My last post (the parent) was about my experiences. This one is more opinionated, and depending on your own experiences and views it may come off a bit objectionable.
I'm convinced where people get it backwards is in thinking long hours produce a corresponding increase in output. In my experience, long hours are a symptom, not a cause.
They can be a symptom of passion and eagerness. I've seen folks so excited and proud of what they're creating that they drive themselves to put in as much time as they can until it's done. It's like they're headed to Disneyland and can't get there fast enough, and it's contagious. When your whole team is infected with a fervent goal, there's this huge amplifying effect. Members stimulate each other to pile on, through inspiration ("Damn we're achieving something great, I want to be a part of this!") or simple enablement ("Ouch, I just realized I'm blocked! But wait, the guy I need to do the thing is available"). The dynamic isn't uncommon in startups with strong team buy-in to the mission. Even in a more traditional corporate setting, managers may strategically place an employee with relentless work ethic in a particular cubicle in an effort to breed their performance (although the two don't necessarily equate!)
Long hours in a team setting can also be the result of camaraderie or peer pressure ("Jeez everyone else around me is slugging it out tonight, maybe I ought to as well").
Or a symptom of guilt ("I should have gotten this done by now").
Whether or not such reasons are ethical or healthy, more time behind the hammer can make the walls go up faster. Sure, if you're building enough of them, you reach a point where it makes more sense to invest in more hammers and a smarter method of wall-building (or go zen and figure out how to build your house with less walls or none at all). But many startups get where they need to go before reaching that scale.
It's plausible the CEO embellished that statement to weed out candidates he doesn't think will fit into the culture of his workplace. Declining to work above-normal hours doesn't mean you're uncommitted. But if the whole team is doing it, there's a risk you'll be unhappy there (sounds like this is the case and his tactic worked), create optics of inequity ("Why am I working so long when that new guy isn't?") or - heaven forbid - spread your radical propaganda of sanity and reasonableness to the rest of his crew.
Some members of a team have a natural proclivity to work longer than their peers (I've seen this in volunteer environments), while others simply don't need as long to accomplish a given set of tasks (often this can be the same person at different stages in their career). It sure sounds like he may be exploiting his workforce, but it's difficult to make more than a superficial judgement without knowing the employees and their values, the lifestyle they seek, their compensation, equity stake, time off, etc. I've seen cases where a person had to be reigned down to 60 hours a week for their own good.
On the other hand, long hours can also be a symptom of despair from severe mismanagement. All too often they tend to appear when a venture slips into dire straights after its participants have exhausted other means to deal with problems (some popular means being money, which has run out; or denial, which crashed headlong into reality). Like a frantic crew striving to paddle faster on a leaking boat, everyone gets stretched thin in desperate measures to salvage unrealistic deadlines, keep customers from leaving, or hit targets that avoid a loss of VC backing. Sometimes they'll stay afloat long enough to patch the boat and make landfall, other times they'll sink.
When your team feels overworked, overwhelmed and burnt out, you plunge through diminishing returns and into negative ones. You make more mistakes, the walls go up crooked and in the end you realize you put them in entirely the wrong place and could have done it properly in half the time if you weren't all walking zombies. When this happens, hindsight makes it obvious "paddle harder" was the wrong approach. I'm really interested in the research on this topic, and another post here suggests there's data behind the ~40 hours a week much of the world has standardized on.
A good leader knows how to inspire their team to drive hard, and senses when to ride the brakes to keep them from burning out.
I used to joke that Google hired developers who crave coding, then removed all the little barriers that kept them from doing it (Cooking meals? We'll do that for you. Body aches? Hit up a massage to get you back in action. Wasting time doing laundry? Taken care of. Quit driving, here's a bus with WiFi = another hour a day of productivity. No time to come down to the cafeteria today? No problem, we'll sprinkle snacks in walking distance. Our bidet toilets will even take care of them on the other end). What at first glance seems like working at a luxury spa, could be viewed through another lens as a carefully engineered mecca for codeaholics. (Kidding aside, I hear they do promote fantastic work-life balance)
When it comes to building new things, I've found I prefer to work with a small group of extremely high-caliber and driven individuals who I need to encourage not to work, than with a clock-watching, bureaucratic army of muggles. I might take a different approach if I were optimizing an established endeavor for sustainable longevity and efficiency.
My partner spent a decade in a completely opposite lifestyle, working for government, typically (but not always) 9-5, regular yearly vacations, etc. while I was engulfed in my work. It's fun to compare war stories (she has hers too!).