[ykler]

It sounds like a lot of the criticism is that employees don't get enough compensation or don't get it quickly enough. With options, the variance is too high, since even companies that raise a lot may fail, and liquidity takes a long time. Plus, if the shares are voting, founders have to give up some control. I guess the variance will always be higher than many employees would prefer (at least not considering schemes that share risk among multiple startups), but how about something like the following for mitigating the concerns people are raising?

The company commits that some percentage of each month's revenue will be immediately set aside for existing employees (to a first approximation, split equally between them). Crucially, any investment should be counted as revenue for this purpose, since early-stage startups often get major investment before major revenue. Ideally the percentage should be something big, like ten.

To encourage employees to stay, the revenue will be paid out to them over a period of years, similarly to how options take time to vest. A detail to be worked out is what to do with any money that isn't paid out because the employee leaves. (Maybe just return it to the company, though that could give companies an incentive to get rid of employees after a major funding.)

The company should be able to revise this commitment but not without a warning period of, say, half the period over which compensation is paid out to employees.