Key takeaways
Building the web3 CFO playbook for the next generation: Mike Featherstone, Flipside Crypto
The fifth installment of our web3 finance series is here!
We’re featuring Mike Featherstone, CFO of Flipside Crypto.
Mike is a global finance leader with experience everywhere from Series A startups to publicly listed companies. He’s also built and led global operations and sales and revenue teams.
Mike speaks multiple languages, and has spent time living overseas in Taiwan, India, the UK, Malaysia, China, Ireland, and Australia.
Today, he leads Flipside Crypto’s finance function.
Backed by Galaxy Digital Ventures, True Ventures, Republic, Coinbase Ventures, and others, Flipside Crypto empowers crypto communities to create and share data-driven insights on the projects they care most about.
As Mike related, Flipside helps blockchains succeed. They partner with L1s, L2s, and protocols of all stripes to make their data freely accessible, then run community-based programs to drive user acquisition, retention and transaction outcomes. They often begin pre-launch as a validator, accepting delegations and using yield to build the results and execute programs. Their 85K+ community of analysts run nearly 450K queries and produce 50 insights dashboards every day.
Current partners include Solana, Avalanche, Near, Aptos, Sei, and many more.
In our interview, Mike covered:
→ His appetite for risk, and how that led him to make the leap into crypto
→ How to apply your web2 finance background to web3 challenges
→ How he’s contributing to an emerging playbook for web3 CFOs
“If you really want to understand it, you need to go DO it”
Mike found his way into crypto during COVID: “I had time on my hands, so I decided to learn something new. That something happened to be crypto. A mentor of mine told me: "You can watch from the sidelines and learn a few things, but if you really want to understand this thing, you need to go do it for at least a year.’”
Prior to web3, Mike had what he calls “a traditional career—I spent a few years at a bank, then decided I never wanted to do that again. Then I worked in corporate finance, got my MBA and CFA, and then went overseas.”
He’s lived and worked in 7 countries, and his time traveling eventually landed him at a SaaS company, working in finance. During that time, he also “branched out into operations in Europe and revenue, working as a regional GM for a while in Australia.”
Mike knew the Flipside founders because Pluralsight, his prior company, “had acquired their prior company. So I worked with them, and I knew them, but we hadn’t talked in years.”
On Cryptocurrency Jobs, he saw that they needed a Head of Finance, so he reached out in late 2021. Fast forward a few months, and Mike joined Flipside as their full-time CFO in early 2022 when he moved back to the US.
“You truly only live once — embrace that.”
Mike thinks of himself as “an adventurer—I’ll usually say ‘yes’ to things, if I think it’s a valuable opportunity. I’ve always sought risk in different ways, and those experiences have taught me how to manage that risk and ambiguity.”
That drive to take risks is what he credits as “giving me some really amazing experiences, and letting me live in the places I’ve lived, and working in the roles I’ve had.”
That drive is also what propelled him to fully leave the “predictable and safe” role he had in TradFi, move to SaaS, and eventually to crypto: “When I started that journey, I’d never done any of these things before. But if I’m ever in a position of being a mentor, I give the following advice:: ‘Embrace risk.’”
There’s “so many roles,” he explained, “outside of TradFi, where you can still apply your finance skills, thinking, and mental models. And you never know where that might lead!”
Managing the complexities that come with digital asset classes
“There’s commonalities,” Mike explained, “no matter what business you’re building. It’s important to think about governance, about applying a sound rationale to your investments, and about stewarding your capital wisely. All those frameworks still apply.”
In his work at Flipside, he uses “those same frameworks, but there’s also an exciting chance to rethink, redo, and approach the world differently. That’s exciting.”
The whole crypto world, he explained, functions in many ways differently than SaaS: “In crypto, so many things happen in tokens, which means you can’t think the same way you would if it all happened in fiat. Even basic audits in SaaS look way different, as opposed to crypto.”
When you’re dealing with tokens, you’re dealing with grants, validators and different kinds of yield generation models, and you need to “think about those things, relative to revenue. There’s tons of other complexities that come along with different classes of digital assets.”
But for Mike, that ambiguity is exciting:
“I’d rather spend my time figuring out those types of problems. Asking ‘Can I apply a prior model here? Why? Or do I need to rethink and adapt?’ That’s more fun to me than working at a company where I’m just applying the same, legacy tools and frameworks.”
