[vkou]

Hollywood does this sort of thing. It's a complete and utter scam.

Films that bring in hundreds of millions of dollars from the box office consistently manage to post up zero-dollar profits. (Screwing anyone who lacks the leverage to have demanded a percentage of revenue, as opposed to a percentage of profits.)

And yet, somehow, the funders keep bankrolling 'profitless' sequels after sequels.

As bad as the 1/9/90 split of outcomes for startups is for employees (1% of a good exit, 9% of slight profit/break-even, 90% of a loss), transitioning to your model will destroy the upshot of the 1%, and make the 9% even more contingent on your employer and funders not engaging in Hollywood accounting.

What you propose creates a colossal incentives for investors to turn the 9% case into an (on paper) 90% case - because otherwise, they'd be on the hook for a very large number of backdated salaries - the obligations for whom magically disappear if you structure the 9% case as a profitless exit.

[dperfect]

I'm familiar with how residuals work (and sometimes go unpaid), but in my opinion that's not a flaw in the idea itself, but rather a question of regulation and/or better legal work (in the contracts) to prevent studios from exploiting loopholes.

Earlier in my career, I was the victim of similar shenanigans when it came to startup equity (promises of equity that never materialized), so it's not like the traditional path to IPO precludes deception and exploitation. My point is, with proper legal boundaries, a system of compensation with increased transparency is fairer than the current one that essentially uses a startup lottery to attract employees.