The 409a value is the strike price, say it's $1. Your investor comes in and buys for $10. Every new employee that comes in, you say 'you can buy it for $1 and

The 409a value is the strike price, say it's $1. Your investor comes in and buys for $10. Every new employee that comes in, you say 'you can buy it for $1 and sell for $10, so each share is worth $9,' which is basically lying to make the comp package sound better and hire people for less money. To be less cynical, the lower you force the strike price, the less anyone getting new shares has to pay to buy it. Early on, it's much easier to early exercise and buy them if its cheaper. Everyone gets more profit if they can buy at a discount, so they try to discount options as much as possible