[rmelton]

My company is actively using this model now. It's really hard watching competitors raise multi-million dollar rounds though.

[Eisenstein]

Unless your plan is to vest and cash out, you shouldn't envy them.

[ethbr1]

That's why it happens so often though -- the very people who are directly enriched by doing it (holders of the majority of the company's equity) are the only ones asked to decide to do it (board votes).

Canonical example: MailChimp

The founders retained essentially all the equity (Atlanta), so when push came to shove they decided "Fuck it, we'd rather be rich than work" and sold the company.

It feels like the only way to avoid this would be aligning the equity structure with employees and customers in a better way.