[advisedwang]

To value stock options correctly you must know a lot more than the headline valuation. You have to know the size (in $ and units), preference and other terms of every funding round, burn rate, cash left, whether any one investor has outsize control of the company and finally a good view of the competition, market and potential buyers. This is not available to the average employee, and often not to founders.

Stock options are a gamble not because of the economics of startups (although that can be true), but because the average employee cannot do serious financial decision making around them.

[sigmoid10]

The key difference is that diversification of risk works for stocks. Yeah, if you invest in just one company it's like going to a casino. So if your portfolio only includes stocks from your employer, you might as well gamble all your money. But when you invest in lots of different stocks, you can make pretty stable profits, whereas you'll never make any stable long term income by diversifying your bets in a casino.