Good point and if this were a bigger company I would agree with you. However, we are still a very small company (single digits) going through a critical period.

As one of the key employees I have leverage. Am I irreplaceable? No, but it would definitely be a setback. One that the founder cannot afford at this time.

I can't speak for the other employees but I imagine they won't be happy either once they learn how the founder treats employees.

Besides appeasing existing employees there is the added benefit of attracting and retaining talent going forward. This is a great point that you mentioned and shouldn't be overlooked especially considering how competitive the valley is for talent.