The benefit to founders of progressive equity is that at a smaller exit they still get a big return. It's only when the numbers get huge, as they often seem to be doing these days, that progressive equity kick in. Like a progressive tax system.

If the founders goals are to achieve a satisfying outcome ("financial security"), they would have to achieve a 2.5x bigger exit under scenario 2 than scenario 1. Andrew's new system retains scenario 1's "ease" of achieving a satisfying outcome for the founders while allowing the other employees to reap more of the benefits if the company grows further.

It's a structure supporting the idea that the first $X million are pretty important for the founders (or anyone, really) but the next $XXXm aren't as big of a deal and can be spread around somewhat, hopefully increasing the total number of people who hit $Xm within the company if it becomes huge.

I like the idea.

If you made that change only, you'd presumably still end up allocating the remaining 45% in a way that skewed heavily towards early hires. On the other hand, this system allocates the unicorn value to much later hires as well.