Startups hiring early employees and asking them to have the commitment and work ethic of a founder but a tiny fraction of a founder's equity, playing up the exciting possibility of a billion dollar valuation while never mentioning the liquidation preferences and possibility of many years of illiquidity -- this is essentially an MLM and it's incredibly common among Y Combinator companies.
For Joe average, the expected value of working at a random startup is positive - compared to not working.
It's just the employee's gamble to figure out whether the expected value is high enough and the risk ratio is aligned with their preference.
The expected return for an average MLM joiner is deep in the reds.
From an individual perspective that's a huge difference.
But it isn't multi-level marketing (MLM) until he starts pushing some product onto his peers, or unless the employer starts hiring aggressively with equity as the main salary.
Employees have a better overall risk / reward ratio, as they usually do receive salary, unlike founders, who often invest their own money and have negative effective salary. So them having a higher equity is fair.
