This is one of the better explanations I've heard about preferred stock. I'd say the counter point for the engineers at least is that frequently the opportunity

This is one of the better explanations I've heard about preferred stock. I'd say the counter point for the engineers at least is that frequently the opportunity cost for them is vesting stock. That lost revenue over the vesting period is IMHO the same as directly investing cash in the company that the company itself can liquidate. I would say that when shares are used for compensation with a vesting period they should be treated equivalently to investors that are directly putting cash in.