Indeed. Two other situations where this comes up, and in my experience people fail to see this: a) In a standard house (real estate) transaction: One party (Bu

Indeed. Two other situations where this comes up, and in my experience people fail to see this: a) In a standard house (real estate) transaction: One party (Buyer) brings money in. Three parties take money out directly in proportion: Buyer's agent; Seller's agent; Seller. Buyer wants lower price; All others want higher price. That's the payout structure (and the induced incentive structure). It's that simple mathematically. b) In a standard job offer, the employer has a budget to spend; they don't actually care how much of it is "above the line" (employer taxes, 401k matching, employer's contribution to social security) and how much is below (salary, income taxes, employee's contribution). If an item below the line changes (e.g. lower income tax), they won't offer "lower salaries". If an item above the line changes (e.g., lower employer taxes), they will. These changes are not immediate, but they converge rather quickly. Yet, in both cases (as in the VC case), many people fail to see that. You have to have enough detail when doing such evaluations until every change is a zero-sum game between the different players -- and it is only at that point that you can evaluate the merits of a rule.