You are absolutely correct. It's a numbers game and we're doing everything to tilt to our advantage. We don't use external recruiters for many reasons, but we do have an internal recruiter already. We are also working for the dev community through open source, sponsorships and events. Please check out http://github.hubspot.com/
I totally agree with a talented young engineer becoming senior quickly. This summer we have 12 interns/co-ops and we have hired several from co-ops into full time positions already.
We pay very competitively. For example, these past two years we have reviewed compensation twice a year in order to make sure we're paying what they're worth. We based our decisions on multiple salary surveys and our own offers based on new college graduates and competitors counter-offers.
Actually, our turnover is very low. We have a team of 53 engineers and over 40 are less than two years old in the company. Only 2 engineers have left in the past year pursuing different options. A few others hired in the past two years that left because of performance issues, but very small. I can tell you more if you are interested.