Does this conflict with the mantra, 'Hire people that are smarter than you.'?
Conversely, you've probably encountered highly intelligent people that have the people skills of a bug.
No one (ok... almost no one) has no management nor coding skill, rather each of us has a mix of the two. The great organizations I've worked in had extremely smart people in management and in development, but the type of brilliance was different.
So yes, hire someone smarter than yourself.
But software development specially in small teams doesn't work that way. Many a times, junior programmers require direction and even help in completing their tasks. So it comes down to two problems (three, third one later)
1. Either you give someone sub-standard work to maintain that you be able to help them. This will lead to demotivation eventually
2. You accept you are not in position to help them. This generally leads to friction and a bad boss will try to hide incompetence by architecture discussions, meetings etc
Smartness is subjective. Which leads to the third problem. How can you assess skills of someone better than you? You can only go as far as grilling a candidate to your own competence. So a B, C player will only be hiring other B, C players and that will soon degenerate the organization.
A leader is spending a fraction of the time hands on that a programmer is. Given the developments in technology and the additional time the developers are getting with it, if they're not better than their leader in a few years, you've got the wrong programmers.
Sounds like your answer is: When there are items that smart people want to outsource, they often go work for people stupider than them rather than hire people to take care of it.
Do I have that right?
No, I am looking at the logical consequence of "hire people smarter than yourself". If A is smarter than B, then B is less smart than A.
Therefore: "hire people smarter than yourself" implies hiring people who are willing to work for someone dumber.
Your boss can be smarter than you at his job, and successfully hire you, smarter than he is at your job. That's an odd way to word it, but the fact remains -- there are generally different skillsets and competencies involved, and you are looking to build or be a part of a team with complementary talents.