It's not just a time cost. The graph near the top of Jeff's article shows "Ran Out of Cash" as the #2 cause of startup failures, ahead of anything else hiring-related. I say anything else because hiring the best means paying for the best. If you hire nobody else, then salary costs rise. Attrition probably does too, because the best are often among the first to jump elsewhere.
Every startup needs a few of the best. You should definitely seek out and pay for those few. After that, even a startup has jobs that don't require the best. Hire for potential, attitude, chemistry. Hire for special knowledge when you have to (though you should try to avoid it). But don't demand that every hire be among the proven elite.
You could argue that the best pay for themselves, and that running out of a cash could come from hiring bad people.
The absolutely best employees I've seen haven't been frequent job hoppers. At most it's every 3-5 years. I'm thinking of an unscientific sample size of 5 or 6 people who have had sustained outstanding technical performance of 10-25 years. Companies don't let people like them go. And they tend to be loyal to the mission if treated fairly.
Now a company with $1mm of seed money that's supposed to last 12-18 months can't afford to hire 5 people like that. There's not enough cash or equity to go around.
Every startup needs a few of the best. You should definitely seek out and pay for those few. After that, even a startup has jobs that don't require the best. Hire for potential, attitude, chemistry. Hire for special knowledge when you have to (though you should try to avoid it). But don't demand that every hire be among the proven elite.