Some solid points here, but I gotta disagree with this one...
If a product grows huge quickly, which almost always requires it to be free, it will probably be acquired for a lot of money. Free products that don’t grow quickly enough can usually die with an “acquihire”, which lets everyone save face and ensures that the investors get something out of the deal.
I think this way of thinking is the product of a very frothy market over the last few years. Now, I'm not one to scream series A crunch from the mountain tops, but it's unrealistic to think that thousands of these startups that "don't grow quickly enough" will be acquihired. In 2012 Google and Facebook combined to make 21 acquisitions. That doesn't put much of a dent in the number of failing startups. And with the Formspring shutdown announcement last week, it seems that even companies that have achieved impressive scale (30M users in since 2010) cannot rely on being bought.