Allen Pike

How to Not Get Acquired

2025-10-31T23:45:30+00:00

Building something new from 0 → 1 is hard, so it requires your full attention. Given that, a key part of creating a new product is limiting distractions – anything that pulls your attention away from finding product-market fit. There are a lot of things a founder can be distracted by, but one of the most distractive distractions has become more common in recent months: the acquisition inquiry.

Here are some tips on how to avoid these¹.

Trade offer

A year into my first startup, we got our first legit inquiry about an acquisition.² This was very exciting! It feels validating to be wanted by somebody you respect, a company you find interesting.

Back then, I sat down with my then co-founder and worked through a huge new question: Did we want to give up our mission, relocate to the Bay Area, and join a FAANG company?

This is the kind of question that consumes not only work hours, but in-between hours. At lunch, we talked about the acquisition idea. When I talked to my wife, we would discuss it. When I was lying in bed or taking a shower or walking around, instead of thinking about how to build a great product and team, I was instead thinking about building products for this whole other company.³

In time, we came to a conclusion: we didn’t want to stop, and we didn’t want to move, but the prospective company and mission were compelling enough that there was indeed an amount of money we’d be willing to do the deal for.

With trepidation, we met for the follow-up call with the Big Deal Company. We heard out their much-anticipated offer, which was, basically, to just offer us jobs. If we gave up on Steamclock, we could become IC developers at their company, at the normal salaries we would make if we’d applied to work there with our dang resumes, and a typical signing bonus.

We politely declined, then sat back to reflect on what had just happened. We’d been distracted for weeks by an opportunity that never was. Or, maybe more accurately, an opportunity we already knew was there (get hired at a big company) but had been repackaged as something that initially sounded novel.

This experience, and others, have led me to simply decline most such inquiries since.

Still, though, every year or two an inquiry will be interesting enough that I can’t just say no. On occasion, the email about “discussing opportunities to work together” is not automated outreach, but a thoughtful question from a founder or leader I am deeply curious to learn more from, at a company I find intriguing. When the problem they’re tackling is fundamentally one we’re already obsessed with, just at a far larger scale, I’m gonna want to talk to them!

In these cases – when I can’t bring myself to just politely say no thank you, we’re busy building – I’ve developed a simple approach for responding in a way that maximizes learning yet minimizes distraction: meet them, then advise them against acquiring you.

A simple algorithm

Firstly, when taking these exploration calls it’s worth getting something for your time. While naturally you’ll be sharing about your work, also seek to learn about their business. While I’ve kept these conversations short and sweet, they’ve still enabled me to learn about some fascinating businesses, and even made friends. Every person who considers buying your business is a potential mentor – doubly so in the unlikely case they actually pull the trigger and become your new boss.

If you’re not careful, though, an acquistion inquiry will fractal into a long distracting back-and-forth. Most big companies have professionals whose full-time job is to learn about startups and try to acquire them at competitive prices – affectionately referred to as Corp Dev. The asymmetry here is why the Pocket Guide of Essential YC Advice flatly says “Don’t talk to corp dev.” This is an oversimplification, but the plausibility of any deal will indeed hinge not on the M&A folks, but on a champion – a product leader or founder who wants you on their team.

Your key point of contact for sanity-checking an inquiry is this “exec sponsor” in acquisition jargon. The idea is to talk through, together, the big opportunity or problem on their plate, and why they think buying you might be the best and/or fastest way to pursue it. I’ve had some fascinating conversations with tech execs in this context. Sometimes they haven’t even thought it through and you can easily convince them it doesn’t make sense. Other times they’ve done some really thoughtful analysis, and you learn some useful things about the business and the market.

As much as I enjoy these conversations, it’s still best to be disciplined and limit them until you have a ballpark number in writing. This is because, very likely, the number will be disappointing, and you can get back to work.

Here’s a way to get a number.

Explain that it’s your policy not to have more than one or two calls about an acquisition unless there’s a ballpark number to consider, and agreement on some basic non-negotiables⁴. Explain that you do this because, in your experience, the amounts acquirers can justify don’t generally match up with how much you and your team value the company. (Of course if this isn’t true then don’t lie, though you can say you’ve heard that this is typically the case.)

