There is talent outside the valley and you can get it at a discount. I live in Berlin but I've worked with lots of Polish, Rumanian, Belarusian, Russian, etc. colleagues spread all over Europe. Good hard working people, with solid academic degrees, plenty of experience, up to date skill sets, etc. You can hire an entire team of them for the kind of money valley based teams spend on a single person. It doesn't even have to be a good one.
From what I've seen, there sure are a lot of not so great developers working in the valley. At least judging from the copycat designs, the clumsy UIs, chronic UX issues, etc. from typical startups I don't think that the grass is greener over there in any meaningful way. So, I think it is a myth that you get better than average people or products in SFO. Sure there are geniuses but the success/failure rates are not significantly different. There's simply more of both around. However, the failures are five times more expensive (ballpark, give or take, lets assume that for the sake of this argument).
That is only offset by the occasional unicorn; which due to the enormous amount of startups happens more often there as well. IMHO this is the main benefit the valley has. There are lots of unicorns creating lots of wealth which quite often gets reinvested locally. There's a lot of money flowing around there. Most of it gets wasted on the same BS that VCs are funding elsewhere. But then you get the occasional unicorn making up for that and the practice of those companies acquiring the expensive failures to funnel some of that back to investors.
Is a valley based team five times more expensive than a Eastern European team five times as good? I don't think so. I'd say it's quite easy to find people and teams elsewhere that are arguably just as good. Also, job hopping is a thing in the valley. Despite the insane salaries, the average tenure is quite short, especially at the bigger unicorns.
So, there's a bang for buck problem in the Valley and the smart VC money there is already encouraging startups there to work remotely or consider having remote developer teams. Relocating to the valley after you get funded stopped being a thing here in Europe. VCs are no longer asking or expecting that; that was a standard question a few years ago. What would be the point? Quintupling the burnrate is not a goal; you need a good excuse than vague beliefs/hopes. You basically pay five times what you pay in e.g. Eastern Europe and most of that goes directly to real-estate owners, the state of California (taxes are actually very high there, even compared to Europe), and all the other overpriced stuff that the Valley has to offer.