No, nepotism is covering someone who's _failing_ at their duties, yet retaining them due to familial connections.
Otherwise, what are you really mitigating by refusing to hire your CTO's nephew? If he's a strong candidate, it's not pathological and calling it nepotism is pointless at best. Otherwise if CTO's nephew turns out to be a weak candidate and is let go then again, it's completely normal. If CTO's nephew is a bad hire, yet he's retained, then it's nepotism.
(is kin) -> (insider knowledge that they're better than expected) -> (preferred for job)
Specifically,
(insider knowledge that they're better than expected) -> (preferred for job)
would make complete sense and would not be looked down upon. The source of that knowledge is problematic on a societal scale, but not on an individual level.
Person A and B are equally great for the role but cannot do a triple summersault to land on a beam, so neither can get past the interview stage
But… A’s uncle who went to Harvard with a high-up says “that boy is good” so they hire him on that. B posts on HN about getting no feedback and submitting their CV to 100 firms.
Nepotism has happened.
Later A may/may not succeed, turns out he does in this N=1 case.
This debate about definition is sort of irrelevant to the broader question. Should knowledge that someone is good be ignored if the knowledge was gained through prior personal knowledge of a candidate? Even if that was possible, it would seem to me an absurd a route to take. Surely the better question is how those without prior connections can be allowed to sufficiently demonstrate their competence.
Otherwise, what are you really mitigating by refusing to hire your CTO's nephew? If he's a strong candidate, it's not pathological and calling it nepotism is pointless at best. Otherwise if CTO's nephew turns out to be a weak candidate and is let go then again, it's completely normal. If CTO's nephew is a bad hire, yet he's retained, then it's nepotism.