Two ways this happens are liquidation preference and "participation". In both cases (they work differently but mean similar downsides for employee stock), your

Two ways this happens are liquidation preference and "participation". In both cases (they work differently but mean similar downsides for employee stock), your stake's value becomes conditional on a best case scenario exit and investors in practice gain more ownership than the numbers immediately reveal. If the company fails, all that means nothing. If the company goes big, it won't matter. But in the most likely exit case where the company sells for less than everyone was hoping, now you get into the interesting territory where the investors might make their 1.5x return before you see a cent. It's not that founders don't understand this. It's that founders end up taking these conditions when they're low on negotiation leverage and choose between that and running out of funding, so it's an understandable decision. However, they also avoid talking about it unless forced to because it changes how you will value your stock, which changes how attractive your offer or current compensation is. As a rule I ask about it when I talk to startups about job offers.