Notice it doesn't say anything about people staying, just about people coming. Of course that if no one stays there is no ecosystem, but this is a work in progress. By attracting nerds, they got at least one part right (http://www.paulgraham.com/siliconvalley.html).
The chicken/egg problem is that we can't find follow-on investment here, so we leave. But if we leave, no VC will want to be here to make follow-on investments. What should we do?