As a former startup founder, I tend to agree that most startups are low-balling early employees. These employees over-value their stock by imagining what it would be worth if the company reaches $1B valuation. It really is a lottery ticket.
But in my opinion, the answer is more pay, not more equity.
Employees should get market comp, period. Doesn't matter how early-stage the startup is. If a founder can't afford employees at market rate, they shouldn't be hiring yet. They could perhaps offer to take people on as co-founders -- with an appropriately equal share.
People looking to join early-stage startups as employees should be extremely skeptical of equity. Obviously, you want to take some. But if a small chance of getting super-rich is your goal, you should start your own startup. If you are going to make bets, bet on yourself, not on someone else, because you know yourself much better than you know anyone else, and wise bets are all about having information no one else has. Yes, non-founding early-stage employees can have a big impact on a company, but they are still beholden to the founders -- if something goes wrong, they can fire you but you can't fire them. Making a big bet while letting someone else hold the cards is just too risky.
Instead, demand market comp. Do not join a startup that won't offer you market comp. It's not worth it.
But in my opinion, the answer is more pay, not more equity.
Employees should get market comp, period. Doesn't matter how early-stage the startup is. If a founder can't afford employees at market rate, they shouldn't be hiring yet. They could perhaps offer to take people on as co-founders -- with an appropriately equal share.
People looking to join early-stage startups as employees should be extremely skeptical of equity. Obviously, you want to take some. But if a small chance of getting super-rich is your goal, you should start your own startup. If you are going to make bets, bet on yourself, not on someone else, because you know yourself much better than you know anyone else, and wise bets are all about having information no one else has. Yes, non-founding early-stage employees can have a big impact on a company, but they are still beholden to the founders -- if something goes wrong, they can fire you but you can't fire them. Making a big bet while letting someone else hold the cards is just too risky.
Instead, demand market comp. Do not join a startup that won't offer you market comp. It's not worth it.