Management should not do this because it makes it harder to hire at all stages of the company until it's liquid. And founders know how fucking hard it's to hire in general. If you fuck over early employees, what prevents you from fucking over later employees?

And imagine trying to do something equivalent to investors. How easy will it be to get funding then?

If I'm an early employee trying to join, will you fuck me over or will you give me liquidity? I will look at your options program, if I can early exercise, if you will give me hell for using ESO fund.

Now the internet is starting to write how being an early startup employee is an extra bad idea. The very public example of zach holman and other articles creates chilling effects on startup hiring.

It's what made me choose to go to the big company after my last job.