If I start a business and purchase a $1M machine and pay someone $30K to run it and make $100K in profit, how much value extraction from the employee am I doing?
It is incorrect to assert that the employees are creating all the value created by a company. Companies are not just people but also a lot of other things:
Easy to see and measure things like equipment, facilities and bank account balances.
Somewhat harder to quantify but still important things like business relationships, contracts, brands and reputation.
Even more effervescent but still important things like corporate culture & values; the so called "DNA" of a company.
All of this stuff matters a lot and exists mostly independent of the employees. It is owned (quite literally) by the stockholders so the value accrues to them.
They failed miserably.
Never underestimate the value of the backing, resources and organization of BigCorp to one's success.
This wasn't asserted, so it isn't really worthwhile to argue against it. Obviously other stakeholders can participant in value generation, including by providing influxes of capital.
Obviously employees are going to generate more value than they capture on the whole; if they didn't, the firm would crater over time.
The key here is the proportion.
I agree that the key is the proportion. One way to think about this is to imagine if one of the employees in question quit and started operating independently. How much $ could they make? If it's more than they made while working for the company then the proportion taken by shareholders might indeed be too high. But if it is not more, then you've got a hard hill to climb when making your argument that the proportion is significantly off.
What error? He isn't indicating that the mechanics of capital equity valuation are wrong, but that the sheer size of the value extraction from employees which occurs in de-risked large entities far exceeds what most people would expect.
You can have all of the conditions leading to wealth creation as in your post in a system where labour has far better leverage to capture a larger portion of their own value creation.
The interesting knock-on effect is that reviews of inequality indicate that firm formation is actually amplified in situations where labour has that leverage, as workers are able to get more self-generated capital through labour to finance their own bootstrapped projects/businesses.