It's adverse selection: the type of people who would use this service are probably not the people you want working for your startup. The really successful people would be picked off in other ways (not actively recruiting) so you are left with the B and C players (which ironically are a dime a dozen)
Not entirely true. Really good engineers may not be good at getting what they are worth and be willing to see what they can get. Finding a job for a higher salary is a lot of work, finding the maximum salary (not that that should be your goal) is very difficult, negotiating is a huge challenge while auctions usually increase prices more easily.
Sure, an excellent engineer employed at $200K with a vast network is unlikely to send his resume to Craigslist ads, but they may use a simple way to find out whether they could get $300K and a $500K signing bonus.
They have a hard problem. Looking for a job makes you less attractive, and there are a lot of people on the market who aren't qualified at all (non-Fizzbuzzers). They want to have only desirable applicants, which means they need to control quality (otherwise they'll get spammed) and the intention behind the exclusivity is rate-limiting, which makes a lot of sense, but I think they douched it up by focusing on the wrong things (school and company affiliation). That's especially bad now with all the MBA carpetbaggers in tech. Focusing on degrees and prestigious companies makes you (at least seem like) the wrong kind of people.
I would have made it Silicon Valley only: either you live there, or you'll move there. (I'm in New York, so it might seem unusual that I'm suggesting excluding my city, but you need to limit inflow and that's the best way to do it, because job markets are pretty local. You add cities once you have traction and are looking to scale.)
Then I would have partnered with a company like Kaggle in order to get access to people who can actually code. I've met a lot of mediocrities with prestigious resumes. One of the biggest problems with hiring is the number of people who have established a great connections <-> great jobs loop but don't know anything.
"but I think they douched it up by focusing on the wrong things (school and company affiliation). "
They focused on the right thing. The target audience isn't the startup that cares about getting the best people, just the ones with the best pedigrees. This would be perfect in finance.
