Preparing a company for acquisition can lead founders to make short-term decisions that please the acquirer but undermine the brand's core agility, setting it up for failure post-sale. The focus shifts from longevity to a transaction.

The Froyo industry's previous decline wasn't due to a lack of demand, but a surplus of supply. The business model—low-cost self-serve machines and minimal labor needs—was so attractive and easy to replicate that it led to oversaturation. The industry essentially became a victim of its own success.

Club Penguin's co-founder warns that accepting VC money creates immense pressure to become a billion-dollar company. This often crushes otherwise successful businesses that could have been profitable at a smaller scale, making founders worse off in the long run.

Current AI investment patterns mirror the "round-tripping" seen in the late '90s tech bubble. For example, NVIDIA invests billions in a startup like OpenAI, which then uses that capital to purchase NVIDIA chips. This creates an illusion of demand and inflated valuations, masking the lack of real, external customer revenue.

In AI M&A, recency is key. Companies pre-ChatGPT often had to rewrite their entire stack and relearn skills, making their experience less relevant. Acquiring a company with post-ChatGPT experience ensures their tech and knowledge are current, not already obsolete.

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.

Contrary to common belief, the home goods sector is facing a more challenging period now than during the 2008 recession. The massive pull-forward of demand during the pandemic created an artificially high peak, resulting in a deeper and more prolonged subsequent trough that is harder for businesses to navigate.

Sonder's bankruptcy wasn't due to its core idea of a standardized home rental, which was sound. The failure stemmed from raising too much venture capital ($680M), which created immense pressure for hyper-growth. This forced the company to sign unprofitable leases, proving a good business can be destroyed by the wrong funding model and unrealistic expectations.

Rapidly scaling companies can have fantastic unit economics but face constant insolvency risk. The cash required for advance hiring and inventory means you're perpetually on the edge of collapse, even while growing revenue by triple digits. You are going out of business every day.