Quote · Startups For the Rest of Us
Episode 845 | Lifetime Deals Revisited, Building is Not the Hard Part, and Confirming an Idea is Worth Paying For (Rob Solo)
Where this was said
Customer Agreements and M&A Due Diligence
At 14:47 · chapter starts 14:00
Johannes from Sweden, a longtime listener and MicroConf regular who runs SQL Spreads, submits a detailed audio question about whether and how rigorously he should review the custom agreements his enterprise customers ask him to sign. He's particularly asking about acquisition context: how deeply do M&A buyers examine these documents at the $1–2M ARR stage, and what can he do now to avoid problems later? [1] — Rob Walling "When you get acquired, buyers go through every contract you've ever signed. The two deal-killers: uncapped liability clauses and IP rights …" 13:40 Rob's response is practical and layered. First, he flags a cautionary tale about a man who used ChatGPT as a de facto lawyer, shared incriminating things in the conversation, and saw those transcripts subpoenaed and admitted as evidence after the court found no attorney-client privilege applied. The lesson: AI is a useful first-pass tool, not a legal advisor. For substantive contracts, Rob recommends having a contracts attorney review the most onerous ones by the time you're doing $1–2M ARR. In a perfect world, a lawyer reviews everything — but that's not realistic for most bootstrappers, and Rob admits he didn't do it consistently himself. What matters most during due diligence: uncapped liability clauses (which expose the acquirer to unlimited risk) and any clause where you've given away IP rights, since those directly undermine the value of what you're selling.
A man used ChatGPT as a de facto lawyer, sharing self-incriminating details in his chats. When the transcripts were subpoenaed, the judge ruled no attorney-client privilege applied and admitted the chats as evidence against him. AI first passes are useful — treating AI as your counsel is dangerous.
During acquisition due diligence, buyers scrutinize every signed agreement for uncapped liability clauses and IP rights transfers, which can torpedo or devalue a deal.
Jason Cohen's argument is simple: you'll need to find 50 people to sell to whether you build first or not. Building before validating is a way to avoid the scary part — talking to customers. The code is a comfort blanket masquerading as productivity.
