I've been thinking about the equity split amongst early employees. Our startup is reserving 20% of equity for early employees. How about a division by 2 every time? First employee gets 0.5 x 20%, second employee gets 0.25 * 20%, etc.
Early employees are better rewarded for the risk, but later employees (e.g. #10) will get basically nothing. It's all about tradeoffs
people already do a variant of “earlier gets more, later gets less” that’s a lot smoother/linear than your scheme and can be customized and adjusted to roles (engineers get more than salespeople as an example). With what you describe, offering some exec down the line 0.5% or whatever is impossible.
You need flexibility because at any moment some killer candidate might come along that you need to juice the grant for. Just being earlier doesn’t mean they contribute more to the company
But you can leave easily. and in 2024 I think people should insist on getting a decent salary (FAANG is impossible, but for most of the country, “even just” $170K is eye watering), and work life balance (sure, you will have to put in extra hours sometimes, but if it’s a 12 hours a day shop, don’t join). Founder should work a lot more aggressively, live a lot more spartan, and obviously is shackled to the damn thing with no optionality.
Early employees are better rewarded for the risk, but later employees (e.g. #10) will get basically nothing. It's all about tradeoffs