How the web3 CFO functions differs from its web2 counterpart
A former mentor CFO taught Mike that all finance teams really, have 3 main functions:
- Accounting, bookkeeping, audit, and tax
- FP&A + strategic planning of all types
- Capital markets, treasury, and cash management
Some of these functions (treasury, for instance) look totally different when you move from a web2 to web3 business:
“Typically, basic treasury management is pretty boring. You manage bank accounts, you ensure you get the statements right, you make sure the invoices line up. In crypto, it's the exact opposite—there’s a variety of digital assets that you need to handle, and figuring out where and how to maximize yield and protect or hedge your runway is a major challenge.”
Mike loves this type of work because it forces you to “learn how to manage your treasury in a way that’s entirely different from any CFO training ground you could come from. There’s some similarities, potentially, if you were at a proprietary trading desk handling a high volume of volatile FX activities, but—ultimately—those hedging and other products have been around for a long time.”
With crypto, you’re often dealing with brand-new tokens, and you need to ask questions like:
- Does Fireblocks or other institutional tooling support it?
- Do we need to use Ledgers instead? Why or why not?
- How do we come up with a multi-sig strategy that ensures one of us can’t just walk away with this entire treasury?
- How do we translate our strategy into “a defensible set of audit procedures and internal controls that make sense?”
All of these considerations (and more) are what Mike enjoys about his day-to-day work at Flipside: “I’m constantly excited by our ability as a company to improve, and to take our solutions to institutional grade-level using other institutional-grade tools.”
He mentioned how Flipside works with many “vendors who’ve built amazing tools that we can use to manage our treasury, payments, and everything else related to digital assets. In a way, we’re growing up together. We’re building as we go—which is amazing.”
Building the playbook for web3 finance best practices
Ultimately, the “playbook” for web3 finance leaders is still being written.
And Mike’s grateful to have a hand in writing it:
“It’s not like this has been done for the last 30 years. We can’t just rely on the playbook, because that playbook doesn’t exist. The tools and processes are all new, and everyone’s figuring it out in real time. We’re growing up as an industry, together.”
He also explained how this “growing together” happens across sub-industries, with various tools and software.
Within web3 as a whole, there’s various sub-components that each have their own “flavor of priorities:
“There’s DeFi (decentralized finance), NFT projects, gaming, communities, exchanges, custody providers, and others. These different sub-industries come with varying priorities, in terms of accounting practices, regulatory consideration, compliance, token tax challenges, and more.”
For Mike, that means he’s constantly interfacing with other CFOs concerned with slightly different priorities: “depending on their actual product—an exchange, a stablecoin issuer, a tool-builder or service—each CFO will have different unique challenges or focus areas.”
Whereas most of SaaS finance has “largely been figured out,” many of these priorities and sub-industries of web3 are very much still “uncharted waters.” He explained how:
“There's a wide range in web3. Some CFOs think about managing and hedging all digital asset risk. Others just sell it because it doesn’t affect their core business. Others are figuring out how to best manage auditors. Others really dive into the legal questions, and how to navigate changing regulatory environments."
Ultimately, Mike explained, this ambiguity has been motivating “because it means I’m contributing to the build. That’s what I want; that’s just how I’ve always been.”
How to “executing with excellence” while managing both fiat and crypto costs
Flipside’s “flavor of complexity” is the fact that—financially—they deal with tools for both crypto and fiat assets.
That level of complexity means he needs “tools to manage both digital and fiat—good subledgers for digital assets, along with good payment tools (both purchased or proprietary) for our fiat operations.”
At Flipside, he’s led the creation of both a digital assets process and a fiat process—they both “exist within the same ‘finance world,’ but we need different capabilities for each, and we need to unite them into a cohesive unit.”
One of the most important paths to success, for Mike, is ensuring that “we’re working with great auditors, great vendors, advisors, and other folks who can help us really understand where our processes work, and where we can improve. Then we go from there.”
Contributing to the playbook that next gen companies will use
At the end of our interview, I asked Mike what “mark” he wants to leave on such a young industry.
His response:
“I truly believe there’s world-changing tech in crypto. We don’t know exactly how it'll play out ultimately, in terms of use cases, but I want to ‘be on that bus,' helping to write the playbooks that companies 10-20 years from now will reference. I want them to benefit from our work, both the successes and the failures."
As the industry develops, Mike believes the ultimate objective for web3 CFOs is “managing financial risk and providing access to capital such that our industry has the ability to figure out what it’ll become. This is a challenge when there’s an outrageous pace of change, but it’s an exciting place to be.”
We’re thrilled to feature Mike on this episode of our web3 finance leadership series—and we’re excited to share more about the work he’s doing at Flipside.
Check out their website here, and connect with Mike on LinkedIn!
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