>Suppose I give you $10M to start a company in exchange for 10% of it. The scenario you present is a great excuse for preferred stock but the same result could

>Suppose I give you $10M to start a company in exchange for 10% of it. The scenario you present is a great excuse for preferred stock but the same result could be achieved by other methods. For example the minority shareholder in this case could be given a veto over the sale of the company for anything less than 1.x times the most recent valuation. Or they could be given the right of first refusal on the sale of any shares. But yeah I think it's just generally pretty common in the gamut of human relationships for people to try and put themselves in positions where they can't get screwed by putting themselves in positions where they can do the screwing. It's also pretty common for predators and control-freaks to try to elevate themselves to advantageous positions by justifying it in terms of having the right to defend themselves. I think a good partnership is one where all sides work together to not only align their interests, but also to structure things in a way where everyone feels safe. It's much easier for me to totally throw myself at a cause, especially one that may involve making sacrifices, if I don't have to worry about the potential for getting screwed for my efforts. Having shares that I know will be just as valuable as all the rest can go a long way towards achieving that.