If they really want you, they’ll give you a number. Optionally you can expedite things by seeding them with an anchor. You could say, “Well, this early we would need to consider anything exceeding $50M but most acquirers can’t justify something like that given our stage” or “Well our valuation at last round was $10M, so we don’t expect to consider any offers until we’ve substantially exceeded that level.” Being transparent might not maximize how much you get if they do acquire you, but it speeds things up, and statistically they’re not gonna acquire you anyway! So you’re instead optimizing for the more important thing: getting back to building with minimal distraction.

When asked for a number, their corp dev person might push to collect a lot more info about your business, or even interview all your team members – basically derailing your startup so they can get more confidence in the number. This disruption is not worth improving the accuracy of a number that you’re probably going to decline anyhow. Instead, have them give a range based on what they do know, then just consider the bottom end of their provided range.

Attempt to decline the offer

If you fail to convince them not to acquire you, you’ll get a number – which (probably) does not meet your “hell yeah” threshold. Then you can thank them for their time, appreciate having had a couple calls where you learned about a scaled tech company and one of their execs, and get back to work.

If the number seems almost good enough to be compelling but you’re not sure, I would encourage you to turn it down. Day 1 is probably the best that number will ever feel. If you agree to it in principle, that begins a process where the acquirer’s full-time staff of expert acquisition analyzers will halt your forward progress by assessing you every way from Sunday, considering ways to negotiate down the number, and lawyering you into submission. If $10M doesn’t sound awesome now, it will sound less awesome when it’s been walked back significantly, divided among your investors and cofounders and team, spread over 4 years, then finally taxed.

Naturally, if you have investors, you are obligated to consider their perspective, which will probably be that they want you to keep building for the long term, and if need be they’d prefer you took the deal with the biggest financial upside. For early-stage deals, though, the non-financial aspects matter too. Once you’ve made enough money to no longer have a mortgage, you’re going to get more happiness from a deal that accelerates you and the awesome team you’ve assembled to put that dent in the universe, rather than a 20% higher offer that would disassemble your people and spread you across the Legacy Settings Screen Maintenance org at IBM. If the offer feels like the latter, get your heads back down.

Get back to building

A lesson I’ve re-learned starting up for a second time is that when you’re trying to do something very difficult, it’s all too easy to find yourself distracted by less-difficult opportunities, even if they’re not the thing that really matters.

Talking to leaders at big companies about the problems on their plate can absolutely support your mission – they often have a wealth of experience, and they could make for great customers, or even someday hires. Just be well aware of the asymmetry. It costs them nothing to ask if you’ve thought about selling, but it can cost you a lot if you don’t have a quick algorithm for getting to, “Sorry – we’ve still got a lot of work to do.”

This post assumes you don’t actually want to sell right now – your company is neither doomed nor succeeding so spectacularly that you’ll get superlative offers. If you do want to sell now, Justin Kan and Daniel Debow have guides on how to go about that. ↩
Now that we’re one year into Forestwalk this has happened as well. Not sure if people keep a timer, or just know not to bother somebody who’s less than 1 year down a 10-year path. ↩
Any time you are in the shower and thinking about a work thing that is not hiring the right people, having enough money, or building the right product, that’s a signal that something is going wrong. ↩
Non-negotiables might include things like no forced relocation, ensuring your investors get treated fairly, the rough mix of cash vs. stock, and so on. These aren’t meant to be contentious, it’s just “FYI we wouldn’t take a deal that doesn’t have these attributes.” ↩

UX Entropy

2025-09-30T23:45:30+00:00

In the olden days, video calls were hard.

Circa 2012, if your next meeting was online, it was important to start the process 5-10 minutes early. The process, at that time, was some or all of the following incantations and rituals:

Find the meeting URL
Find the meeting passcode
Download a specific videoconferencing app
Agree to and accept various things
Dial in separately to get audio
Troubleshoot your audio or video
Wait for an update to download
Wait for the videoconferencing app to restart
Wait for your whole computer to restart
Repeat some of the above steps, now that your computer has restarted

With luck, you would eventually be in the meeting. The other participants, often, would not be. Regrettably, each participant also needed to do the incantations, and they might not have started early. They might even be stuck.

