Even if the first five employees get 50% that will be diluted to ~5% by the time there is any form of satisfactory exit, so while it sounds high, its not crazy either. If the company doesn't exit well the 50% doesn't matter.
What do you think early employee equity should look like relative to founders'? And what should employee #1 equity look like relative to #2, #3, and so on? In a fair world.
I think a lot of that depends on the field the company is in, how much vision is is brought in by fouders (is it a radically new, risky field that requires true vision, or is it another sass app that is reinventing the wheel while taking out a few of the hassles in current industry, etc...). It also depends on how much talent/skill is brought on by employees 1,2,3... etc... Is it rare expertise that is hard to find, vs just another javascript dev that knows AWS etc.... So to define that is tough, or rather fluid but I think offering employee's 1-5 <1% pre-dilution with a low salary is definitely someone being taken advantage of regardless of the company....
I would be OK with contracts that say employee's 1 through 5 get 0.8 to 1% share of the company but is non-diluatable. So their equity stays the same regardless of the success of the company. (of course there is room for discussion with an idea like this but hopefully you get the point Im trying to make)
