There are two unmentioned issues in regards to stock grants and hiring:

1) Information asymmetry or just plain symmetric lack of information in regards to stock grants.

2) The price of a home in a decent school district within a "reasonable" (< 1 hour each way, i.e., no more than 2 hours a day total) commute to any cluster of software companies in Bay Area (whether SOMA, Peninsula, or South Bay).

The two are closely related. When startups are competing for people against Google or any of the young public (or pre-IPO) technology companies, the issue at stake isn't salary (post series-A, startups may pay a slightly below market salary, but not an egregiously low one) but RSUs ("restricted stock units" or essentially outright stock grants: while these are treated as income for the purpose of taxation, there's also no strike price and AMT trap to worry about).

The reasons why these grants (which are generally very far from the "retire on a yacht category") matter is that their ball-park value is known, they're often refreshed as part of the performance review cycle (as opposed to fixed during offer negotiation time), and if you plan on staying in Bay Area and having kids, you're relying upon them to either afford a house in a decent school district and with a reasonable commute, or to afford private school tuition.

Changing grant tactics can help with information asymmetry problem (transparency about finances and valuation is nowadays the rule rather than exception in early stage companies), but they can't help with mutual lack of information: neither the founders nor the investors know with certainty a general ballpark figure of what the value of the company price will be at a liquidity event, or if there will be a liquidity event in the first place.

What this means is that unless housing problems in Bay Area are addressed, in addition to the already well discussed negative externalities, startups will have an increasingly harder time hiring engineers that haven't yet experienced a liquidity event or spent four or more years at bigger companies. They would love to join a start-up, but not at the cost of their (future or existing) children's education.

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Unrelated to the above points, this paragraph is also as important as it should be obvious:

"Finally, most founders are not willing to spend the time it takes to source engineering candidates and convince them to come interview. You can't outsource this to a recruiter until the company is fairly well-established--you have to do it yourself."

If I receive a message from an external recruiter, it's hard to tell whether they really reasonably believe there's a good match between my skills and interest and the company, or if they're just employing a shotgun approach. I usually disregard these messages, even when I may be open to a new opportunity. On the other hand, if I receive a message from a founder or a tech lead, I try to reply even if (as, e.g., now) I'm not interested in interviewing: at the very least, it's likely they did actually mean to approach me specifically (not just anyone who has "Hadoop" in their profile), and I've an obligation to let them know that I'm not available at the moment as not to string them along.

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Finally, to underscore something else said in the article, in general, best way to hire good people, is to work on something good people enjoy working on, whether it's a greater mission or a good technical challenge. If neither of the two is there, the most straight forward startup recruiting pitch -- "come work on something cool with other smart people" -- fails.