Economically, if the Amsterdam developer is providing the same value as the bay area developer - you should probably pay the them the same. While it's true that the local market for Amsterdam developers is set lower, you're building a global company and competing with other global companies. Sure you can get a discount now on Amsterdam developers but eventually a competitor will offer them something closer to their value or they will leave to do their own thing.
I think we'll see the strongest companies pay location-agnostic prices for talent. Ultimately, it's about value delivered. If I'm Gitlab with a likely large encumbered ruby codebase and I want to sell to large enterprises that care about performance and reliability, I'm probably gonna pay this person more than 120k EUR a year. Most engineers who care about performance, type-safety, and reliability have no interest in Ruby so the market rate of that skillset is definitely higher. Is it bay-area 500k/year high? I dunno, but I imagine that the strongest companies who want top-talent will probably need to tie their comp to value delivered rather than location or they'll lose their talent to the companies that do.
If you pay people according to value you get happy value-generating employees. If you pay people the minimum of what you can get them for- you get the minimum - unhappy, less productive employees that eventually leave your company.
There is no free lunch. Just because they aren't the type of person to get counteroffers or move to the bay area doesn't mean they don't recognize their value or won't feel taken advantage of.
I think we'll see the strongest companies pay location-agnostic prices for talent. Ultimately, it's about value delivered. If I'm Gitlab with a likely large encumbered ruby codebase and I want to sell to large enterprises that care about performance and reliability, I'm probably gonna pay this person more than 120k EUR a year. Most engineers who care about performance, type-safety, and reliability have no interest in Ruby so the market rate of that skillset is definitely higher. Is it bay-area 500k/year high? I dunno, but I imagine that the strongest companies who want top-talent will probably need to tie their comp to value delivered rather than location or they'll lose their talent to the companies that do.