Investors in large acquisitions, like the EA deal, are mercenaries who operate based on spreadsheets, not a love for the product. They analyze future revenue streams, like mobile microtransactions, and are "leading from behind" by monetizing proven user behavior, not innovating from the front.

Official financial segments often reflect bureaucracy, not true business economics. By creating a 'Shadow P&L' through deductive analysis, investors can uncover massive hidden costs in non-core initiatives, as ValueAct did with Microsoft's hardware divisions.

Founders should be wary of earn-out clauses. Acquirers can impose layers of pointless processes and overhead costs, tanking the profitability of a successful business and making it impossible for the founder to ever receive their earn-out payment.

Investors and acquirers pay premiums for predictable revenue, which comes from retaining and upselling existing customers. This "expansion revenue" is a far greater value multiplier than simply acquiring new customers, a metric most founders wrongly prioritize.

Escape the trap of chasing top-line revenue. Instead, make contribution margin (revenue minus COGS, ad spend, and discounts) your primary success metric. This provides a truer picture of business health and aligns the entire organization around profitable, sustainable growth rather than vanity metrics.

Corporate leaders are incentivized and wired to pursue growth through acquisition, constantly getting bigger. However, they consistently fail at the strategically crucial, but less glamorous, task of divesting assets at the right time, often holding on until value has significantly eroded.

Financial models struggle to project sustained high growth rates (>30% YoY). Analysts naturally revert to the mean, causing them to undervalue companies that defy this and maintain high growth for years, creating an opportunity for investors who spot this persistence.

Beyond outright fraud, startups often misrepresent financial health in subtle ways. Common examples include classifying trial revenue as ARR or recognizing contracts that have "out for convenience" clauses. These gray-area distinctions can drastically inflate a company's perceived stability and mislead investors.

Before analyzing a balance sheet or income statement, read the footnotes. They act as a legend, revealing the specific accounting choices, definitions, and modifications management has made. This context is essential to accurately interpret the numbers and understand the underlying business reality.