Not sure if it works or not.
I think the current trend of 4 year vesting with a 1 year cliff (and 0.1%-0.5% for very early engineers in startups less than 7 people, as it seems on angel.co job postings) is totally messed up. It seems every startup wants to you take a $40k salary cut at least and isn't giving you equity anywhere close to that value (even optimistically, though it really should be at net present valuation. EG: If your last funding round was an incubator which put in $20k for %5, then your valuation is $400k, and each year that engineer gives up $40k in salary, he should get %10 of the company... until you do another round, at which the $40k will buy less of the company. But nobody is doing that...)
Don't even get me started on the one year cliff. Can you imagine any other investor in a startup taking a one year cliff? "Ok, we'll take your venture capital, but you're going to vest and it's got a cliff. If you act like jackasses in the first year we're going to cut you off and you get nothing"
Here's the magical thinking: Somehow investor dollars are more "real" than employee sweat, or lost salary the employee gave up to come work there.
Hell, if they pay you %60 of a market salary and then give you %40 as deferred salary, you should still get probably %4 of your salaries value in equity to compensate for the risk that the deferred salary will never be paid.
And why don't startups use deferred salary? Just each funding round, pay off some of the deferred salary. Make the interest on deferred salary something like %5. You're gonna grow a lot faster than %5 right?
Oh, that's right... Companies don't use deferred salary because Investors don't want the company to have liabilities-- investors want the first place in line when the company gets liquidated.
More magical thinking-- their dollars contributed by pension funds and tied to "you must pursue the higher risk strategy, we don't care if it destroys the company" pressure is more "real" than the salary employees give up to do the actual work.
I'm far from a unionist, but I blame founders for putting up with this kind of employee hostile thinking. Look to bright lights like Basecamp and Github-- you don't have to sell your soul to start a company. Bootstrap and it will let you treat your employees well. And then if you do want to take VC money, like Github did, you can do it on your own terms, not theirs.
Too many founders seem to come out of an incubator (which is coaching them for demo day- seemingly the whole point of many incubators) thinking that their purpose is to get VC money. IT's not. It is to build a business. VC money is a loan that is an ongoing drag on the business (even more expensive when you consider the advice of VCs.)