> prevent startups from hiring in SF and NYC

I think most are willing to make this tremendous sacrifice.

You can exclusively hire the SF and NYC engineers into levels that aren't offered to applicants from Bangalore and Lisbon and still satisfy "One Job, One Pay".

Why not? It seems like your claim is based on one of two assumptions, neither of which I find particularly compelling:

a) any startup hiring in SF and NYC will go bankrupt

b) the devs you hire outside of SF and NYC for the same HCoL salaries are not worth the pay, and over time will cause business failure

or is there another option?

Nonsense. This is FUD in my estimation. I've work for remote companies who don't pay regionally since 2010. None of them have gone out of business, none of them have been bankrupted by paying people the market rate.