I don't think it's a symptom of hype in the Valley. (The high rents in general, sure. But not the hacker hostels.) As others mentioned, the whole point of being in the Valley in the first place is to be around other people doing similar things, because it's more fun that way.
But if you just step off a plane at SFO and walk around, you're not guaranteed to find people doing startups, especially if you don't know which coffee shops they frequent. Speaking from experience, staying at somewhere like Chez JJ means an instant connection to a community of smart and similarly-inclined people. It really is great for folks new to the Valley ("on the bottom rung"), and I think the article got at least that point correct.
But if you just step off a plane at SFO and walk around, you're not guaranteed to find people doing startups, especially if you don't know which coffee shops they frequent. Speaking from experience, staying at somewhere like Chez JJ means an instant connection to a community of smart and similarly-inclined people. It really is great for folks new to the Valley ("on the bottom rung"), and I think the article got at least that point correct.