It's much much easier to hire good engineers at a lower payrate when the signaling is good because they actual believe the paper equity they get is actually worth something down the road.
In the same vein, positive signals and the good press that comes with it helps you win business. In our case (no where near a unicorn), but we were featured in a local paper. That paper was seen by the CEO of a company we were in negotiations with and were stuck down on a lot of DD work. They wanted all these assurances we would still provide services and won't just take the money and go bankrupt a year later etc etc.
CEO saw us described as the "next big thing in X" and intervened. He told us later he "knew" we were going to be huge and wanted to lock us in early as a partner. Contract was signed less than a week later.
Unicorn status is largely a vanity metric, but it's also a power signal that if used correctly, gives a lot of benefits to the startup.
ps -- you can't blame founders for responding to the market. If potential employees overvalue unicorn valuations and undervalue 83b or long term options, well, I'm not capable of changing their minds. I sell to the market I have, not the market I wish I had.
While I would say that it seems probable that many startup employees are young and inexperienced enough that it services the founder to play these games, I'd definitely say that the incentives are definitely in favor of this dynamic. It's unfortunate. I'd prefer solid financials and growth, just like you. The only real way to avoid this kind of game is not to play -- have an independently wealthy founder/stakeholder, or a very close relationship with an angel investment firm that can afford to be long term. It's challenging to find that from people managing Other People's Money.
In my first startup we were so happy anyone would be interested in funding us we took on, in hindsight, some pretty bad terms. But having said that, our first raise got us onto a tech blog where a person reached out intrigued by what we did and turned out to be our best engineer.
It's really a calculated risk. Despite all that, since we got acquired reasonably early on, our engineers made a pretty solid return.
banks found that out the hard way at the end of 2008, when companies wouldn't do business with banks with falling stock prices. even facebook found out the hard way after IPO when its stock was tanking and many tenured employees where questioning whether to stay. stock / valuation performance matters a lot.