I agree with you, absolutely. What he means is, "You start hiring mercenaries rather than 'true believers.' " True believers make great cannon fodder. They'll

I agree with you, absolutely. What he means is, "You start hiring mercenaries rather than 'true believers.' " True believers make great cannon fodder. They'll work crazy hours, take prod-support duties with no expectation of reward, and do the grunt work without asking whether it benefits their careers. It's not that they don't care about their careers; it's that they still believe that their careers are perfectly correlated with the success of the company, and will make a lot of unwise sacrifices. They often overestimate how locked-in their promotions are (they expect to grow with the company, and are shocked when it doesn't happen) and the future improvement of their equity position. See, non-founding employees in most startups get very small equity slices-- it's typically about 2% * N(-1.2) for employee #N; this means that only about 11% will ever be allocated to non-founding employees, which is about right-- and fall into two categories: (a) those who don't take the equity seriously, work 9-to-5, and optimize for their careers-- and this can work out well for the company because there are benefits to doing well at a reputable startup-- (b) true believers who think their initial 0.5% (as Employee #3) is just a "teaser" and will be re-uped to "the real amount" 10x higher once they prove themselves. Of course, that isn't the case. In fact, that only happens in event of a major promotion and those are rare because (although there are exceptions) startups tend to get the Social Climber Complex and hand out new executive positions to externals. Around 25 people is where employees' equity slices drop below the 0.1% mark, which is when it's clear that they're not really owners or genuine partners in the company, and probably never will be. So the good people (mercenaries) are the career optimizers and the "true believers" you get, at that point, aren't very good. (The TBs that you get early on aren't that talented, either, but they'll at least take a lot of abuse and risk.)