For example, the person you’re meeting might think they’re waiting for you, so they’ve multi-tasked to another app – but surprise! GoToMeeting or WebEx or whatever actually needed them to click “OK” or “Update” or “Ẓ̴͝a̴̡̕l̷̙̓g̶̫̔ó̸̻” to continue the joining process. After 5-10 minutes you would politely email your colleague, asking if they were still joining. Often enough you’d find yourself attempting to help people troubleshoot the above steps via email, which was… not enjoyable.

This was all obviously bad. Any user could see it was bad, but it seemed – oddly – like the companies supporting these apps were kind of blind to it. Or, at least, their enterprise customers weren’t demanding better.

As the story goes, Eric Yuan, then an executive at WebEx, was aware how clunky these product experiences were, and was ashamed of it. He felt that customers deserved a more user-centric video product, with excellent call quality, that ensured anybody could join a call with one click.

In January 2013, his new startup launched Zoom 1.0. They employed some clever tricks to make sure Zoom seamlessly installed and stayed up to date, so anybody could always join a call in one click. They pushed hard to ramp up the video quality. They prioritized UX at all costs.

Zoom as it once was.

The formula worked. A few months after launching 1.0, Zoom had 1 million users. In April 2019, they IPOed with $600M of revenue, were profitable, and were doubling yearly. By then they were well-known as the video app with the best call quality and UX, so when the pandemic happened the following year, Zoom was propelled to household name status.

Today, they have over $1B/yr in profit, and continue to grow. Zoom is one of the great startup success stories.

It’s also slowly falling apart.

Enterprise rot

Success at scale always causes problems. Enterprise software success, doubly so.

The first hurdle for Zoom, shortly after their IPO, was security issues. These ranged from underpowered encryption to leaky analytics to the revelation that their legendary one-click meeting flow was itself a security vulnerability. With market dominance in hand and billions of dollars of enterprise revenue on the line, Zoom started to unwind their approach of usability at all costs. Zoom founder Eric Yuan on this shift:

One-click is important. However, you need to make sure there’s not any potential issue, any potential violation of the operating system. Sometimes we have to sacrifice usability for privacy or security, that’s exactly what we did. We now think security or privacy [is] even more important than that.

And objectively, this is good! We want the software everybody uses to communicate to be private and secure. But it’s also a change in mindset from what made the product great in the first place. The defaults get locked down, the settings panels balloon, and Zoom is that much less likely to incubate the next team communications breakthrough.

Zoom was also one of the companies most thrashed around by the pandemic. While from the outside the surge in usage might have seemed like a blessing, it ultimately caused Zoom more trouble than it was worth. Yuan again:

I really wish there was no COVID. Zoom would be a much better company today. COVID, I do not think really helped us that much except for the brand recognition. For everything else, I feel like there was a negative impact to our business in terms of culture, and growth, and the internal challenge, or the competitive landscape. Everything else… I feel like it’s not good for us.

When your company goes from 2000 employees to 6000 in 2 years because of an event outside your control, you’re gonna have a bad time! You’re also going to get even more settings screens. How many settings, you ask?

The first two layers of Zoom’s admin settings now offer 63 sections and sub-sections worth of settings. These sub-sections are further divided into as many as 17 sub-sub-sections, which are then divided into as many as 12 sub-sub-sub-sections.

Developing a clear and coherent product is hard. Developing a clear and coherent product with 6000 other people is even harder!

The other day I had to log in to Zoom to change one of these myriad settings. Shown below is what Zoom looks like today when somebody at a 2-person startup logs in.

Now. In your opinion, what is the ideal number of times this screen should try to sell a startup an upgrade to allow over 100 people in a meeting? Maybe… 6 separate upsells? (The sixth is hard to spot, it’s partially hidden by the popover for the 5th upsell.)

There are even more upsells below the fold.

