Hiring seems to be the preferred use of seed funds (by investors and founders), whereas I'd prefer a focus on customer acquisition.
The problem is you don't yet have product/market fit, and until you do, you don't really know what to build. And that should be the focus of the founders -- to find the special fit that will make your company take off. When product vision is truly clear, then it makes sense to execute it, and hiring follows.
In the mean time, if you need some extra help, get some contractors to test out specific things. You may end up hiring these people eventually and you'll know more about them when you do.
I'm not sure I'd carry the argument quite as far as Gabriel does, but I completely agree with his central premise. When I talk with early-stage companies, often the discussion starts with them asking me about Hiring a CTO for Your Startup, or Finding a Technical Cofounder for Your Startup or How to Find Programmers for Your Startup. In other words, they come in asking for help with sourcing and hiring. These companies are very early-stage and definitely have not shown product/market fit. Far from it.
In many cases, during my Free Startup CTO Consulting Session with them, we discuss where they are in in the process. They are very early. They need to determine product/market fit. They need to conserve cash.
The startup founder is definitely not ready to hire a CTO. And in most cases they are not ready to hire developers either.
They most often really just need either a Part-Time CTO or Technology Advisor, and then some combination of hiring and/or outsourcing (on-shore or off-shore). The Part-Time CTO or Technology Advisor will be able to help make that determination.
Great post Gabriel!