Actually, if you're looking to "make money in a start-up", you'd join a start-up that you believe has growth potential and ask for an appropriate equity stake.

Actually, if you're looking to "make money in a start-up", you'd join a start-up that you believe has growth potential and ask for an appropriate equity stake. As a trade off, you yourself accept a below market rate as a form of an investment. If one is not seeking money in a start-up, but rather experience, environment and personal growth it would make sense for them to ask for a market rate salary (which is a valid concern if they've got a a family to feed or a mortgage to pay). Before you say "but isn't the experience/environment worth something" - yes it is, and the trade offs they make to gain that experience would be working longer hours, less job stability as well as lack of chances/challenges/opportunities/perks that only a big company could provide (e.g. if you're looking for a great UX/UI person you are probably competing with Yahoo, who has a really strong UX/UI organization; Yahoo offers its developers the challenge to scale a web application to thousand node deployments and billions of page views, you would never be able to do that). For an employee applying to your start-up, taking a higher salary may as well be a smart thing to do, as judging by your posting (again, I may be wildly off track here and I mean no offense) you're building yet another LAMP webapp - not anything that's going to be wildly different from what there is on the market - in other words, you aren't building the next flickr/delicious/twitter much less youtube/facebook (and of course not the next google/yahoo). That's fine and there are always the above mentioned reasons to join your start-up (experience, environment) but the equity may not end up amounting to much (you could build a viable small business, but you wouldn't have a spectacular exit, especially for employees holding 0.25-2% equity which would be typical for a lead engineer). Another point: if an employee sells themselves short to you (e.g. less options, less salary) how do you know they won't sell your product short (e.g. write worse code to save time; or purchase inferior hardware/hosting services to save money -- or even literally, sell your product for less than it's worth if they're a sales person). So in short, your choices are either to expect an employee that matches the compensation you give them (below average comp. - below average employee, "market comp" - average employee, great comp - great employee) or convince the employees that their equity will amount to something. That's not always the wrong way to go: if building customer facing web applications isn't your company's core competency you don't need a great UI hacker - but that clearly isn't your case.