A web startup I joined years ago hired this way. The "main" technical interview was pairing with one of the devs to fix a toy broken service. In my case, this went fullstack from client bugs to backend bugs to sql/orm bugs as well as "make a page to show a list of things". They weren't so formal as to have a coded up modular interview system or anything, but I always enjoyed that one the most because it was closest to the job.