[logfromblammo]

In practice, the people that can have a significant impact on the success of their employer are officers, or at least upper management. And they will also be in a position to negotiate their equity compensation. They don't need to take sound-bite advice from the Internet.

If you don't have a contract (you are "at will"), don't invest in your employer, ever. If you do have a contract, but can be fired for any reason that is outside your control, don't make an investment that is not completely liquid. If you can make the stock price move unilaterally, perhaps you should consider shorting it, quitting, and airing all the dirty laundry in public? That would be a dick move, but so is diluting all your employees into oblivion so you get a bigger share of the payout.

If one cannot raise enough capital to execute on the business plan, I question the value of the investment. In any case, the market is not homogenous. If you can't afford the market wages in Silicon Valley, move your startup to the Rust Belt. If you can't afford those wages, hire remote from Britain, Australia, or India. If you can't afford that, try your hand at lowballing freelancers. Or maybe hire one 40+ developer at 120% median pay instead of two 25-year-olds at 80%. Tricking your employees into thinking you're paying them more than they're actually getting is not a viable way to conduct business in the long run. Believe it or not, there is value in not being a scumbag employer.