I don't think he missed the point. You should probably read all of this (which the Hole Hawg bit is an excerpt from) to a whole picture of this school of thought:
For the record, I'm not a recruiter (and was sad to see myself labeled as such). I've worked on the recruiting problem pretty extensively for Palantir, but I'm actually a software engineer. These days, my work tends towards writing about our technology and occasionally speaking in public but I'd hate to go down in history as a recruiter. (Not that there's anything wrong with recruiters).
And to add to the point above, Yelp ratings are not well-normalized across markets. The things that people care about in the 'burbs is different than in the city and places get voted up or down for odd reasons.
For example, Joya in Palo Alto is a pretty amazing restaurant but only gets 3.5 stars. The Cheesecake Factory (which is a pretty crappy chain) gets a 5. This is not really good data.
For example, Rangoon Ruby in Palo Alto is a pale imitation of Burma Superstar in San Francisco, a restaurant is openly models itself after.
Claiming that the best independent coffeeshop is in MV is really going out on a limb and ignoring the myriad of amazing coffee houses in SF - like Sightglass or Blue Bottle.
As someone who's lived in the city and in Sunnyvale and Palo Alto and Menlo Park, I pretty much agree with every that jwz has said and not much has changed.
It's true that there are some great places on the peninsula, but there's no critical mass. And often those places are in a strip mall and severely lacking in ambiance and atmosphere.
Have you considered that stable currency is a service performed by the government? Feel free to accumulate wealth, just don't use government backed currency.
It was much cooler to be jaded about the interview process last year.
But in all seriousness, I'm sure there are companies like the one you described and there are many that aren't that way. I'm certain that your blanket characterization of 'the interview process, at least in Silicon Valley' being broken is incorrect.
You don't need to come up with weirder and harder questions. You just want to give them something in a form that they haven't seen before. It makes them listen and think, which is what you're looking for.
I always look at an interview to be more like a code review than a unit test: it's not about getting the right answer, it's how you get there that tells me what kind of an engineer you are. In fact, if you get the answer too quickly or jump to it, even if I don't think you're cheating, I need to ask another question or make you explain yourself in depth so I can probe how you got there.
You'd be surprised at what people will do to game an interview. I've had people give me the correct answer to a question I didn't ask (but from our list of questions) - clearly having gotten from someone else who had interviewed earlier.
Note that algorithms interviews are just one part of a larger inventory that one takes of a candidates, one dimension. Take home and/or whiteboard coding can be a part of that process as well, but each has its downsides.
What we look for, in particular, is methods that have a very low false positive rate. In person algorithm interviews, where the point is not the 'right' answer but hearing about how someone thinks are in that category. You can't really fake it.
I think you're correct that for certain types of apps, this sort of knowledge is pretty useless.
However, once the number of things you're dealing with gets up to, say, the millions, algorithmic complexity can really bite you in the ass and no matter how much hardware you throw at it (rented or otherwise), if the work that a single node needs to do is unreasonably complex, your whole app will be slow for every user, even if you have enough capacity to handle many simultaneous users.
In the mobile space, you can think of algorithmic complexity being a proxy for battery life - if you can make it cheaper to compute, you do less overall work, and the battery lasts longer.