You missed the point; Aaron wasn't saying to always optimize for price and take "dumb money." His point was that founders today have a choice, and that choice is important, and worth recognizing. Because of the (present) imbalance of power, founders can be more aggressive with their fundraising. That isn't always true, though.

I hear you... but this "run an auction" narrative he's proposing is very dangerous if implemented in any way close to actual auctions.

Sure, I agree; I do not think it was intended as a pure price auction. That would be ridiculous, imho.