This is also partially why your common stock options can be valued significantly less than the price the company value would imply: because it’s not an even share in the business.
Assuming you're talking about the Trados Inc litigation, the situation was:
* Raised 52m
* Acquired for 52m
* 8m paid to exec team to stay in place
* Common stock got zero
The lawsuit determined that the board did have a fiduciary duty to the common stock, but that the common stock had no economic value, so they were not actually being harmed here, aka this is basically the best deal the company could have gotten, but it didn't clear the pref stack.
In the Groq/Character deals, they very obviously cleared the pref stack, so common stock deserves to get a piece of the licensing deal at the rate of the stock they held. It's annoying because its a dividend and doesn't benefit from QSBS, etc, but common stock is getting paid there.
You join a company, are granted ISOs/RSUs/etc, and they matter at some point when a liquidity event happens.
Now the liquidity events are "acquihireasitions", the execs and senior AI/ML eng get buyouts to go to a new company -- everyone else: regular eng, designers, PMs, marketers, recruiting, etc. everyone else is just left with nothing.
I wouldn't join an AI startup unless I was on the ML side, and I'm not: I'm just a "regular ass product engineer" so screw me I guess.
Everyone who had stock (including common stock) at character.ai was bought out at the $2.6bn price: https://www.theinformation.com/articles/google-hires-charact...
The buyout included guaranteed payouts for people who had unvested stock for 2 years post-acquisition.
These transactions are opaque and confusing, but employees are generally not being fucked over here.