Valuing a startup and being in a position to receive a meaningful amount of compensation from said startup if/when it IPOs are two very different things.
I am not an expert, but between dilution of stock, the high risk involved with any startup, the timeline to payoff on equity and accompanying opportunity cost for non-founding engineers, and the overall lack of control which even early employees have relative to founders, it’s not unreasonable for an early employee to say “I do value the company but do not want to bet the farm on it for the next five years of my life. I will, however, as an employee, give it my all.”
I agree with what you wrote, but the reality is that startups can't pay market rate in most cases. So they should at least offer more equity.
Or, you know, they can try to keep getting away with offering 0.01% non-preferred stock, and telling every employee that the startup will sell for $1BN at least, and they will become millionaires.
I am not an expert, but between dilution of stock, the high risk involved with any startup, the timeline to payoff on equity and accompanying opportunity cost for non-founding engineers, and the overall lack of control which even early employees have relative to founders, it’s not unreasonable for an early employee to say “I do value the company but do not want to bet the farm on it for the next five years of my life. I will, however, as an employee, give it my all.”
Especially if said employee is > 24 years of age.