Not necessarily true. People better than you might want to be a part of the company and the problems you are solving more than they care whether their "boss" is more skilled than them.

Also, depending on the role, it might be different skillsets. Perhaps you are a better manager, but they are a better coder. That's often a good fit.

However it does run the risk of hiring ambitious people who expect to grow, and if they feel you prevent them from doing so, and they bring more to the table, it might turn the relationship sour.