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Comment by babyshake | Hacker News Reader

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.

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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.

Yes, for Joe it's a gamble.

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.

by a factor of 100-10000x? maybe a 2 or even a 10x multiple would be reasonable but that's not how it works.

I'd love to see your calculations how you arrived to a factor 10000x number.

Anyway, employees are always free to start their own company and potentially receive all the reward they can get.

It's only an MLM if they hire you as HR where you recruit the next wave of exploitation participants.

That's only very tangentially related to what the issue with MLMs is. This comment misses the point IMO.

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