Of course nobody at Zoom decided 6 was the right number. While there is probably somebody at Zoom thinking about the 2-person startup UX, there are clearly 20x as many people concerned about increasing the number of customers who sign up for 500-person meetings. This dashboard is a veritable <marquee> banner that says “Our KPI is selling Large Meeting add-ons.”

Which I’m sure is logical! At least in the short term.

At the same time though, this stuff gives users the ick. “Avoid the ick” is not an OKR, and “% of users that hate navigating your settings” does not appear on your KPI dashboard. But it still accumulates.

When this kind of rot happens, it’s obviously bad. Any user can see it’s bad. But, importantly, enterprise customers don’t demand fewer settings, nor sane marketing position toward startups. So, often, these situations degrade.

It’s a tale as old as time. Occasionally a market leader who’s gotten off track will rally – especially if they’re still founder-led – to save themselves from fossilization and reinvent. In theory, Zoom could lever their position, in the center of billions of work meetings, into becoming a critical part of future AI-accelerated work.

More often, the gaps grow large enough that they spawn new startups. Blind spots and product debt compound until they recreate the situation that inspired Yuan in 2011: the market leader’s UX will be bad enough, and the potential for what could be will be compelling enough, that a worthy successor will launch. People will love it, and it will grow like wild.

Either way, we’ll look back on today as the bad old days, and appreciate how much better software has gotten. Customers will continue to demand better, and eventually someone will provide.

It’s the circle of life.

Building Something Big

2025-08-31T23:45:30+00:00

When I talk about building Forestwalk, people who’ve long known me are sometimes surprised that I’ve been using terms like “runway”, “venture-scale”, and other jargon more associated with the VC world than indie or lifestyle businesses. And indeed, I do have a secret to come clean about.

You see, for most founders, most of the time, it’s logical to build a “lifestyle business” rather than a venture-track one. The good lifestyle is right in the name.

Unluckily for me, working for a lifestyle was never that motivating. I love building software and teams and companies – if I earned enough to retire, I would just keep doing that. So instead of centring my first business around my lifestyle, it was focused on building great products and being a great place to work. Still, our ambitions were generally sized to ensure we didn’t need to make tradeoffs like working late nights, bringing on investors, or taking big risks.

This mostly achieved my goals. For a while.

Yet a standard human foible is that, as we achieve our dreams, we generate larger ones. A decade in, I didn’t just want to build great apps with a small team of good people. I wanted to build great products that had a positive impact on a lot of people, and I wanted to do that with a highly ambitious team.

Over the years I’ve had the chance to work with some really incredible folks – driven, passionate, smart, and ambitious. People who are unhappy with the status quo, and who rally their peers to do better work and set their sights higher.

As I was working last year towards founding Forestwalk, I realized that a core motivator for us was building with these kinds of people. But how the heck could we afford to do that?

Alex MacCaw highlighted this dynamic in his generally excellent Lifestyle business FAQ:

Pros of lifestyle businesses:

Fairly straightforward way to get rich

Earn while you sleep; escape the 9 to 5 rat race

Focus on other pursuits, like writing, traveling, family, etc

Cons of lifestyle businesses:

Unreliable source of income (at least initially)

Does not force ones self-growth (unlike venture-backed companies)

Most likely you won’t work closely with incredible people (can get boring/lonely)

There it is. If you want to constantly be learning, and attract and retain a team full of world-class people who are driven to push you to do so – the sort of people you dream of working with – the best way to do that is to build a venture-scale business. So if you’re a weirdo who cares more about that than you do about your own stress levels, you should swing big.

So that’s what we’ve been doing.

That’s why, earlier this year, when we concluded the LLM evals product we’d been working on could make a meaningful business but not a venture-scale one, we pivoted to something new (using what we’d learned as kindling). And why we’ll keep adjusting our plan until something clicks that we could plausibly build into something big. Not because building a huge company is inherently good, but because building toward something big is the best way to attract incredible people.

Of course, it might not work. Things are still very early. But I thought it was worth being straight: that’s the goal. We’re going to build something big, or die tryin’.

Wish us luck.