They claim they want a "geographically diverse team", but without saying what benefit that brings them, that doesn't really explain anything.
Hiring is hard. Sure there may be a theoretical "better hire" outside of the Bay Area, but if they have someone in front of them who seems like they would do a great job and wants to work for them, it behooves them to hire that person now, even if it costs more. The cost of not hiring them is probably more, in lost time and productivity.
Maybe as they get bigger and each individual role becomes less critical, they can start to focus their recruiting on areas outside of SF. But right now, given that the founders are in SF, it's probably a lot easier to recruit people here.
It is the same with factory workers, ideally you should pay them all the same and as much as you can. But when you start doing it all kinds of problems pop up like it is not sustainable because people want more, and factory does not earn as much. Then they strike and factory goes bankrupt, no more work.
If you will get concentration of people from one locale it is big risk for remote company. If company at some point will have to pull out from that locale because politics/taxes change for instance that is huge risk for those employees.
Social justice is not as easy as "give people because they deserve".
1. This is meaningless.
2. This is FAR more a factor of lifestyle choices than CoL. I've lived in extremely high and extremely low CoL places and there is not a big difference. I have a $1500 mortgage instead of a $1700 lease. Maybe apples are 20c cheaper a pound?
3. "It's better if we pay you less, really!" PS Other remote employers pay significantly more than you.
4. Pay people competitively for the role instead.
5. Pay people competitively for the role instead.