>because the cost of a bad hire is so much higher than the cost on missing out on someone good

The founders of WhatsApp for example applied to Facebook but got rejected. Facebook then had to acquire WhatsApp for 20 Billion, pretty expensive false negative. You can afford a lot of bad hires if a few of them hit big. That's basically the whole premise of venture capital and silicon valley, majority fail but a few unicorns pay the bills. Logically companies should be offering some sort of alternative short term "prove it" offer to people who are borderline for being hired.