FTA: "For instance, if the company is worth $1m, and you are granted options on 1% of the company, then this basic model says that the expected value of the options is 1m * 0.01 = 10k."

The options are options to buy, so if you are granted 1% options of a $10m company your options are worth just above zero -- you can pay $10k to get $10k of stock back. You only make money if the company value goes up relative to your strike price, and the amount of money you make is proportional to that.

E.g. if the company literally doubles in value, you now can pay $10k to get $20k worth of shares. Only then do you profit the $10k in the above model. So the model only makes sense if you get in and the company doubles in value, and even after that you still only make $10k.