This attitude of "you really have to want to work here or you ought to leave" justifies a lot of insanity. I've heard it from companies who make potential employees jump through ridiculous hoops to even get a chance at a job. Here's reality for people who suffer from this delusion: most people don't give a fuck and are just looking for a job. They're applying to dozens or hundreds of jobs (yes, even in software), and expecting them to know everything there is to know about your company just to apply (like providing a detailed cover letter) is downright insane. This is how companies with such an attitude problem attract "yes-people," suckups and other undesirables and miss out on real talent that isn't going to stand on its head just to get a chance at an interview. Likewise, as the article points out, this toxic attitude is just as bad at retaining employees as it is at getting them in the first place. What I'd like to see is the second part of this story. How these people then hired another 50 software engineers with actual talent in the bay area. Most companies I speak to have trouble finding one or two, let alone 50. And all because of an incredibly naive and stupid attitude of the company's execs. This is indeed a case where the founders should have been replaced with proper executives, though I'm not sure 'proper' executives would have made a better decision.
As an aside, one shortcut to weeding out shitty companies is to simply filter out companies that say shit like, "we are on a mission to change the world." That's a guaranteed bad time.