Good point. I think (well, actually, I *know*) that their are companies out there who have been waiting--specifically--for Yahoo to acquire them. Just look at all those Dodgeball clones or Writely clones out there with no real business model.

True, but does that imply that companies should be formed with the sole purpose/goal of getting acquired?

Of course it'd be ideal to create a company with a sustaining business model; there's no question about that.

Is that the only time a company should be formed? That may be akin to only purchasing shares in long-term growth companies. Sometimes it's in your best interest to just ride the short-term explosion and move on.

It's completely viable to get into something with only a foreseeable immediate market. After a certain point, perhaps the company would be better off taking advantage of the economies of scale. It isn't a problem to be true to yourself and realize early on that an acquisition is the best end-target for your new company.

Right, it's a strategy you could decide to use. The only downside is if you don't get acquired, you're forced to shut down.

YC's application asks both "How will you make money?" and "Which companies would be most likely to buy you?" so I was interested in finding out which strategy they're most likely to advocate in practice