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So what is the true Sparrow story? Because it looks like the Sparrow guys simply cashed out. I'm sure the founders and investors got a nice return, and the rest of the team, outside of stock options, got great salaries, and great retention bonuses. What else is there?

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Thats the problem. Probably investors didn't get the return they expected. Google bought sparrow's for the team, not the tech. So what likely happen is Google payed a small sum for Sparrow and instead gave huge sign-in bonuses to the team. Thus investors don't ge a huge return, the team does.

I love how the "true sparrow story" is purportedly the one where the people who were already millionaires made a profit somewhat less then they had hoped.

That would be interesting. You can't totally screw over investors (you can screw them a little). Even if the founders hold majority shares the company needs to sell at a reasonable valuation. But you're right, I can see a scenario in which the founders supplemented their intake with the retention bonus (which is mostly likely in the 7 figure range) - and that would piss of investors.

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