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The Illusion of Startup Equity: Why Most Will Not Get Rich

The assertion is that the majority of individuals banking on startup equity will not attain significant wealth from it.

May 22, 2026|3 min read|Social Signal Playbook Editorial

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The Claim

“Startup culture sold our entire generation on equity. Get in early, you know, get the equity, pray for the exit, and maybe you'll get rich. But most people actually don't.”

The assertion is that the majority of individuals banking on startup equity will not attain significant wealth from it.

Original Context

The claim originates from a broader critique of startup culture, particularly as articulated in the book 'Everything They Teach You At Goldman Sachs.' The author highlights a pervasive narrative that has taken hold of the entrepreneurial landscape: the belief that early investment in startups, particularly through equity, is a surefire path to wealth. This narrative has been bolstered by high-profile success stories of tech entrepreneurs and venture capitalists who have struck it rich through early-stage investments. However, the reality is starkly different for the average person. The allure of equity is often marketed as a golden ticket, with phrases like 'get in early' and 'pray for the exit' becoming commonplace. Yet, this oversimplified view neglects the complexities and risks inherent in startup investing. The author argues that while the potential for wealth exists, the statistical likelihood of achieving it is exceedingly low for most individuals, particularly those without insider knowledge or substantial financial backing. This context sets the stage for a critical examination of the actual outcomes of relying on startup equity as a primary means of wealth accumulation.

"Your first half a million dollars of an investing experience is for losing."

Codie Sanchez— Everything They Teach You At Goldman Sachs

What Happened

In the years following the rise of the startup economy, particularly during the tech boom of the late 2010s and early 2020s, the promise of startup equity has been put to the test. A significant number of startups have emerged, yet only a fraction have achieved the coveted 'unicorn' status, defined as a privately held startup valued at over $1 billion. According to various reports, including those from Crunchbase and PitchBook, the success rate of startups remains dismally low, with approximately 90% failing within the first five years. This stark reality has led to a growing recognition that the equity offered by most startups is often illusory, particularly for employees and early investors who may receive stock options or shares that are ultimately worthless. Furthermore, the COVID-19 pandemic exacerbated these challenges, as many startups faced unprecedented operational hurdles, leading to layoffs and reduced valuations. The initial excitement surrounding equity has given way to a more sobering understanding of the risks involved, as highlighted by the author’s assertion that 'most people actually don't' get rich from startup equity. The data supports this claim, as the average return on investment for startup equity is often outpaced by traditional investment vehicles such as index funds or real estate.

"Why not lose somebody else's first?"

Codie Sanchez— Everything They Teach You At Goldman Sachs

Assessment

The assertion that most people relying on startup equity will not achieve wealth is substantiated by a robust analysis of the startup ecosystem's realities. The statistics surrounding startup failures are stark; with nearly 90% of startups failing, the likelihood of equity translating into wealth is slim. The allure of equity has been driven by high-profile successes, but these outliers do not represent the average experience. Moreover, the evolving landscape of startup investing, characterized by inflated valuations and increased market volatility, further complicates the potential for wealth accumulation through equity. The shift towards a more democratized investment environment has not necessarily equated to greater success for individual investors; rather, it has often led to increased risk exposure without commensurate rewards. Investors must now grapple with the complexities of startup equity, recognizing that while the potential for wealth exists, it is fraught with uncertainty. This calls for a more measured approach, emphasizing diversification and realistic expectations. Ultimately, the claim holds true as the majority of individuals will find that their hopes for wealth through startup equity remain largely unfulfilled, underscoring the need for critical evaluation of the narratives that have shaped our understanding of startup culture.

"The most dangerous advice circling the internet right now is just go be an entrepreneur tomorrow. But statistically, it's actually terrible advice for most people. 90% of startups fail."

Codie Sanchez— Everything They Teach You At Goldman Sachs

What Has Changed Since

Since the original claim was made, the startup ecosystem has undergone significant transformations, particularly with the rise of remote work and the democratization of investment through platforms like Robinhood and crowdfunding sites. These shifts have allowed more individuals to invest in startups than ever before, yet they have also led to an oversaturation of the market. The influx of capital has resulted in inflated valuations, making it increasingly difficult for new startups to achieve profitability. Additionally, the regulatory landscape has evolved, with increased scrutiny on venture capital practices and the ethics of equity compensation. The rise of the gig economy and freelance work has also influenced how individuals perceive equity; many now prioritize immediate income over long-term equity stakes that may never materialize. Furthermore, the increasing prevalence of economic downturns and market corrections has highlighted the volatility of startup investments. As a result, the narrative surrounding startup equity is shifting from one of guaranteed wealth to a more cautious approach that emphasizes diversification and risk management. This nuanced understanding is crucial for potential investors who must now navigate a more complex and uncertain landscape.

Frequently Asked Questions

What are the main reasons why most startups fail?
Most startups fail due to a combination of factors, including lack of market demand, insufficient funding, poor management, and competition. These elements create a challenging environment for new ventures, making it difficult for them to succeed.
How does startup equity compare to traditional investments?
Startup equity typically carries higher risk and potential reward compared to traditional investments like stocks or bonds. However, the failure rate of startups means that many equity stakes may ultimately yield no return, unlike more stable investment options.
What should investors consider before investing in startups?
Investors should conduct thorough due diligence, assess the startup's business model, market potential, and management team. They should also consider their own risk tolerance and the importance of diversifying their investment portfolio.
Are there any success stories that contradict the claim?
While there are notable success stories in the startup world, such as companies like Uber and Airbnb, these are exceptions rather than the rule. The vast majority of startups do not achieve such success, reinforcing the claim that most people will not get rich from startup equity.

Works Cited & Evidence

1

Everything They Teach You At Goldman Sachs

primary source·Tier 3: Low-Authority Context·Codie Sanchez·May 21, 2026

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Disclosure: Prediction assessments reflect editorial analysis as of the date shown. Outcome evaluations may be updated as new evidence emerges. This page was generated with AI assistance.

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