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From a preference standpoint, I had assumed that founders were in the same boat as employees most of the time (especially first-time founders), just that they have a lot more stock.

If investors put in $10M and the company sells for $9M, doesn't it all go to the investors?

If founders get the same preference as investors, it wouldn't be true. I just didn't think they normally did.

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Your understanding is correct, founder shares are typically just common, the same as employees get, whereas a lot of early-stage capital partners (investors) get a different class of stock with a preference attached.

OTOH founders typically have much larger interests in the companies they own, leading to much higher control, which is for all intents and purposes a different class of stock, even though the rights of say, an employee, are nominally the same. Control is everything.

Also, P.S. most employees get options, not shares, which can be exercised into common shares, but are a little different with regard to tax and the fact that they must be "purchased" or exercised.

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