I've thought about the comp issue for a while and came up with a kernel of an idea for a possible solution. Most companies are going to fail which means that most engineers will see their options go to ~$0. The reason VCs make money regardless of this low success rate is that they have a better Beta due to the many concurrent bets they're taking.

It occurs to me that some kind of Startup PEO could be created to help give engineers a favorable Beta too. Startups would hire the PEO by granting them equity and paying the salaries of their team each month. In exchange the PEO would pool the costs for good healthcare and other benefits. They'd also provide placement services to help engineers in their program switch companies whenever they wanted.

Do damn good work and the shared fund will give you upside. You won't be rewarded for picking the winning horse anymore, but instead the quality of your work over years and across several organizations. I'm not going to pretend I have all the incentive management figured out, but I think there's something in there and an ORG like YC might be able to pull it off.