I don’t think this is accurate. Even in successful startups, most employees don’t get rich. Yes, some manage to navigate the complicated financials and can afford to execute their options, but typically only valuable roles are offered stock options and not all employees can afford to execute them.

Even if the company is “successful” and goes IPO, employees that execute their options can lose money while trying to execute their options (many Uber employees right now and plenty of 1999-2000 IPO employees).

In short, stock option incentives are gambling. I’m not sure they are a net positive even for the USA. Yes, we get harder workers for cheaper, but this depends on VC and Fed Reserve money being plentiful, which comes with other costs.

For early stage startups in the valley, pretty much all employees receive options. How many options, dilution and if if a positive exit will occur are all variables, but generally everyone gets an option grant.

Employees who don't stay long enough to vest (much or at all) don't get rich.

Employees who work in roles like office admin, security guard, janitor, intern, etc. usually aren't offered options (frequently because they are outsourced or independent contractors, etc). I'd wager that engineers, designers, and management are consistently offered options, but most other roles vary. Sales frequently insists on large cash commissions, so management probably wouldn't augment that with expensive early stock options.

There is inherent risk in owning stocks -- you need to time your exit well or a wise purchase in options/RSUs can turn into a financial liability or can significantly cut your profits if you exit the stock at the wrong time. I have a friend who exited FSLY as soon as their options execution turned to long term cap gains (resulting in a comfortable profit), but they could have more than doubled their profits (and been borderline "rich") had they stayed in until peak.

Employees don't always time their options/RSU executions well (because life is unpredictable). There is an opportunity cost to risking startup life at a lower up-front salary than working at a larger more stable company that pays more but offers no stock benefits.

Employees can't afford to execute their options/RSUs at the right time (eg. I could have owned significant CloudFlare stock if I was better at saving money while in university).

Employees don't always spend the money to gamble on options/RSUs and their tax obligations because they don't anticipate the company worth much (which can be a misperception or a lack of trust in management/owners).

Do most startup successes (which themselves are quite rare) result in most employees becoming rich? I've had my share of successful startup experience as an employee, and there was a nice payoff, but I'd hardly call it "rich" in any accepted definition of the word. At best, it's made up for the time I spent being underpaid compared to market rates.

Really? I thought most startup get a successful exit, result into their employees being modestly compensated, probably on par with the counterparts in mega corps.

At vest, in the US, a percentage of shares are immediately sold to cover taxes.

With illiquid stock - as in a startup - where there's no public market for it, and no one to sell it to, you can't really do that, and you're creating a tax problem for your employees.

The company can pay those taxes on your behalf - but that's expensive when a startup is explicitly paying in stock because they need the cash to grow.