In Israel there is an HR as a service company for early stage startups, that succeeds in bring really good talent. They choose startups wisely, their employees actually work in that startup shoulder to shoulder with the developers (especially to avoid backward linkedin interaction) and they recommend good candidates that had issues in/with one company to try and fit in another. This makes everyone happy. They also have a good name so they have connections with good head hunters, friends of friends, manager's linkedin profile access.
Their main problem is that their hr specialist take a long time to train, and since stationed in good startups they might want to become a FullTime employee themselves, instead of switching to a new startup as the existing one grows too big.
I've been thinking of starting something similar here in the states (recruiting as a service), but there's always one problem: small companies don't trust anything labeled 'recruiting' or 'hr' to gauge technical talent.
If I can come up with a reliable, repeatable system for identifying good developers, I still have to convince other companies to pay for it. The skepticism I get from companies is off the charts.
Do you know how the "HR as a service" company gets around that? Maybe that's why they embed their employees in the startup (face time generates trust)? I don't see them lasting long, though, for the exact reason you state: they're setting themselves up for high training costs and high turnover.
I don't know how they bootstrapped, but startups in Israel have repeatably same problems. Good technology, not so good business leadership, and zero hr skills. It's a known issue, that founders seek help with the minute they start interviewing people and getting frustrated from the pipeline, or the candidate reactions. This company (called 'added value') is unique since it provides a precise solution to that stage in a startups life and they phase out when you get to a certain size, helping the startup hire full time hr. They deliver results, and word travels fast.
Their main problem is that their hr specialist take a long time to train, and since stationed in good startups they might want to become a FullTime employee themselves, instead of switching to a new startup as the existing one grows too big.