The error he's making is that personal risk is different from the company's risk. Just after receiving funding the company isn't any less likely to fail (well, maybe slightly less), but a job with this company now offers a steady income for longer than was guaranteed prior to greater funding.
So, in fact, just after funding might be a great time to join a company.
That's an important question to ask yourself. And the converse is equally important: "if you're willing to work with a low and very unreliable income stream for a while, why be someone else's employee?"
The "early employee" in the middle can be a tricky spot. There's a phrase I read on HN a while back "the founders get rich, the early employees get screwed, and the late employees get paid."
I think this phrase does a better job identifying a risk than an inevitability, but it is worth thinking about.
Right, which I think is the point of the article. The "after series A" point is sorta in no-man's-land, where if you're optimizing for potential returns it sucks, and if you're optimizing for stability it sucks.
There is one potential difference, though, which is in the value of a full paycheck in the short to medium term.
Some people may feel they just can't afford to forego a standard, market rate salary, and they wouldn't want to join a company that has a high chance of disappearing next month or failing to make payroll. But beyond that, they're not terrified of the idea of losing their job and looking for a new one. I think we may overstate at times how easy it is to get a job here on HN, but clearly there is a large population of strong programmers who can be picky about what they'll take and still get a decent job offer within a month or two of looking.
I remember Marc Andressen writing about this on his blog a while back - that in a very tech dense place like silicon valley, startups aren't quite as risky as they might sound. A total meltdown in hiring is an outside risk (like the couple of years immediately after the first dot com bust), but otherwise, people often build up such a strong network and skillset through startups that they may have more "job" stability, if it's defined as the ability to get a job (I hear this referred to as "career stability").
None of this necessarily means that post series A is quite the right spot to be in. That might still have too poor a stability vs opportunity ratio. But some sort of "early employee" be the right spot for people who would like to optimize for potential returns under a strict constraint of earning a market-level (or close to it) salary.
There's a risk/reward continuum. Big company gives me a very secure job and zero equity. Post-series-A you have a fair bit of salary security and a small but nontrivial slice of equity. Pre-series-A you have a larger piece of equity but they could fail to make payroll at any point. For some people post-series-A is the best point on the curve.
So, in fact, just after funding might be a great time to join a company.