The distinction between investors investing actual money, and employees who are comped with equity is is not a fiction.
Investors are in a totally separate class for so many reasons, and it's why there are distinctions in the type of equity they get.
The market for both talent and capital is very liquid and there really aren't that many secrets - so the current equilibrium between capital and talent is a function of the reality of market dynamics, not some sort of 'secret marketing magic' that VC's use. Although on a case by case basis, there's going to be some leveraging by VC's on some level, one could argue the corollary is the number of completely-full-of-crap 'founders' who are full of rubbish, some of them not even aware they are, or who are simply not aware of the real amount of risk they are offering. Silicon Valley is full of people who are making things for companies that will fail, and are therefore taking huge salaries at the expense of capital.
In fact, VC as an asset class is kind of a loser overall, globally - and almost all of the returns go to the top handful of funds, so one could argue that it's the mid-to-long tail of VC's that are the 'chumps' in the equation, because they're literally losing money while staffers making 'stuff that nobody wants' are walking away with small fortunes in salary for which there was no ROI.
So 'investors' are different than 'employees who take equity as comp' - and the 'power balance' between them can favour one side or the other, even as this clear distinction remains.
Investors are in a totally separate class for so many reasons, and it's why there are distinctions in the type of equity they get.
The market for both talent and capital is very liquid and there really aren't that many secrets - so the current equilibrium between capital and talent is a function of the reality of market dynamics, not some sort of 'secret marketing magic' that VC's use. Although on a case by case basis, there's going to be some leveraging by VC's on some level, one could argue the corollary is the number of completely-full-of-crap 'founders' who are full of rubbish, some of them not even aware they are, or who are simply not aware of the real amount of risk they are offering. Silicon Valley is full of people who are making things for companies that will fail, and are therefore taking huge salaries at the expense of capital.
In fact, VC as an asset class is kind of a loser overall, globally - and almost all of the returns go to the top handful of funds, so one could argue that it's the mid-to-long tail of VC's that are the 'chumps' in the equation, because they're literally losing money while staffers making 'stuff that nobody wants' are walking away with small fortunes in salary for which there was no ROI.
So 'investors' are different than 'employees who take equity as comp' - and the 'power balance' between them can favour one side or the other, even as this clear distinction remains.