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Idea #2 is genius. In my experience early employees become a liability as you scale and exceed their experience skill level. This makes it a win for them and for the org. Nothing worse than an early employee who is hanging on to a high level role when everyone knows they aren’t cutting it. What are some possible downsides of this?

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In other words, idea #2 is to have a mini-IPO (liquidity event) for the early employees, by round A or B. B might make the most sense. Kind of like a super-bonus or extra warrants. So at least the early employees don't have to wait 7-10 years to see an outcome, but can expect a (smaller) windfall within 1-3 years, to put them on par with high-paying jobs if the company is successful enough to raise a B round.

Downsides could be - more risk for founders raising rounds, since its unconventional - increase of tax complexity for both employees and employer - more complex cap tables and/or processes around converting stocks, since employees are usually owning common stocks, while investors are looking to get new preferred stocks issued for round

But I think big vc orgs and especially YC could pioneer / help with new approaches

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