Why are engineers treated like peons in the startup world?

Vinod Khosla is talking at sxsw on how rigorously they evaluate and monitor the CEOs they invest in. Evidently that doesn't apply to his grandson.

What's going on with his grandson?

His grandson is the CEO in this story

For better or for worse, the system is named "capitalism" not "hardworkerism".

In the "you can't cheat an honest man" department, you can be sure that some of the engineers complaining about nepotism now were expecting to cash in on the CEO's connections when they signed on.

I'm the one complaining about nepotism. They were just complaining that he is an inexperienced tool that underpays them. That said, I'm sure they did count on his family connections creating an unending runway when they signed on.

In my experience, everyone in tech tends to think that their particular skill set is the only thing that matters and that everyone else is an idiot. This seems true for business, marketing, engineering, etc.

That's probably true. It'd be okay if everyone thought their skills was most important and all the skills paid about the same, but business and investing think their skill is most important and their salaries actually support that idea.