What it seems to me this is saying is the following: - before we'd give you X options (say, 40,000) vesting over 4 years - now you get 1/4 of that, 10,000 vesting annually

The strike price of both grants is the same (say, $1/option)

Now the question is, what happens year 2?

If the company is a lot more valuable, two things will change: - strike price will be higher (say, $3/option) which makes the options slightly less attractive. But that's not the big deal - # of options will go down, because the more companies grow the more options are valuable and the less they give out to employees. So year 2 options will be 5K.

If this continues, over 4 years the end the employee will have something like 10K + 5K + 3K + 2K = 20K options vs 40K. Not only that, but the 20K options will have a much higher blended rate.

On the positive side, there will be no reason for the employee to stay if they don't want the new grant. But the reason they don't have to stay is that they were not comp'ed as much in the beginning.

So me reading between the lines, this will mean a lot less compensation for early employees of successful startups vs the traditional model.

There is a reason why the handcuffs are called golden. At the end of the day employees decide to stay because it's worth it for them.