It's more like: devs tell him, "yes, super excited to work in a startup, salary is terrific, challenge accepted."
truth: "oh, it's 5pm, lets go home. we haven't had the time to push production code to fix that bug, but we can do it tomorrow."
it is easy to say that someone is a bad leader/bad recruiter, but the fact of the matter is that it is a common cultural issue (as per other comments in this thread). Hence, why did it work in Poland and not Spain? Many good engineers at large corporates in Spain don't make that money, and yet for less one can get an equal service in Poland.
Clearly "at least you have a job" was not an approach to motivate hires, they were let go.
Poland has almost 1/3 the GDP of Spain; of course his money was more effective there. Did he bring them to Spain? Last time I interviewed a Polish developer, salary expectations including relocation to Spain were roughly 2/3 from a pool of candidates decidedly more expert than their Spanish counterparts.
That's one of the big challenges Spain faces in the next few years: reducing the cost of living without destroying the standards of life, so it can become competitive again while keeping a reasonable amount of experts and highly skilled workers (who are now fleeing the country in droves).
Don't get me wrong on the hiring issue, I think they are both parts at fault. The irony in this whole situation is that you hear from Spaniards (primarily those called "indignados") complaining about €1k/month salaries, shitty jobs, etc. and my friends stumbles into a situation where his employees have above avg working conditions (€2,700/month, with private health insurance and equity"!") and there is no reciprocity in specific working situations (he was definitely not asking 80hr/week in perpetuity, he was just asking to ship on time to meet deadlines, if that means working leaner, or working more hours that is up to each individual, just get it done).
I know where you are coming from but unlike people here on HN seem to think; the whole world is not Silicon Valley (and I know at least one person in Silicon Valley crunching 11+ hours/day for equity in a startup actually); the amounts paid to programmers there are not really examples for the rest of the world. If you want that just move there and pray the stories are true; there is no bubble.
One of my best friends in the Netherlands has been working for around E40k gross as a top dev for 15 years; he doesn't care about money, doesn't ask for raises. The company still looks like a startup, but is making enough to pay salaries every month for 15 years. He doesn't mind crunching outside work time and often does.
Besides the question if it is 'smart' or not to do so, I don't know a lot of people who worry about these kind of things much. They just work and have fun doing it and the moment they don't like it anymore, they switch.
Anyway, happy it worked out for your friend. Yay for outsourcing!