The reasons given by the founders to only allow local workers are:
* we want everybody in the room to build the culture and for people to learn how to work together
* whiteboard sessions/intense discussions are difficult to do remotely
* for lead positions: face time is important to properly lead the team
I feel like it's a disastrous policy to find candidates. I'm in MA and we compete with a lot of companies over a rather small pool of candidates. The worse is that the "local only" comes with a "please, go easy on the WFH" policy. Recruiters literally laugh at us, and tell us that we will never be able to compete if we don't allow flexible hours/locations.
We did manager to hire a couple developers, but we had to lower our standards (and one could question them, but it's not really the point here).
Interestingly, after a while the "limit the WFH" policy was relaxed. And now people are still local but can take a couple days to stay home every week. I think it's just because the team delivered, worked hard and built trust. It's just sad that it took a long time, and that still has not changed the no full-remote policy.
I think the candidate would have to be extraordinary and, more important, fill a position that had been open for a long time to allow remote workers. Enough time to convince upper management that we had to consider a wider pool or we would never find anybody.