"I agree with you and generally this is a great way for a startup to save money as well because new grads are cheap."

I'd argue the opposite case — if it's true that a good programmer is at least 5-10x more productive than an average programmer[1], you'd actually save money by paying the experienced programmer significantly more when compared to hiring a team of beginning or average programmers.

[1]: http://en.wikipedia.org/wiki/The_Mythical_Man-Month#The_surg...