In your position, I’d take candidate 2. Displaying a reasonable level of competence and ability to work in a group is so much more crucial for a small company!

But now you did the mistake of assuming a lot of stuff, with very little data. Why can you say that person 2 is better at working in a group? Maybe person 1 was just very nervous, or is a type that takes a few days to warm up to new people. Maybe person 1 just crack jokes all day and is actually detrimental to the productivity. Impossible to tell from this one que alone.

You're always left with an imperfect amount of information after an interview. I don't think that means you should discount how well someone fits into a conversation given how important solid communication is.

Pretty much this. Yes, technical skill is important, but to some degree, the proficiency to do our jobs can mostly be taught given a proven background and some proven competency during the interview. Good communication skills? That's something taught over a lifetime.

And hence, some weight in the skills/judgement of the interviewer.

Which is also why there are usually multiple stages in an interview process, or at least, you pass a candidate to 3 or more team members to interview the candidate.

In my experience, it's hard to find good candidates, but not that hard to figure out which of the candidates will be a good fit, and a strong contributor, to a team. I've also hired mostly for team sizes of 10-20 developers, not 200.

what about the risk that candidate #2 has schmoozed their way up the ladder, and really isn't as smart as they seem?