In the case of startups I think that there are two issues to be aware of. The first is that (in my experience) most early stage startups are severely underfunded. After the dot com bust (back then the startups were severely overfunded) the investors swung back to a different extreme. So don't jump to conclusions and blame the founders - I think most founders are trying to do the best they can with the resources at hand.
The second issue is how the founder presents the situation to potential employees. I was once offered 10,000 options by what's considered to be a very successful startup. When I politely mentioned that this figure is meaningless and that I need to know the percentage of the company it represents in order to properly evaluate the offer, the founder said that "investors don't like giving away this information - I promise you that it's enough that you'll become a millionaire". If you're in a situation like that where the management has no respect for your time, I'd say run. But if they're honest about why the salary is lower than average, well, it's really up to you.
I think in general the economics works out because it's easy for investors (and in turn, founders) to prey on young, gullible people who have a romanticized idea of the startup scene and potential returns. If you look at the statistics, the expected value is just bad, and young inexperienced people generally aren't able to properly evaluate it. So investors put in too little money because enough people are willing to work for pizza and beer, and in turn employees are underpaid because enough people are willing to work for less in exchange for the "startup experience". It's a crappy situation, but like with most things in the world, I'd say don't worry about fighting battles that aren't worth fighting. If you're clever enough to realize this, work for Wall Street or Microsoft - in my experience you'll find much smarter people there than in most startups anyway.
Regarding Google underpaying engineers, in my opinion it doesn't jibe with their "don't be evil" mantra. They really should know better.
The second issue is how the founder presents the situation to potential employees. I was once offered 10,000 options by what's considered to be a very successful startup. When I politely mentioned that this figure is meaningless and that I need to know the percentage of the company it represents in order to properly evaluate the offer, the founder said that "investors don't like giving away this information - I promise you that it's enough that you'll become a millionaire". If you're in a situation like that where the management has no respect for your time, I'd say run. But if they're honest about why the salary is lower than average, well, it's really up to you.
I think in general the economics works out because it's easy for investors (and in turn, founders) to prey on young, gullible people who have a romanticized idea of the startup scene and potential returns. If you look at the statistics, the expected value is just bad, and young inexperienced people generally aren't able to properly evaluate it. So investors put in too little money because enough people are willing to work for pizza and beer, and in turn employees are underpaid because enough people are willing to work for less in exchange for the "startup experience". It's a crappy situation, but like with most things in the world, I'd say don't worry about fighting battles that aren't worth fighting. If you're clever enough to realize this, work for Wall Street or Microsoft - in my experience you'll find much smarter people there than in most startups anyway.
Regarding Google underpaying engineers, in my opinion it doesn't jibe with their "don't be evil" mantra. They really should know better.