[hedora]

Each funding round and new hire brings dilution.

The company issues new shares for the investors and new hires.

So, you might start with 100,000 shares and 10% of the company, but by IPO, there could be 100,000,000 shares, giving you 0.1% of the company.

(These numbers are completely made up, though if the company ipo’s for $1B, that’s $10/share which is a plausible price per share. Companies often grant additional shares to early employees.)

[matrix_overload]

Exactly. And then the board votes on who gets extra shares to compensate for the dilution, and the CTO is suddenly not on the list. Because the CEO spent months playing political chess with the board members, negotiating who gets what, and before that spent years playing political chess with investors to see who gets into the board. CTO is usually not involved in these games, and has no pull beyond the CEO's goodwill.