I don't agree that you need to automate from the beginning. I launched a site where I did everything manually behind the scenes and never needed to automate; figuring out the automation code would have been the trickiest, hardest part of the development process, and I saved a lot of time by not doing it upfront. Even had I reached the point where I needed to write it, I would have had a much better idea of incoming data and desired outputs to write it far more accurately than stabs in the dark pre-launch.
The advice I was given from similar workshops with Steve Blank etc. is to do things by hand until you have to automate; when you reach the point when you have to automate to scale, it's a good problem to have.
I can understand having the problem where you can't agree on automation strategy; options range from outsourcing the manual work to fully implementing algorithms, and even those can wildly differ. Obviously it depends on your specific situation, but I don't think your example is an argument against "Wizard of Oz" launches per se, just an example that it isn't always gravy.