Early-stage employees are often compensated with huge amounts of equity. I'm a fairly senior-level guy, and would happily trade a bigger salary for a large equity chunk at a startup, but we're talking a large chunk, bigger than a lot of companies are willing to give to non-founders.

Let's say that I usually make $160k/year, and I'm willing to work for half that at a startup for four years, which means that I'm giving up $320k in income.

I'm not going to do that for a chance at earning $320k, but I'll definitely do so for a 10% chance at earning $3.2M. Which means that if the company exits four years later at $50MM, I'd need a 6.4% equity stake to make my target. If the company exits for any less than $5M, I've lost money.

Naturally, this is a simplified analysis of the situation, but it illustrates an important point. I know of a lot of startups that want to pay their employees peanuts, while at the same time giving them a tiny slice of the pie.

None of these companies have been massively successful either, in part due to the best talent having zero interest in committing to a company where they aren't valued.

This is exactly the reason why I've never been interested in working for a startup. Learning experience? Yeah, I've got that working during the dotcom boom/bust cycle.

Your reasoning is spot on but the numbers get even more unappealing once dilution in future rounds of financing kicks in.

If you have the experience, be a co-founder at a startup with pretty big upside. If you can't find that, the 150K/year salaries are a much better deal than <5% equities.