If you do the Math, 1% seems fair. The typical YC company raises a seed round at a valuation of around $20M. 1% of that with standard vesting terms equates to $50k/yr.
If the typical founding engineer equity was 5%, that would equate to $250k/yr which would mean most startups would have greater total comp than Google.
As a founding engineer, I do almost the same amount of work as the founder (e.g. 90%), and get only 5% or less of the reward.
If the founder is the main source of capital, I can understand. But if all the founder does is build the product and raise money, how different is (s)he from you?
> As a founding engineer, I do almost the same amount of work as the founder (e.g. 90%), and get only 5% or less of the reward.
If you believe you're doing 90% the work of a founder and getting paid 5%, then you should be an actual founder and get paid 20x as much as you be as a founding engineer
What % of startups fail before they even get to the stage of being able to hire a founding engineer? You can either make the choice to be a founder and start before this selection filter or be a founding engineer and start after the selection filter.
Of course, the odds are not static and some people genuinely do have a better RAROC by being a founder but most people overestimate their founder abilities vs the odds and feel like they're not fairly compensated at 1%, which is fine, most people shouldn't be founding engineers either.
But there's a reason it's equilibrated around the 1% mark because early equity compensation is about risk, not effort.
The 50k/yr value of the 1% equity already prices in future dilution. Just because the equity is going to be less than 1% in the future doesn't mean it's not worth $50k/yr today
Why shouldn't a startup engineer earn more than an engineer at Google? Think about it, they take much much more risk. Their comp can go to zero. It's not liquid like a google engineer. Also they are creating something net-new that can benefit society in the long run. We want, as a society, to reward people for taking those kinds of risks!
In other words, we need more startup engineers and less google engineers.
If the typical founding engineer equity was 5%, that would equate to $250k/yr which would mean most startups would have greater total comp than Google.