The perception that many people have about the Valley is that these clueless young engineers are either bad at math or forgot to ask how many shares were outstanding, and that's why they throw down 60-hour weeks with a sub-1% slice. From my experience in the Valley, that isn't it. Most of these young engineers (accurately) perceive that their likelihood of getting rich of their tiny option allocations is very low.

What the clueless young engineers tend to overestimate is their likelihood of being a founder in the next go 'round. They're smart enough to realize that their option grants won't make them rich, but they think that if they work 70 hours per week, they'll be promoted rapidly and getting personal introductions to investors, from the CEO, inside of two years. Of course, that's rarely how it happens. If everyone could hop into the founder ranks just by working hard, who would be left to be the employees on 0.05%? The Valley doesn't mislead young people about their equity grants (because that would be illegal) so much as it tends to mislead them about reporting structure, project allocation, and expected career trajectory. Consequently, you have a lot of startups where on a team of 10 people, you have 6 people who think that they're the boss (because of implicit promises made to them in the hiring process).