That's just how Thomas at Cloudthread.io run his process, he used real paid work for his final hiring decision. It's not the only way. We personally (Algora.io founders) jumped straight into paid work without prior interviews.
We shared a hiring bounty with a dozen applicants purely based on their resumes, never spoke with anyone on the phone, received 5 PRs, awarded & hired 3 of them.
If you're only paying the people you hire, that's not paying people for their time.
I mean sorry, but if you did a good job, we're going to make you an offer such that you won't need to quibble about $500. The entire difficult part is what you're asking from people you don't hire!
We clarified it in our bounty issue that only the best-winning submissions would get the bounty. Other folks have chosen to award all PR submissions regardless of hiring outcome. The format is up to the company hiring.
You're making a great point! It's exactly about what we ask from people who don't get hired.
I think real-world coding, getting reviewed by the CTO / hiring manager and getting compensated beats standardized coding tests & imaginary take-home assignments any time of the day.
I mean you do you, but it's a total farce to call this paying people for their time. You're paying people who win your little contest, which is what hiring already is before your startup tries to insert itself as a middleman.