Side note, but there are other reasons people will take that gamble.
Sometimes, the reason employees take equity is because they think they will have a nontrivial impact on the business and want to feel like an owner. The actual financial consideration of the equity can be triumphed by the emotional connection it gives them with the team and their work.
This might explain why some early employees don't even know what percent of the company they own.
By the time you get diluted you effectively are a stockholder with way too much of your net worth locked into one likely extremely volatile company. If you are lucky enough to be in a succesful startup you still have to survive the inevitable whiplash when your liquidity frees up.
Ironically and sadly I have a couple old-timer friends who have been through IPOs where they have lost money on the whole damn thing mostly due to taxes and poor timing.
Treating employee-level equity as anything other than the chance for a nice bonus some day is a sucker's game. Especially for early employees who'll take a significant haircut on salary for the privilege of getting "points on the package" (to quote The Wire)
Edit: and that really sucks for your friends. I feel bad for them :(
Sometimes, the reason employees take equity is because they think they will have a nontrivial impact on the business and want to feel like an owner. The actual financial consideration of the equity can be triumphed by the emotional connection it gives them with the team and their work.
This might explain why some early employees don't even know what percent of the company they own.