Work at a Startup is a brilliant move and I'm looking forward to learning from it.

I don't agree that "usually startups in trouble end up dying, or getting bought in a fire sale." I don't know if anyone has a big enough data set to give us the "correct" answer.

But if you talk to thoughtful, experienced VCs and entrepreneurs who have seen many companies through their whole lifecycle (birth to IPO and beyond), I think they'll tell you that a lot of the successful startups get in significant trouble along the way. And if that trouble coincides with the need to raise a round, common stockholders get diluted.

Preferred stockholders have anti-dilution, pro rata rights, protective provisions, and cash reserves to protect them.