As a former poker player, the problem here is very clear. Let's say there is $100 in the pot, and it's going to cost $50 for me to call and be all-in. I'm paying $50 to win a total of $150. That means that I need to have a 1/3 chance of winning to make this a financially-breakeven call. I estimate that my hand has 35% equity, so I go ahead and call.
I'm going to lose 65% of the time, I'm going to be ridiculed by poor players without knowledge of equity and pot odds, and I'll question whether I actually made the right decision. The other 35% of the time, I'll win that $150, feel good that I made the right decision, and those same people will call me a lucky moron.
The average result is that I gain $100 * 0.35 - $50 * 0.65 = $2.50[0] every time I make this decision. My decision was good, even if the outcome is highly volatile (nearly 2/3 of the time, I lose).
Now the player I was up against says that because I got lucky and won with a worse hand, I don't deserve the full $150 that's in the pot. How about if I give him 10% of that as consolation, since he "should have won"? Everyone else at the table agrees that's reasonable (after all, I'm just an idiot who got lucky), and now the equity of my decision works out to 85 * 0.35 - 50 * 0.65 = -$2.75[1], and I'm actually losing money on my original decision.
Changing the terms after I've made an informed decision is more than shady: it makes my original decision (based on the overall expected value) incorrect in retrospect. That is what people have a problem with. If early employees now have to account for some nonzero chance of getting fucked on their equity, it's going to make it that much harder for an early startup to afford anyone. Limiting the upside of an investment drastically lowers the risk an investor (and an early employee is effectively an investor) can rationally bear.
[0] At the time of my decision, there was $100 in the pot for me to win. I win it 35% of time, and the other 65% of the time I lose the $50 that I'm paying now.
[1] 150 - 10% = 135 - 50 (the amount that I put into the pot to call) = 85.
My entire point is that it was explicitly in the rules that they are allowed to do this. If you did the calculation and excluded the possibility that you would get $0 because the options are otherwise worth too much then you did you calculation wrong. It's like you played the above scenario but didn't take the externality that the other player was going to get a straight flush into account in your calculations, your "informed decision" was actually an uninformed decision because you incorrectly treated options as though they were guaranteed.
I'm going to lose 65% of the time, I'm going to be ridiculed by poor players without knowledge of equity and pot odds, and I'll question whether I actually made the right decision. The other 35% of the time, I'll win that $150, feel good that I made the right decision, and those same people will call me a lucky moron.
The average result is that I gain $100 * 0.35 - $50 * 0.65 = $2.50[0] every time I make this decision. My decision was good, even if the outcome is highly volatile (nearly 2/3 of the time, I lose).
Now the player I was up against says that because I got lucky and won with a worse hand, I don't deserve the full $150 that's in the pot. How about if I give him 10% of that as consolation, since he "should have won"? Everyone else at the table agrees that's reasonable (after all, I'm just an idiot who got lucky), and now the equity of my decision works out to 85 * 0.35 - 50 * 0.65 = -$2.75[1], and I'm actually losing money on my original decision.
Changing the terms after I've made an informed decision is more than shady: it makes my original decision (based on the overall expected value) incorrect in retrospect. That is what people have a problem with. If early employees now have to account for some nonzero chance of getting fucked on their equity, it's going to make it that much harder for an early startup to afford anyone. Limiting the upside of an investment drastically lowers the risk an investor (and an early employee is effectively an investor) can rationally bear.
[0] At the time of my decision, there was $100 in the pot for me to win. I win it 35% of time, and the other 65% of the time I lose the $50 that I'm paying now.
[1] 150 - 10% = 135 - 50 (the amount that I put into the pot to call) = 85.