The fundamental principle-agent issue here, is that startup-y people, who thrive on small teams getting stuff done, are essential for getting a startup up the g

The fundamental principle-agent issue here, is that startup-y people, who thrive on small teams getting stuff done, are essential for getting a startup up the ground; however it is exactly the point where startups hold the least cash to compensate with. This generally leads to stock-option based compensation; which, in turn, expires 30 days after employee leaves. This economics -as practiced presently- strongly implies for savvy startupy people to work only on startups of their own; which in turn makes early hiring extremely difficult. There are 2 points of equilibrium here: * The current one is people leading less savvy people on. This leads to a lot of resentment; see rest of HN for that. * a much less wrong solution would be to have secondary markets set up significantly earlier in the game (post series a); which would make stock & options immediate liquid. Despite sales difficulties(for finding counter parties for that), this can be a huge advantage during hiring, as employees don’t have to take on lottery tickets; and allow early employees to resign with much less resentment.