The California dream of long hours of work but a big pay-off in shares at the end of to all has come somewhat unstuck.
Workers at four high-profile Internet companies that began selling shares in the past 16 months have collectively lost about $9 billion on paper since their IPOs, according to calculations by compensation researcher Equilar and The Wall Street Journal.
Most of the drop—$7.2 billion—is at Facebook. The average Facebook employee still holds stock or options worth an average of $2.5 million - but they have lost roughly $2 million of wealth on average since the company's May IPO.
Employees at social games firm Zynga - closely involved with Facebook - have suffered more. Shares have fallen about 75% since the December IPO, including 12% on Friday after warnings of weaker financial results.
Nonexecs there now hold equity worth an average of $132,000, down 79% from $635,000 at the time of its IPO last December.
Niko Vuori, a 34-year-old general manager at Zynga, has put off plans to buy the home he is renting .
"It's disappointing; nobody is going to pretend it isn't," Vuori told the WSJ . But Vuori said he liked working at start-ups to help build companies . "If you're in it for the long haul, it's a temporary blip,"he said .
It's not all gloom. At LinkedIn, employee-held equity has tripled since its May IPO. The average employee holds stock options valued at $922,000, versus $310,000 at the time of the IPO.
But at Internet-radio firm Pandora, employees hold an average of $530,000 in equity, down 41% from $896,000 at its June IPO.
At coupon company Groupon, employees hold an average of $11,100 in equity, down from $48,000 when the company went public in November.
Recruiters told the WSJ it's now harder to attract employees to Internet start-ups, particularly in social media
"Why would you want to work for next to nothing at the next Facebook when the real Facebook isn't doing all that well?" said Valerie Frederickson, head of a human-resources consulting firm .
"People are sometimes dedicating years of their lives to something where they think there's going to be a big payoff, and then there's not."