Wow, this is bound to backfire. Naively you'd think that this would be a win-win-win situation for company, employee and referrer alike. But emotional monkey-brain psychology intervenes. Frankly the idea of a friend of mine getting that kind of scratch for referring me to a job would put a bad taste in my mouth and poison the friendship. For whatever reason, if he were already working there and the company had an internal referral program (as many companies do), I'd feel fine about the arrangement, maybe because I'd assume his motivation in that case would not be mercenary.

One good thing about this offer is that it's an attention grabber and signals that they're willing to pay a very large multiple of that $20,000 to the prospective employee as wages. But it also signals a certain level of desperation and that they don't have enough hot shot, well connected software engineers on staff to attract others in adequate numbers, with all that implies about culture.

Or maybe it signals they're too stingy to pay a good professional recruiter's fee. Or that they despise that peculiar semi-sentient, parasitic life form as much as I do. :)