You're making the opposite point you think you are. How do you know that you observed an inability to code as opposed to interview performance anxiety?
I've been coding for 25 years, but have bombed my share of very simple white-boarding exercises because I panic and my brain absolutely stops working. If it's experience-based or even take home, I generally knock it out of the park.
White-board coding works for FAANG because they have 100,000 applicants at any given time and it doesn't matter if it has an exceptionally high false negative rate. It does not work so well for shops that are struggling to find candidates.