Which begs the question, why would you deliberately build a cliff into the vesting process? Why not say, 20000$/yr (or whatever arbitrary amount) at then-curren

Which begs the question, why would you deliberately build a cliff into the vesting process? Why not say, 20000$/yr (or whatever arbitrary amount) at then-current valuation? As for institutional investment, this would create incentives for the founders (or other equity holders) to exaggerate the valuation of the company. On a different note, this kind of vesting would mean more equity for people who worked for the company while it was growing slowly (and who took on more risks - that's why you give them equity and not hard cash) before seeing exponential growth, and no equity growth for people who joined after the company had reached a stable state. The next point is, what's whith people who want to disinvest from their position? This is both the case for investors after a company has reached a certain size (e.g. Zappos before they were acquired by Amazon), but it will also be the case when people who get partly paid in equity want out of their position. Vesting cliffs unilaterally benefit the current equity holders, because it creates a skewed incentive structure where you either should leave at the start or stick it out until the vesting cliff. (And, that's what it was with Microsoft in the 90s/2000s: many people stayed on exactly for the time it took for their equity to vest).