I got to work with one of the guys who was hired this way... ohh boy was he something. The most important lesson I got out of that was there are students in B-tier schools that easily are more capable than A-tier schools any day of the week -- I suspect the reason the founder of the company took this approach was that you'd get workers who're extremely capable, but would accept a lower salary than MIT grads are expected to (because, yes, at some point I asked the guy how much he was making and I remember my jaw just dropped on the floor at how little the amount he said was).