That - obviously. What I have in mind as the dilemma is exactly the fact that is is rational for the early investor to accept the terms of the latter round, wh

That - obviously. What I have in mind as the dilemma is exactly the fact that is is rational for the early investor to accept the terms of the latter round, which is why they are likely to get screwed. The dilemma of the founder, to me, seems to be whether (1) to go along with whatever terms the latter investors propose, even though you know it's not fair to the early investors, because you know that it's rational for the early investor to accept them, or (2) to stick out with the early investors and only accept further investment provided they honour your agreement (and not try to strong-arm the early investor in giving up their rights), even though it's not rational for you (the founder) or your company to do so (however, it's rational for you+early investor). It's similar to the story that was on HN earlier - founders that had great exists had rewarded their employees with additional equity/cash, even though they were neither rationally nor legally bound to do it - but they did it anyways, because it was fair / the right thing to do. That's the sort of dilemmas I'm talking about, and I believe the original article is talking about.