The downside of hiring only from "trusted networks" is that you are building an echo chamber.
If you care about diversity (as most companies like TrendCo claim to) then hiring only referrals from your trusted network is likely to lead to entire teams of people that ARE JUST LIKE EACHOTHER. When I talk about diversity I refer more to diversity in viewpoints and experiences, than I do to race, gender orientation, sex, etc.. Whether we like it or not, our friends and networks are made up of people who think and work exactly like we do, that is just how humans are.
So hiring only from networks like that can lead to a huge disservice to the company, especially a growing startup company that usually tends to already suffer with the "diversity of thoughts" problem.
In addition, you are back to the original problem of potentially missing on valuable candidates because you narrowed your search to only people inside of your network. Who is to say that your network is best engineers in the world? By narrowing the search within the network you are missing out on likely better candidates that might come from a normal resume search.
From a pure statistical perspective, lets say you get 300 resumes the first week after posting a job (that's about what I would get depending on the jobs I was posting when I was last hiring). To make your life easy you cut it off after only a week. Well you have 300 potential candidates here that we can assume have self-qualified themselves based on your amazing job posting you wrote. So let's assume at least 80% of them are qualified for the job. That's 240 qualified candidates of which you need to choose 1. How many people are realistically in your network that are available for new jobs when you have an opening? Most of the time I was getting 2-3 at most for any given job coming in as referrals. Compare that to the 240 other candidates you had and you are MORE LIKELY STATISTICALLY speaking to find a better candidate out of the resume pool than the referral pool.It contains a large sample size, simple as that.
Hiring only from trusted networks is really a cop-out for the hiring manager. It makes their job easier because they can blindly narrow down the search to a handful of people without truly inspecting other talent out there. I would argue its more irresponsible than what the original comment suggested.
Plus in my experience I have hired some great people that came in as referrals. But if I also look at my top 5 worst hires I have ever made, all of them have been referral candidates. The truth is that most of the time the friend that referred them will prep them for the interview to coast through the interview. Telling them not to mention certain things and focus on things that our company is looking for in new hires. It creates an extremely biased job hiring process.
Tl;dr - Don't pat yourself on the back for only hiring from your network. You are likely missing out on the best talent by doing so, and creating an echo chamber in the process. Plus you stunt the future growth of your own personal network.