Good point, although do long term cap gains apply to private company stock being held over years until the liquidity event?
Not sure what the best source on this is, but a quick DDGing:
https://www.fool.com/knowledge-center/tax-rate-on-exercising...
If I early exercise my options on day 1, then I still have to wait until the 2 years after the grant date (2 years of employment) to get long term capital gains treatment.
If I wait 4 years, then exercise, then I have already satisfied the 2 years post-grant requirement, but I still have to wait a year after the exercise to get long term capital gains treatment.
The key part was my last clause: "whichever is later".