Early employees take a pay-cut, work hard, and get so little equity that even if there's a big (not gargantuan) payout it won't make up for the pay they've lost. The only real advantage is that they are an early employee, and have a reasonable chance of getting promoted in the growing company.

edit: read your post. I was right. It's what basically everyone says about early employees.

Founders: take on risk (no salary pre-seed, zero job security) but get a massive payout if it works.

Big-company employees: no risk, high job security, guaranteed payout.

For startup employees, the bargain is murky and implicit. These employees take some risk and stress (not as much as founders, but probably 30-40% as much) in exchange not for a huge payout, but for the promise of a leadership position when the company gets big. That's the (implicit) contract. It's not, "Get $100 million when this thing exits" but "Get a VP-level position, that might help you along to something else, when we hit 500 people".

The implicit nature of that bargain makes it problematic. A founder with 5% in equity is always going to have those shares of stock. (His percentage can be diluted, but he has legal recourse if it's done improperly.) Even if he's fired, he has whatever equity he has vested. The early employee (whose equity amount is small) who worked his ass off to get a leadership position in the company as it grew can be denied that opportunity at any time for any reason.

There isn't an easy solution, because some early employees don't deserve the leadership positions they want, but they usually aren't bad enough to be fired either. My solution would be to give them very small-scale leadership, or even autonomous contributor status (they can work on whatever they want, but can only pull other people to their projects if someone else thinks it's a good idea) as a token of appreciation. Perhaps that's because I think there are few truly incompetent people; some just don;'t grow as fast, for whatever reason.

There's another dynamic that hits this whole thing in the side: as startups grow, they start wanting "The Best" hires, which often means that they have to hire people into positions of some status. But if your older employees feel promised leadership positions, and those opportunities are bargained away to new employees in order to make the best hires, you can end up with a conflict.

I work for a small, profitable company right now. It's great. The pay is good, it's low stress, and I have a lot of control over the direction of the product and the work I do. There's no expectation of crazy hours, and we have time to do things well.

Yeah, I won't make a bazillion dollars, but I've already worked at two startups, and clearly I'm not a bazillionaire.

I find that both startups and big companies usually fail (not maliciously, but just due to failures of introspection) to deliver on their non-monetary promises.

Startups: people associate startups with interesting, creative work reflexively. Not so, or not always. First, 80% of startups aren't doing very interesting things (social semantic coupon aggregators? That's the business plan analogue of OOP's VisitorFactoryObserverFactory pattern!) Even in those other 20%, there's a lot of uninteresting stuff that has to be done in order to meet the rapid client-acquisition or growth targets.

Related to this, every startup has deadlines, and that can be managed so it doesn't become a problem, but too-often startups develop Deadline Culture and accumulate technical debt at a rapid pace. (It doesn't take long.) One of those unpublished startup negativities is how quickly and how often this happens. It's not published because, by the time Deadline Culture is having serious negative impacts (in code quality, organizational structure, morale and blame-shifting when things break) the people being affected have double- and triple-digit employee numbers (i.e. they're nobodies).

With big companies, the promise is that you can have a career within the company that transcends "jobs". That is, if one job doesn't work out, you can move to another one and still have a 12-year career (possibly moving into another role entirely) with the company. In theory.

What happens in practice in BigCos is that manager-as-SPOF is still the law of the land. Large-corporate middle managers often have zero interest in extra-hierarchical collaboration, some actively want to isolate their reports, and are just as liable to take employee's extracurricular interests (or outright desire for transition) personally as startup founders. The problem with the middle managers' emotional outbursts related to people wanting to "leave them" is that they have a lot more power (within their organizations) than "jilted" founders.

What I find darkly ironic is how many rapid-growth startups-- mostly managers, engineers aren't this way-- want to become huge corporations (and naively think they won't lose their character in the process). I find that hypocritical. "We're agile and awesome because we're a small startup. We also want to become bigger than Google." What people can't say (because it's impolite) is that they won't care that the thing became a BigCo because they'll be very rich by then-- or at least, rich enough to easily move on. It's a less brazen variant of "build to flip".

People tend to fetishize 200%/year growth curves and billion-dollar exits, while ignoring the fact that anything growing that fast is going to get destroyed in the process. Fuck 200%. If my income grows at a "piddling" 10%/year for the next 40, that will give me more money than I could ever need at any stage of life (and more than I could ever deserve toward the end). So I'd rather focus on building real skills and learning how to actually reliably deliver value to the world than chasing some huge acquisition.

Out of curiosity, what technologies do you use at your company? I've become a major fan of Scala of late, but I'm also impressed by Clojure and Ocaml.