This is the strategy that we've followed at WooThemes with regards to growing our team organically.
Great read with some great pointers this. Having burnt by the odd outsourced design / development relationship in the past, I can relate to a lot of the advice that Derek has given. I specifically like & agree with #7: You’re going to hire at least two different people
A nice read if you’re creating a new startup at the moment or planning to do so in the near future.