It's really interesting to note that he thinks the biggest benefit from rails for 37 Signals has been hiring contributors. It makes a lot of sense and is something to keep in mind. Though obviously not easy, any company that can open source part of their product and get people excited about it will garner an invaluable recruitment pool.
It's even applicable to YC; open sourcing Arc would likely be a very good pipeline for future YC founders (my guess is better than news.yc).