I've hired 100+ engineers in my career. The ones with side projects are the best engineers. That said, sure I've had to fire some who don't perform.

Pretty common question to ask from hiring managers. It shows passion. Passion is a way better predictor of your work quality and commitment than asking ICPC whiteboard questions.

Side projects prove the passion, I certainly agree. Only, I can't get my head around if employee decides to start dreaming his/her side project taking over the current job. If odds are close and side project has good traction, maybe it's not ethical to work in fulltime before understanding it either.

It's not ethical to take a job you think you might leave at some point in the future? lol

Isn't fulltime an accepted life-style? I see lot of people didn't think far enough but loved their job. Indeed, they seem much happier than lost people in startups. If I would hire someone, I would like to work with that type of person. They can change their mind later, no problem.