're not robots and relationships in the industry that are not purely self-interested are important. "Friend" is always going to change with the context, but it's worth having a personal side to the relationship.

Sounds like bad advice to me. My manager is my friend and is generally a strong advocate/influence on my success. If forced to make a decision that favors the company over me, I don't see any need to consider that a betrayal or a forfeiture of friendship. To put it at an extreme, I don't require unbridled nepotism to be happy with a manager's treatment of me.

yes. you are absolutely correct