When Square's IPO priced below its expectations, the news was good in many ways for entrepreneurs. But it was also good for big insider investors. And what's happened since is a reminder that going public is often a game played by the few at the expense of the many.

In its first day of trading on Thursday, Square shares were up 45 percent over their initial $9 price, closing at $13.07. Great news, right? That meant a lot of people who had worked hard to make something of the company were now well right?

Uh, no.

With IPOs, you have to remember that everything tends to be designed to protect and promote early big investors, VCs and huge institutional investors. The higher the initial price, the harder it is for the stock to jump up and the less likely it is that these shareholders will be able to sell stock on the first day and immediately make 25 percent to 50 percent or more on their investment.

That was what made so many big investors angry about Facebook when it first went public. The shares were priced at about what the market would bear. Facebook brought in a lot, but there was no big pop. The big investors were angry, as they couldn't count on a nice chunk of profit right away.

In the case of Square, by pushing back so the IPO price was under what had been expected, the big investors had more room to maneuver.

Who really got screwed were some employees, as Bloomberg reported. Even at the $13.07 price, their shares were underwater. About 21 million options were offered at more than the first day's closing price.

Now, things may get better over time and most employees at companies going public are contractually kept from exercising their options or selling their shares for some number of months after the IPO. The reason, of course, is to keep the sudden increased amount of stock from pumping up supply and, therefore, lowering price in the short term.

And then there's the ratchet factor. VC-backed firms often have to give investors premiums on their investments, called ratchets, in later funding rounds, lest the profit they expect not come to pass. In other words, it's another way of removing risk from an activity that is supposed to be risky by its nature. The premiums come through issuing additional stock, which dilutes values for people, like employees, already holding stock or options.

It may be that employees start to recognize that the benefit of shares they thought was a big part of their future compensation may not come to pass. If that happens, expect talented workers to start demanding more in the way of cash compensation, as they end up bearing the risk for the big investors as well.