You're not wrong, but this isn't just about taxes. In the case of Square, apparently they got a 409a valuation done that set a FMV for common of $9.11 and then

You're not wrong, but this isn't just about taxes. In the case of Square, apparently they got a 409a valuation done that set a FMV for common of $9.11 and then issued options with that strike price as is standard practice. Anybody who exercised immediately at $9.11 probably wasn't subject to any tax liability (assuming appropriate 83b election). Employees exercising at that price may have fooled themselves into thinking they were already $6/share in profit-land, which would be incorrect and is the point of the article. But the bigger problem to me is that employees were fooled into paying $9.11 for something that was actually worth far less.