I would disagree. Presumably the individual taking a job at this startup has other offers, or other jobs they could get - they are taking some risk by joining the startup.
If everyone wants to say that the equity is fake... then ok, it's fake and we can move on. If the firm is representing 50k options are a lot, then I should be able to put a dollar value on those options. In most cases, an employee will expect to get something in between the downside of nothing, and the upside of infinity dollars. The liquidity preference determines whether you in fact get nothing, ever.
Source: Worked at a firm with a 2x liquidity preference on a Series D which ultimately didn't move the needle for the company. Realized ~1.5 years in that the equity would have inconsequential worth in any reasonable outcome for the company.
It would be better to use the market cap of the currently dominant company in the sector to compute the upside (unless the startup is doing something completely novel, like autonomous robotics or nuclear fusion, in which case the risk is so high there's no point in doing the math.)
Never the less, thats what this is usually sold as. For Series B+ companies, the marginal probability that they only achieve marginal equity growth is quite high. This is problematic for the employee, as there is no natural stopping point after Series B - one could labor indefinitely for worthless equity. Seed and A are really just getting off the ground, and agree that if a preference stack matters - the startup likely failed to get off the ground.
If everyone wants to say that the equity is fake... then ok, it's fake and we can move on. If the firm is representing 50k options are a lot, then I should be able to put a dollar value on those options. In most cases, an employee will expect to get something in between the downside of nothing, and the upside of infinity dollars. The liquidity preference determines whether you in fact get nothing, ever.
Source: Worked at a firm with a 2x liquidity preference on a Series D which ultimately didn't move the needle for the company. Realized ~1.5 years in that the equity would have inconsequential worth in any reasonable outcome for the company.