True but the biggest problem I experience is the supply for good talent. In some cities it is hard to find good programmers. Not every city is desired to be lived in so it has to be a balance.
In places like SF, you have a massive pool of talent, but demand and wages/perks are through the roof so finding talent ends up being a negative ratio.
That said, your first hires should be people who believe in your product, no matter where the pool lies