"It isn't like you go to work for the startup and when it implodes you are left with nothing and no options -- far from it, you likely made a good salary while you worked there"
Aren't startups notorious for paying crappy, below market wages?
"Being that employees ARE investors (their time), they should do their due diligence, too. A company not being transparent about whatever information you need to make a good investment decision should be a reason not to work there ie as a prospective employee you should evaluate how the company shares information with its employees."
Maybe. But given that they are required to give that information to investors who invest with money, why shouldn't they be required to give that information to investors who invest with time and effort?
They aren't legally required to provide any particular set of information to an investor. (They are, though, forbidden from mis-representation and fraud).
The investors ask for it, and if management wants the investor's money, they provide it.
Employees could easily drive the same bargain.
What about periodic updates? Investors are often board members as well as shareholders. Certain amounts of disclosure may be made to the first (depends on the by laws) and must be made to the second.
On might say that the employee is working for stock, but they really aren't: stock would be taxable income with no cash with which to pay the tax. They're really working for stock options, which are not stock. Which means the employee isn't a shareholder. So they don't get the same shareholder disclosure. This is easily fixed: exercise an option for one share. You even then have "your board member" to represent you! Or course, that's probably one of the founders (common stock), so your day-to-day experience may not change much.
In my (limited) experience with founding a company, raising angel investments, restarting it with the person who would then be CEO (the old investors were made whole) and then raising equity from outside investors in multiple rounds... the biggest problem with employee disclosure is that they are financially functionally illiterate. It's a bit burden! We chose to be fully transparent (for good or bad) where the entire sales pipeline was printed and posted every Friday, together with the balance sheet and the income statement. We summarized this with a one-weekly-tick-update on a large (and maybe grim?) "days-to-death" chart. In short -- just everybody "knew the deal". Not everybody "understood the deal", but whaddyagonna do?
As the number grew lower, people would (rationally) become concerned. Sometimes (not often) I had a line outside my door from people wanting a private session to discuss "what should I do?". And although the real answer was "Leave me alone and let me work on closing this deal", I never said that! :-)
As a person being asked to work for free ("just until we get funding!"), I can't remember the last time I was refused a chance to glance over the cap table and balance sheet.
Maybe the answer is: Just ask. If they say "no", that may be all you need to know.
Aren't startups notorious for paying crappy, below market wages?
"Being that employees ARE investors (their time), they should do their due diligence, too. A company not being transparent about whatever information you need to make a good investment decision should be a reason not to work there ie as a prospective employee you should evaluate how the company shares information with its employees."
Maybe. But given that they are required to give that information to investors who invest with money, why shouldn't they be required to give that information to investors who invest with time and effort?