Yeah that line in the article is completely off:

> Ask most venture-backed founders why they get 10x more equity than employee #1

Employee #1 typically gets 1%. Sometimes could be up to 2%, but 1% is standard. So then the founder gets 10%? No way.

I posit that very, very few early non-founding employees in SV startups have a true notion of how cheap they're working compared to the founders. Founders do founder-y stuff, the early engineers build and launch the full product, and if all goes well, the founders fly private the rest of their lives while early engineers make good progress towards a down payment.

And what happens in case it does not work out well ?

Employee gets fired and founder may get something or nothing but get “fired” last and turn off the lights on the way out I would guess.

If startup goes to zero, then everyone goes home with nothing. The founders typically don't lose any money of their own -- that cost is shouldered by angel and series-A investors.

Often though, the startup has a "soft landing" where it's acquihired by a larger company, and then the founders typically get executive or very senior roles (with large bonuses, etc) meanwhile the non-founders get standard employee packages.

Yes, I'm glad I'm not the only one who thinks the economics of it are a little bit broken. I will never join another start up as employee #1. I'd much rather come into a larger start up with a high cash comp + equity, than very low cash comp, worked to the bone.

The other thing no one talks about is founders tend not to dilute themselves, but often early employees are diluted heavily.

Someone once told there's only two times to join a startup: as a founder, or the year before they go public.

I was being generous - if there are 3 cofounders and you let one of your early employees get in the 2-3% range - it might be closer to 10x - but you're right that the majority of the time it's between 20x and 50x, sometimes even more dramatic than that for solo founder scenarios