All of it could have been avoided by just giving him the raise he earned through his hard work.

I have very little sympathy for bosses like this. If your employees work hard and make you extra money, passing down some of that prosperity is just the right thing to do. It shows you value their contribution, and will likely encourage them to keep working hard for you. Happy employees are productive employees, after all.

If you can't get a raise by conventional means, this guy's strategy is a great way to go. He kept his head down and just focused on learning everything he could about the business so he could set up his own company someday. When you stop working for money and work for knowledge instead, it's only a matter of time until you'll be able to literally create your own opportunities instead of relying on others.