There are four major problems: 1) Employees usually don't get enough stock. 2) If an employee leaves the company, he or she often can't afford to exercise and pay taxes on their options. 3) Employee options sometimes get unfavorable tax treatment. 4) Employees usually don't have enough information about the stock or options. Here are some proposed solutions: 1) Startups should give employees more stock. Value is created over many, many years. Founders certainly deserve a huge premium for starting the earliest, but probably not 100 or 200x what employee number 5 gets. Additionally, companies can now get more done with less people. It's very difficult to put precise numbers on this because the specifics of every situation matter so much. Perhaps the best way to think about it is to try to come up with a total compensation package with the same expected value (using the company valuation of the last round,
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