No, your friend is not left holding the bag. He's left holding the money you paid him for the equity. You were the one in the red at first, but since the value of your stake could grow and pay you in dividends you overcame that loss. Both of you gained money - that's the point. He didn't even lose the opportunity for more money, because he needed the initial investment to even grow the company in the first place.

Here's the key point you're missing. In order for it to be zero sum, if you make a million dollars off of this company, he needs to LOSE a million dollars. Not the opportunity to make a million dollars, an actual million dollars. Clearly this does not happen. You are totally and entirely wrong here.

The market doesn't grow because new money flows in. This is mercantalism and your understanding of economics is hundreds of years old. The market grows because companies create REAL (not nominal) value that didn't exist before. I can explain this in more depth, clearly your financial friends aren't very good at their jobs (it's quite common).

The reason your oil trader friend agrees it's zero sum is because the futures market is zero sum. The stock market is not.