Gurley explains private cap tables are structurally built to only go up unlike public stocks.
“Private cap tables are not structured very well to go down. It would take forever to explain exactly why that is with lick preference stacks and whatnot and ratchets, but they're built to kind of only go up and public companies stocks can go up and down.”
Gurley explains that IPOs unlock down-round complexity by converting all preferred shares to common stock.
“And one of the things that the IPO does is unlocks all of that complexity and converts everyone to common.”