For decades, the startup ecosystem operated on a simple promise:
Take a pay cut. Work hard. Own a piece of something early. Get rich at IPO.
That bargain was risky, yes—but it felt fair. Aligned. A deal built on trust and shared ambition.
But in the post-ZIRP, post-SPAC, pre-liquid-everything world we now live in?
That deal is dead.
The Asymmetry That No One Wants to Talk About
Let’s make this plain. In today’s startup environment:
- Investors get diversification and management fees.
- Founders can access liquidity through secondary sales and structured loans.
- Employees? They get paper wealth and 10+ years of waiting.
It's not just broken. It’s lopsided.
What was once a trade—risk for upside—is now a grind with no exit.
What This Means in Practice
1. Employees Are Trapped in “Gold-Cuffed” Roles
You took a 30% pay cut to join early. You worked weekends. You shipped things that probably shouldn't have shipped. And now?
You’re locked into equity that might never convert. Even if the company’s valuation has tripled on paper, you can’t sell a single share.
So what happens?
You stay longer than you want. Not out of loyalty—but out of sunk cost. And when you finally do leave, you lose most of what you earned unless you exercise options within 90 days and write a check.
That’s not compensation. That’s a hostage negotiation.
2. Talent Mobility Is Slowing Down
This might be the least visible but most damaging outcome: the stagnation of talent.
In a healthy ecosystem, people move. Founders found. Engineers experiment. Operators spin out. Learnings compound across companies.
But in a world where nobody can leave without torching their equity?
They stay. Too long. In the wrong roles. In the wrong stage. In the wrong mission.
That inertia hurts everyone.
3. The Discount No Longer Makes Sense
Let’s do some back-of-the-napkin math.
Say you're offered a 130K plus equity.
You think, “Okay, that equity could be worth millions someday.”
Now fast-forward 9 years.
There’s no IPO. You’ve passed on two houses. You’ve delayed having kids. You’re still squinting at Carta and wondering if this is all going to zero in a down round.
The old model made sense when liquidity was a 4-6 year horizon.
Today? It's pushing 10+ years, and nobody knows when the window reopens.
Why This Erodes the Startup Ethos
Startups work because of a shared delusion: that together, we’re building something worth betting on.
But when that delusion becomes a one-sided game, people notice.
- Employees lose trust.
- Early joiners warn new hires to be careful.
- Teams stop acting like owners—because they’re not treated like owners.
And once that ethos is gone? You can’t buy it back with another all-hands slide about “thinking like founders.”
The Founders and Investors Aren’t Villains
To be clear, this isn’t a blame game.
Most founders don’t love this either. They want their early team to win. Many are taking structured loans just to stay afloat while they wait for an exit themselves.
And investors? They’re playing the only game they can in a market where liquidity has evaporated.
But that doesn’t change the fact: the risk-reward equation is broken. And if we don’t fix it, we’ll burn out the very people we depend on to build the next great thing.
What Needs to Change
So, what does a more balanced model look like?
1. More Secondary Access for Employees
If founders and investors can sell early, employees should have some path too.
- Quarterly liquidity windows
- Managed secondary platforms
- Policy shifts to extend option windows and reduce tax traps
Give people a way to realize value—not just wait for it.
2. Rethink Compensation Ratios
If equity is illiquid and uncertain, cash needs to come up.
Some startups are already shifting to 80–90% of market cash comp, with equity as true upside—not deferred pay.
That’s healthy. That’s fair. That’s realistic.
3. Normalize Nonlinear Paths
Leaving a startup doesn’t mean you didn’t believe.
Maybe you bought a house. Maybe you had a kid. Maybe you realized a better fit elsewhere.
Let’s stop treating early exits like disloyalty. The real disloyalty is expecting people to wait a decade on a promise you can’t guarantee.
The Realignment We Need
At its best, the startup world offers something precious:
- A chance to create.
- A chance to own.
- A chance to win together.
But that promise only holds if the rewards are reachable—and the risk is shared.
It’s time to rebuild the bargain. Not with slogans or swag. But with structural change.
Let’s make equity meaningful again.
Let’s make risk fair again.
Let’s make startups worth betting on—for everyone.
Want to keep more great people in the game? Start by fixing the game they’re playing.