Sometimes, the lengths to which interviewers go to in order to determine what a candidate is like are borderline ridiculous.
I work as a CTO/Lead dev so have had experience interviewing myself.
Pondering career options, I attended an interview for a start-up recently and found their methods a bit weird. I was not greeted properly nor was I introduced or spoken to much. Instead, I was taken into a corner, made to sit into an uncomfortable chair, handed a printed test assignment (code) and a pen.
There was not even a clipboard to write on so producing code on one's lap on loose sheets of paper, particularly when you're supposed to be nervous, seemed a bit of an overkill. After the initial shock, I collected myself and came to the conclusion I was being tested to see how I would react. I had typed one function definition on my knee when I asked if I can just use my laptop's text editor instead. Unsurprisingly, they just nodded and agreed. Resources are there to be used!
Seems they must have been reading the same sources / pointers about testing programmers aptitudes as the good question on their part was how I would improve it and make my solution more performant (a theme on the bug thing mentioned above). This is when it becomes interesting. It's all subjective anyway - though you may think of ways of improving it, the interviewer may not and may just be playing on your ego, testing you further. Do you admit to writing it less than perfect on the first version, you put on a show and think of cosmetic changes, do you offer other solutions or do you uphold your initial code whilst showing an openness to improvements. What has more value to an employer anyway, there needs to be a balance.
In any case, the most important thing to remember--as an interviewer--is that the interview process works both ways - after being put through hell, I finally took my turn in asking some questions about their business model, the short and long term plans and so forth.
Surprisingly, the answers that I got that were less than reassuring (or perhaps it was deemed above my station to know more). Questioning the employer's very business idea and model (in order to understand them better) before launch, even gently suggesting it seemed like niché that would be difficult to market had the exact result I was afraid of. The CEO got VERY defensive, almost took offence and went way out of his way to reiterate what a wonderful idea it all was.
Also -- if you're a startup, you need to plan beyond the seeding money or any chance of offering job security to candidates goes down the can. Remember, you are selling your company too! Joining a starup is risky anyway, you need to offer some reassurance and particularly so when you head-hunt people who are not pressured to find a job in the slightest. Your employees need to believe in what you do if they are to make your venture a success.