Flits began as an answer to a question we kept bumping into: what do you do with a good idea that isn't a startup?
Most funding structures assume the answer is to turn it into one: raise a round, grow fast, sell or float. That works for a certain kind of company, where being fast is the advantage and the market rewards whoever gets there first. We have backed a few of those. But most interesting ideas don't work like that.
Some companies are better off small. Some assets are worth holding rather than selling. Some software is better finished than reworked forever. We chose a holding company because every other structure forces a timeline onto the work. The fund model, the startup model and the agency model each bring their own timeline to the underlying work. A fund has a return window. A startup has a growth expectation. A holding company, at least this one, has neither.
What we hold
Flits holds three things.
The first is companies we have built or are building: small, focused businesses that aim to make money in their first year, run by small teams who own their own decisions.
The second is minority stakes in companies we find worth backing. We don't take board seats and we don't push for a quick return. We try to be useful when we're asked, and to stay out of the way when we're not.
The third is digital assets, primarily domains, that we think are either undervalued or directionally useful. A good domain is more like an option than a vanity purchase. It's cheap to hold, specific enough to point at a future product, and rare enough that holding it changes what we can build later.
Why slow is a strategy
Most of the value in something you hold for a long time arrives late. The first year of owning it rarely tells you what you need to know. A discounted cash flow shows this clearly:
The terminal term, \(V_T/(1+r)^T\), is where most of the value sits for anything worth holding past a decade. So the honest question isn't what is this worth today but what could this become, given enough time and the right conditions.
That's an awkward question to ask if you report every quarter. It's an easy one if you're a holding company with no outside investors and enough runway.
What we're not
We're not a venture fund, so we have no mandate to spend capital on one schedule and return it on another. We're not a studio, so we don't build companies for other people. We're not an agency, so we don't sell our time by the hour.
We're a holding company with opinions about what's worth building, buying and keeping. The plan is slow on purpose and the portfolio is small on purpose, and where we do have ambitions, they're long ones.