The Founding of The Flipside, Part VI (Final Chapter)
Balter’s Essays of Mostly Acerbic Witticisms
"There's a right way to do things and a wrong way to do things. And we're going to do it the right way."
This wasn't a request.
This wasn't a suggestion.
This was an instruction. Of that, I could be totally absolutely sure.
The Founding of the Flipside, Part VI
You'll have to forgive me: The sixth and final act in The Founding of The Flipside story is something of a love letter. It's a love letter about the relationship between an investor and startup founders. About forks in the road; about choices and about trust.
It's a love letter about the game of venture capital and how it should be played.
It goes a little like this.
After the Mylestone Board Meeting with Tony - the one where we admitted the side-hustle development of Flipside - True Ventures had some choices to make. In a situation this challenging, the most typical choice might be to ascribe blame; to point fingers, to fuss over money spent, even - in some cases - to be asked for financial restitution. But, instead, True started with one rather simple question. One that foretold their capacity to understand the founder journey deeply.
They asked Jim and I simply: Which company are you most passionate about?
Seed stage venture capital happens to be a game of sophisticated risk. You invest in founders with an idea, maybe a prototype, maybe a scribble on the back of a napkin. More often than not, there isn't yet momentum, or product market fit, or even a fully formed team. And so odds are stacked: Very few companies figure it out, and even fewer make it big; if you look at the math, most startups fail for one reason or another.
But mostly it's not ideas you're backing - it's people. And that's why the best Venture Capitalists are willing to back the founders they believe in again and again and again.
True's math is obvious: it has backed 52 founders more than once.
And so, in the spirit of being backed again, I offered True something of a cutesy idea: Let's take the $2M of venture capital dollars remaining in Mylestone and just, sorta, well...like, just, shovel it right on over to Flipside. That'll let us keep building without missing a beat. Let's get goin'. Giddyup and all that.
Simple, right?
"Whoa, not so fast, buddy, not so fast." This from True Venture's CFO (in 2018), a one Mr. Jim Stewart. He followed with the previously aforementioned chestnut about the right way of doing things.
Jim Stewart is as fascinating a creature as you'll find. In his operating days as a CFO, he took no less than four companies public. Jim's side hustle? Well he moonlights on the pit crew for an IMSA Series Le Mans Prototype 2 auto racing team. Another side hustle? Flying small planes, yeah, no big deal. Oh, wait, one more: Saving puppies. You heard me right, puppies. Besides providing excellent financial advice, you'll often find Jim hustling from a raceway to fly a plane to deliver 8-week old puppies for Canine Companions for Independence. Go ahead, find me another human who does all of these things. I dare you.
Anyway, Jim was adamant: We are going to wind down Mylestone completely. End of story. Then - if True deems it interesting - we'll provide a new term sheet to fund Flipside. Yes, it will take more time, but it is clean and clear and no one will have to try to understand which company is which. Founder impatience aside, this indeed was the right way to do things. Ding dong: a fresh start was required for Flipside.
But what to do with the $2M of remaining capital still in Mylestone? Well, we organized a choice to be offered to all investors: We can return your portion of the remaining capital (we'd spent a little more than half), or you can convert that value into ownership in our future venture, Flipside.
(Fun fact: 100% took us up on the conversion into Flipside.)
And so, nearly seven years has gone by and Flipside is still thrumming along, having navigated crypto highs and lows, and company evolutions, now with 75 employees and tens of millions in revenue. And while Jim and Eric and I were the protagonists, it's really Tony and Adam and True who made this all possible.
C'mon how could we not fall in love with that?
Recently, I had dinner with Mylestone/Flipside investor George Bell.
"Seems this Flipside thing is really happening," he muses.
"As for Mylestone, I loved that company; all I know is that it was a very expensive way to get a company-branded T-Shirt."