Sure, there are plenty of good engineers who won't have a nice side project to bring up. And you will be auto-passing on them.
The real question is, how many bad engineers are hacking away on a side project they can show off and speak intelligently about?
He is right that his method doesn't scale. He is intentionally picking from a rather small bucket. But that bucket should be pretty high signal-to-noise. That makes his job pretty easy.
When hiring, I often try to filter for "gets stuff done". Side projects definitely help check that box. I also filter for how deep their technical knowledge is for their experience level. I love finding people who are passionate about computers and code, as they always hit above their pay grade, but don't really try to filter for this.