This paper considers potential disagreements between an entrepreneur and a venture capitalist about the desirability of taking a company public. Convertible securities are shown to be optimal for a novel reason. In particular, it is shown that automatic conversion at the time of the IPO takes away the option value of the convertible security. This provides an optimal incentive for the venture capitalist not to push the company too hard (or too early) into going public. The paper also derives the optimality of demand registration rights.