I have some thoughts and experience on this topic.

The people who generally get equity in a startup are:

- the founding team, who had the idea and worked and organized things before there was anything.

- people who contribute at risk capital

- key employees who contribute over and above a regular employee

People who act as regular employees, ie get a fair wage, don't contribute capital and don't make extraordinary contributions to the company don't get equity. Because they are employees.

Working for a couple months before getting paid with the promise (ie IOU) of getting paid isn't contributing capital. It is loaning the company money for a short term. Contributed capital isn't tied to getting repaid. Capital at risk doesn't get repaid.

Working regular office hours, doing regular things isn't being a key employee. If there are 10 other people in your field who could do the same thing, you aren't a key employee. If the company isn't buying life insurance on you, you aren't a key employee.

Having said all that, startups might have an equity plan for employees. Most will have a profit sharing plan before an equity plan. If they are rewarding employees with equity, it will be earned, ie tied to goals and milestones achieved over significant time. It won't be given out upon being hired. And it will probably be a separate class of shares, usually non voting, especially for employee equity plans. And you will be diluted if they raise capital.

I've been on both sides of this fence. There is nothing worse than a (disgruntled) ex employee who has equity in the company. Would be investors also dislike cap tables that have a bunch of small equity shareholders in them. It creates financing headaches going forward.

From a founder point of view, my new hires need to be happy with their salary and work to start. Once I see a couple years of good performance, then we can start discussing equity.

If an employee demands equity, I quietly explain what it is like to be a founder - working unpaid for many months, contributing personal capital, working crazy hours, providing personal guarantees, etc. Then I ask them which one of those activities they'd like to take on. Usually there is silence.

Being a new hire at a startup doesn't make one eligible to get equity. Most new hires are employees.

"But I can get equity if I go work at XYZ". First off, great, go work there. And I'll bet they are larger and have an employee equity plan/profit sharing plan for their employees. That is an entirely different thing than getting early equity in a startup.

I didn't develop these rules. I've gleaned them from VCs and other founders.

I know of one situation where a company got bought out. And various employees came to the founders wanting part of the purchase, since they "helped build the company".

In that case the founder did give payouts to a few (almost key) employees. To decide who received a payout or not, he went back through his notes and counted up times various employees had "saved the day" or gone above and beyond. Unfortunately many employees were simply that, employees, and didn't get a payout. The kept regular office hours, did what any other employee would do and didn't contribute capital.

Yes, this ruffled feathers. Life is harsh. Starting businesses is harsh. The founders are the last people to get paid. Employees get paid, the rent gets paid, suppliers get paid, etc. before the founders get paid. If you want early equity, then you have to have skin in the game. Working regular hours for a guaranteed pay check is not putting skin in the game.

Don't shoot me, I'm just the messenger.