I think what Ms. Pao is doing may be genius.
The main problem with restrictions on new hire negotiation is that you're interfering with the bottom of the hiring funnel. You can overcome that, of course, with a strategy to increase your candidate pipeline beyond the restriction. Cutting your ability to hire in half is solved by doubling your reach.
Agree or disagree with Ms. Pao's choice to very publicly endure being on the losing end of sexual harassment civil suit, you cannot deny she has the media's attention more than you or your CEO does: anything she does related to gender is going to get picked up and broadcast right now.
So, take a step back for a moment, temporarily ignore your opinions about gender and society, and really look at what she's just done: she's framed hiring at Reddit - the thing most startups are bleeding for - as a gender issue, which in turn cranks up all these news outlets. What's the message? No new candidate at Reddit (not existing employees, mind you!) can negotiate their salaries.
Downside: people who love negotiation or are proud of their negotiating skills may be less inclined to apply. Upside: people (not just women - the policy itself applies to all people) who don't want to deal with the hassle of negotiating may perceive they'll be treated more fairly at Reddit than other companies, where better cold negotiating skills are more richly compensated.
You may have noticed there are many engineers - and this has nothing to do with gender - who are a bit, well, introverted, and for whom negotiating and interviewing in general is actually pretty stressful. The idea that they may be treated more fairly at Reddit, since they are going to be guaranteed the same deal as someone who is better at negotiating, even though the same quality of engineer, may be more appealing than you (as an excellent negotiator) appreciate.
Setting this policy at your own startup only makes sense if you have a free megaphone to tell all these non-negotiating (but, in my experience, often just as excellent) engineering candidates about your policy. If you don't have this, you wind up with the same pipeline of candidates you would have had otherwise, but limit your ability to hire them. Not good. Unlike you or your company's CEO, however, Ms. Pao does have a giant free megaphone: all she has to do is say the word gender. Literally anything she frames as a path to gender equality is going to end up in the press. Ok, some less than flattering things are going to be said about her (again), but she's pretty clearly demonstrated she has the stomach for that.
Honestly, thinking about it this way, I'm now jealous. If I could get this kind of coverage, I'd tell everyone we were not just eliminating negotiation, but blindly committing to paying in the top 20% of our investors' portfolio for equivalent positions.
I would definitely not do this, of course, if I were trying to hire sales people. Unlike the sales team, however, I really don't need the engineers to be all that aggressive or savvy negotiators, and, given the current overall market, I'm happy to pay for their engineering excellence, even if I could - due to my "superior" negotiating ability - land them for 10% less with a different policy.
And sure, I'd miss out on a few hotshot engineers who are also great negotiators and don't like the idea of the policy; but I'd make it back with all the others I reached through the media attention. Genius.