I might agree with you, but we'd need more information to really know for sure.
A minute of Googling turns up TechCrunch speculating YC and other investors got paid back in this deal, in which case I'd say this is pretty sleazy.
A minute of Googling turns up TechCrunch speculating YC and other investors got paid back in this deal, in which case I'd say this is pretty sleazy.
That TechCrunch article doesn't really present the event as a great exit, but more that the founders were hired to move on from a startup that wasn't really going anywhere. (the post specifically says that Google didn't technically acquire the company)
Seems both sleezy and a cautionary tale for those thinking of working at a startup from where I'm sitting...
So no. There's nothing sleazy about a preferred shareholder being treated preferentially, necessarily.
When you issue stock to someone, you accept a fiduciary responsibility for increasing the value of those shares to the best of your ability. That fiduciary responsibility includes siding with their interests if and when a conflict of interest arises.
If the founders really did receive a large pay day while taking the value of their non-preferred stock to zero, then it sounds like that fiduciary responsibility was ignored.
So yes. Sleazy is an appropriate word.