That is the point. If your employee leaves before they have vested their shares they don't get to keep them.
>but it's still very likely a company death, if someone with 50% of the company leaves.
No, not necessarily. Founders of successful companies leave after several years of service all the time (happened recently with Xobni, for example).
>Do you have a link where I can read up on what profit sharing means and how that differs from equity? I do not know these things.
There are lots of resources if you just do a quick Google search. The basic idea is that your employees would get a % of profits you generate in a given year rather than equity.
>If you could get a job on the open market that paid $130K in salary and benefits, would you instead work for some crazy guy for $30K cash plus another twenty grand in equity?
No. Not because I wouldn't want to work for equity (I have done that before) but because there doesn't be a clear path to liquidity of those options. You've described this as a lifestyle business which typical means no imminent source of liquidity for shareholders. This is why I suggested exploring a profit sharing structure.
If you are saying that this is a business that can't support livable compensation for employees for the foreseeable future, then I think there are bigger issues though.
Sorry if I am not fully understanding what you are getting at.