>I wonder why these bright abd capable people didn't join a company that actually pays reasonably.

Sounds like they do when they get the chance. I've worked for a company that didn't have quite as crazy a hiring process but they had the same basic profile - very good at hiring for potential in juniors, but underpaid for the ability they wanted. As a result they really struggle to hire seniors and are often a stepping stone to a better paid position. They do manage to keep some people until retirement, though (a very bimodal distribution - generally either brilliant but don't care to work anywhere else, or utterly useless and can't get a job anywhere else)