I am currently reading a book by Joel Spolsky "Smart and Gets Things Done"
It's a good book which describes how to cultivate and attract tech talent into your organization.
In the book, Spolsky makes an interesting analogy using Akira Kurosawa's classic "Seven Samurai" (1954). In the movie a poor village is under attack by bandits, so it recruits seven unemployed samurai to help the village defend themselves. The village is poor and can barely afford to feed the samurai, let alone pay them. Yet the samurai still agree to come and defend the village out of good intent. Spolsky comparing hiring developers to hiring the seven samurai.
Many startups can't afford to pay high salaries, so they must captivate the hearts of developers who join their startups with their idea.
Ultimately, people who love what they work on are going to be productive, and in the end it's not about the amount of money you pay them. Lots of my friends on Wall Street rack up good bonuses at the end of the year, but it doesn't compensate them for high blood pressure, lack of life-balance, and gray hair.