The defining difference between Silicon Valley companies and almost every other industry in the U.S. is the virtually universal practice among tech companies of

The defining difference between Silicon Valley companies and almost every other industry in the U.S. is the virtually universal practice among tech companies of distributing meaningful equity (usually in the form of stock options) to ordinary employees. That's disingenuous. 0.02% of something that a CEO thinks (based on nothing but his own ego) is worth $10 billion is not meaningful equity. The proper way to model this is that equity compensation tends to be about 1/3 of what the person is giving up in salary, career advancement, etc. If you're paying $30,000 to work there, you'll typically get $10,000 per year in equity, or $40,000 over 4 years. That'll be 0.4% if the current valuation is $10 million. Now, let's say a clueless schmuck puts his whole life savings (or, more accurately, what he'll be getting in lieu of savings over the next 4 years) in some extremely volatile (100-500%) penny stock, because that's actually what's happening (with that penny stock being in one's employer, i.e. controlled by someone who can fire you for "performance" Pincus-style). Some of those people are going to end up modestly wealthy (no employee gets rich) and most are going to be hosed. To say that employee equity in typical startups (there is "meaningful" is a huge stretch. You'd have the same results asking people to pump their savings into penny stocks. A few would get very rich (from modest starting points) and most would wipe out.