If by "real" financing you mean a series A round, then you're probably mistaken. People who join a startup with just angel funding might get roughly 4-5x as much stock as they'd get post series A. It's only a worse deal if a series A round makes a company 4-5x less risky.
There's a market price for all the different options, from founder to early hire to later hire. It would not make sense for there to be points on the continuum that would suddenly be a much worse (or better) deal, and in my experience there aren't.
You're also mistaken in saying that an early hire will get 1 percent tops. This number varies by 30-40x, depending on where the company is and how early the hire is. 1 percent would be typical for a very good hacker fairly soon after a series A. You can get much more pre series A.
I am drawing a distinction between someone likely to only currently be a good individual contributor, and thus who will not have the option of founding his own startup at that point in time, and a well rounded candidate who brings a lot more to the table. One percent is a lot of equity even as employee one if that person is not going to be in a leadership role later. It was what the mint designer and a few other first hire top notch individual contributors at startups I know have received.
I definitely agree you get more equity during bootstrap time vs. in series a funded startups. I just think the combination of survivorship bias and cash comp makes it a better deal to wait.
Actually someone respectable (Suster?) posted a few months back about how there are discontinuities...and that immediately pre series a closing is a much better time to join than immediately post, since the reduction in risk is far smaller than the reduction in equity. I think the opposite is true between employee one and immediately post a.
By real financing I include mega angel seed rounds. For me a 1.5 seed round vs a 3 vc series a is a distinction without a difference.
My experience as en early-stage employee wasn't quite so bad. As we received funding my salary tended to increase pretty nicely. There was a point that I was the lowest paid employee (with the highest level of responsibility)... but I quickly moved to fix that.
The biggest mistake I find that folks in that position make is in how they value their equity (in that they HUGELY over-value it).
"There's a market price for all the different options"
The market isn't efficient though, because there isn't enough information (tho your comment and the GP are helping increase that). It may very well be that there are worse deals at some points.
Believe me, I know how inefficient the market is. There are certainly overpriced and underpriced startups. But his claim requires more than an inefficient market. He's saying that startups in a certain phase are consistently overpriced. That I've seen no evidence of.
One company might choose to give an early hire 20%, possibly even making them a cofounder. Another company might give an early hire 0.5%. Hence the 40x variability in the amount of equity given to early hires.
Also none of my argument applies to a startup with one or more non technical non domain expert founders hiring a tech guy as employee number one. In that case he is a founder without the title and might get a founder level share. However I think those companies are generally born wearing the stink of death and nor worth consideration.
"depending on where the company is and how early the hire is." In the case where a new hire gets 30%, presumably the company is early enough that they are basically joining as an additional co-founder. Certainly possible.
There's a market price for all the different options, from founder to early hire to later hire. It would not make sense for there to be points on the continuum that would suddenly be a much worse (or better) deal, and in my experience there aren't.
You're also mistaken in saying that an early hire will get 1 percent tops. This number varies by 30-40x, depending on where the company is and how early the hire is. 1 percent would be typical for a very good hacker fairly soon after a series A. You can get much more pre series A.