I've had great luck working for awesome friends of mine and awesome friends/acquaintances/ex-coworkers of their friends. In a large software organization, so much comes down to not just the company and the problems but the exact team you're on that removing a lot of that uncertainty and working on a team with/for people close in your social graph is great.
But strongly biasing your hiring search toward people close in the social graph is a terrible idea. First of all, you're artificially limiting the pool of "ideal candidates" dramatically. Second of all, if most people you hire are friends of friends, you're likely not to build a very diverse company. Your culture will get skewed toward things that you and your friends care about and are interested in, and pretty soon there will be large groups of people who don't feel that they especially fit in at your company because eg. they're not male, they have kids, they don't drink, they don't watch sports, they read philosophy, they don't find working >40 hours/week productive or enjoyable.
This is a problem in many Silicon Valley startups that leads me, despite being demographically indistinguishable from what these companies overindex on (young, male, white, straight, elite education), not to want to work at most Valley startups. I deeply admire that Thomas cares about making a company that avoids these problems, which is a large reason why I'm working for Matasano this summer instead of one of the many Valley companies that would feed me three meals a day and in many cases would have a better-known brand.