How many super early employees are able to hang on for a decade until IPO, or have the cash to exercise their options before they leave?
IMO this should be illegal. It's your property and they should not be allowed to bar it's sale.
The first part of this can be false. If you're 1/2 way to billions IPO then your options can easily be a year or more of salary to exercise.
About the second part if the company gives you that as a signing bonus you're still on the hook to the IRS for the bonus so now you're 10s of 10000s deep on an illiquid position.
The advice giver is super-early, not the target of said advice.
But I agree that the advice is best suited for super-early people.
It's usually done for early employees who join before multiple rounds of funding occur.
Many "successful" exits are actually acqui-hires, where a larger company acquires a dead or dying company for its talent. Often the product from that company is immediately shutdown, or at least shelved and no longer actively developed.
Other "successful" exits pay some percentage back to the recent preferred shareholders. Earlier investors are not made whole. Common shareholders generally get nothing.
Founders will still spin these "exits" a positive because they didn't have to shut down. The reality is the venture was a failure. Employees got jobs... that they could've had anyway.
One word: dilution
This seems unlikely.
Exits and IPOs have much greater valuations now than they did ‘back in the day’ so far more early employees end up with a significant infusion of cash.