If they're not paying you and you accept <10% equity, you're getting ripped off.[1]
But if they've raised money and you're drawing a salary? The startup is massively de-risked. You should accept far less equity. You take on virtually none of the downside risk and still participate in the upside risk.
As an employee, the situation you want to avoid is the quick flip. Do the case analysis:
Failure: better to be a first employee than a founder. You should be better paid, and your 3% of $0 is the same as 50% of 0.
Quick flip (aka HR acquisition): Founders make out much better than first employees, since they'll typically be granted large retention bonuses. Best case you get a free option on a job at the acquirer which probably comes with a reasonably good bonus structure for the first few years.
Acquisition for value: Everyone gets rich. Founders get very rich, first employee gets much richer than he possibly could have working any normal job.
Don't work for people who want to flip their company to Google in 6 months. Work for people who want to change the world.
[1] Unless you've co-founded it with like, Steve Jobs. In which case you should probably take 1% if that's the offer. Also, you are probably a necromancer.
You might just be a disturbed director of a lifesized puppet theater with access to a mini jcb and thoughts of taking contemporary seaside entertainment to the next level of historical accuracy. In which case Steve wont have had a lot of creative input and you might want to take 2%.
But if they've raised money and you're drawing a salary? The startup is massively de-risked. You should accept far less equity. You take on virtually none of the downside risk and still participate in the upside risk.
As an employee, the situation you want to avoid is the quick flip. Do the case analysis:
Failure: better to be a first employee than a founder. You should be better paid, and your 3% of $0 is the same as 50% of 0.
Quick flip (aka HR acquisition): Founders make out much better than first employees, since they'll typically be granted large retention bonuses. Best case you get a free option on a job at the acquirer which probably comes with a reasonably good bonus structure for the first few years.
Acquisition for value: Everyone gets rich. Founders get very rich, first employee gets much richer than he possibly could have working any normal job.
Don't work for people who want to flip their company to Google in 6 months. Work for people who want to change the world.
[1] Unless you've co-founded it with like, Steve Jobs. In which case you should probably take 1% if that's the offer. Also, you are probably a necromancer.