Inexperienced negotiators believe that you should primarily get better deal terms by bluffing more leverage. Experienced negotiators know that you get better deal terms primarily by having more leverage and the bluffing is optional.
I agree that having leverage is better than bluffing it. But under what circumstance is it advantageous to tell a potential acquirer that you think you'd either get acquired by them or go IPO? Isn't it better to let the acquirer think that you're open to transactions with other possible acquirers?
Or was the strategy here that he wanted to make them think they're competing with the massive riches received in an IPO?
I wouldn't question the strategy as much if it had just been executed during the acquisition courtship period. But it sounds like he made his feelings clear from the beginning, when he raised $1M from them (presumably quite a while earlier).
keep in mind that in this case Amazon probably has better market analysis and information than ring. It is pretty tough to bluff a negotiating partner like that.
Meanwhile, there is a lot of value in communicating intent and maintaining their interest.
