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They are fun if you're into competitive programming.

But most people aren't, not even developers, so they probably take people straight back to school days and anxiety inducing exams.

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That's exactly why they don't make much sense as an interview process. You don't need to be thrilled by puzzles to be an effective developer. Also if you reach the goal of solving problems by memorization, I'd be more concerned about how you communicate about your ideas to others and write code that's understandable and maintainable.

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