It's not really, because it's finite. You don't generally dilute the options pool when you hire new employees, you give them some slice of a scarce options pool

Sure, but there's an extent to which the the board and its constitutive shareholders already expect to be giving away options for new employees, and as such will have allocated a pool for such purpose -- both for the "standard" package, and for "hard negotiators". For traditional tech startups (i.e. ones not so flush with cash as OpenAI), giving these away is far easier than giving away more real-world, honest-to-god cashflow, because that directly drains your runway, while all equity does is make your cap sheet look marginally worse.

> all equity does is make your cap sheet look marginally worse

But at the time the employee is negotiating this has already been decided. The company has some valuation and you are offering some known percentage of that scarce resource. You could argue that the valuation itself is the thing being manipulated (which is partially true), but that doesn't change the cost of the offer to the company in units of equity %

My bank account says otherwise, but it depends.

So do all the lottery winners. It doesn't really change how a lottery works, or the likely financial result.

What fraction of lottery participants win, vs startup employees? It's rare and there is luck, but the quantities matter. You are much more likely to make money from a startup and it's much more under your control as an employee

That’s an interesting thought experiment actually.

If you think about the amount of money given up as a startup employee you will definitely get some winnings.

For example, say as a startup employee you are earning/being compensated 80,000 a year in equity. If you bought $80,000 of lottery ticket’s each year how much would you win. Depends on the lottery but most lottery’s have a rough payout of approximately 50-70%. Let’s say it’s 50%. So you would expect to receive back $40,000 per year.

Do half of all startups equity turn into cash, I think not. So probably more likely to make money from the lottery.

You are confusing expected value with probability of "winning".

The purpose is to trade EV for a small probability of high payout. It's less extreme than the big ticket lotteries but more extreme than a scratcher. If that's not for you, don't do it

Also your last point is either obviously not true (if you're talking about big lottery winnings) or trivially true (if you're talking about $1000 scratcher prizes). More people made life changing money from a single company (Facebook) than all California lottery winners combined across all time

I think you are confusing how lotteries work, most lotteries have additional prizes not just the big grand prize. There are a range of prizes.

as an aside, I got to reading some lottery winning tips (https://www.smartluck.com/free-lottery-tips/california-fanta...). A real interesting hodge podge of statistical fallacies and other wishful thinkings but at the same time it does pull at our brains somehow. Like for example even though I know a run of numbers in a row are just as likely to happen as any other number I'm really unlikely to actually pick it as my guess - I suppose my brain just thinks I need some "balance" or the likelihood of this pattern happening is low. Randomness is hard.

Pick a prize amount that is anywhere in the same order of magnitude as any engineers total compensation. For any such amount, there are more people receiving prizes above this amount from startups than lotteries

But why can't you win n smaller prizes, money being fungible and all we can just tot up the smaller prizes.

The total number of lottery winners who have won, in total, an amount of say 50,000 USD is at least 2 orders of magnitude smaller than the number of people who have received that amount or more from startup equity

You are making an empirical claim that can be made rigorous, it's just off by several orders of magnitude

But why are you not including all the people who have won.

Surely the calc is, the number of money gambled in startup equity versus the amount of money gambled in the lottery.

Do startups payout at .5 or above, I think not.

Most startup gambling is on the form of time.

Less than half of startups have exits…

But most startup people don’t work at most startups.

I've worked at startups that have had exits and the employees got zilch. I think even in the startups with exits the probability of an employee having their equity turn into cash money is very low (also I doubt 50% of startups have exits - I hear a number of 10% more often and even that seems high, I'd imagine 10% of YC startups have an exit and they are the most likely to succeed so I imagine when you add in all the other startups that percentage gets far far lower).

I thought this was sarcasm initially, but I think on looking at the rest of your comments that you are actually being serious. wow. Glad I've never had the pleasure of working with you.

Building a business has some luck/lottery components, but not nearly as much as HN comments would lead you to believe.

For the most part, outcomes largely track from strategy and execution.

Of course.

Also…the lottery and startups work very differently.

Yes, the lottery has rules and governance. It's a much safer bet. Startups can decide to devalue their employees' shares. I'd venture that the odds are at least stated on the back of the ticket with the lottery. Employees of privately held startups are often sold a dream of future riches that rarely happens. Even where there is an exit, often even founding employees get taken for a ride.