Our CTO Transition in Retrospect

Over the past few months, we have been dealing with the attrition of our CTO. It has been a challenging and complicated process. He was one of three equal partners in the business, and his departure left a big hole. We already published a lengthy post describing the events leading up to his decision to leave as well as our game plan for the transition. Now that we are through to the other side, we detail here how the transition went, what we actually did, and lessons learned.

Lessons learned

Before we dive into the recap, here are our main takeaways from this experience, while it is still fresh in our minds:

1. Communicate quickly and candidly, internally and externally. It’s easy to fall into the trap of trying to control the message, thinking there is some perfect way to spin bad news into a positive, and trying to time it perfectly. In our experience, this is an impossible needle to thread. People don’t like to be kept in the dark — especially once the rumors start flying — and people definitely don’t like to be spun. The moment there is any news of an impending departure, we think it is best to share with your team and stakeholders, even if you’re not yet 100% sure of the game plan. We believe folks are a lot more understanding and appreciative of this upfront honest approach. I personally find it very uncomfortable sitting on bad news, and I feel a thousand times better once it’s out in the open.
2. Agree to a firm timeline upfront, and use that time wisely. When we learned Prerak was leaving, our initial thought was to try to keep him on the team as long as possible, but we didn’t really set a hard schedule. As a result, we weren’t all on the same page, and the shifting sands became an added source of stress. It would have been better for everyone had we set hard expectations upfront. That said, we did all use the time well — it was a sustained period of intense training, and Prerak taught us a great deal. In the past, I’ve seen transitions where someone is kept around for an extended period, but the company squanders the opportunity to do meaningful knowledge transfer.
3. Transfer knowledge onto the existing team, even if you plan to backfill the role. Even though it may seem redundant to go through the knowledge transfer process multiple times, we like this approach better as it avoids any dependency on an unknown outside hire. The last thing you want is to bring on a new hire to backfill the role only to have that person not work out, and potentially lose the institutional knowledge altogether. Once we decided on this approach, we felt fully in control of our own destiny which was a great relief.
4. Act with empathy. An experience like this can be pretty awkward and tense from either side of the table. It is important to give one another the benefit of the doubt and assume everyone is acting with good intentions. It is easy to become bitter or resentful and feel like someone is intentionally trying to hurt you, especially when emotions are running hot. You may think you would never do something they did if you were in their position. In our experience, rarely will someone intentionally act dishonestly or hurtfully. It’s hard to truly put yourself in the other person’s shoes, but we all have different perspectives and thought processes and goals. Situations like these are hard for everyone involved, and the long term relationship is far too important to throw away over any perceived (and probably unintentional) slight.
5. Maintain a formal relationship afterward. We never had any doubt that Prerak would continue to make himself available to us if we ever needed his help with something — that’s just the type of person he is. That said, we were encouraged by our investors to try to keep him involved in a formal capacity as well, assuming his new company was comfortable with it. We wound up keeping him on as an advisor. We were told this sends a good external signal that the split was on good terms. In our case, it probably doesn’t change much day to day, but it does feel comforting to have him still officially part of the team in this way.

Before the decision was made

We already described the events around Prerak’s decision to leave in the previous post, but here I’ll just mention again that before he signed his offer away, we did fight hard to keep him. I do not ascribe to the school of thought that once someone starts to waver, all hope is lost and it’s best to cut ties immediately. I think there is an alternate world where Prerak might have stayed at Proof for several more years, and it could have been great. But alas it was not meant to be.

Communication

After Prerak made his final decision, there were a few things we had to figure out quickly: communication strategy, timing, and our transition plan. Given our predilection toward transparency, the communication plan was almost a foregone conclusion: we would put the news out as quickly and candidly as possible. We told the rest of the team within 24 hours, and we made a public announcement within about a week. We also set up calls with investors and existing and prospective clients, to talk through what was happening and ask for advice. The public announcement was the trickiest part — striking a balance of candor and vulnerability, while still projecting confidence in our ability to get through it, and also paying homage to Prerak’s immense contribution without implying we would be lost without him. Additionally, this was a very personal blog post — not just for me, but for Allison and Prerak as well. It took many rounds of edits before getting sign off from everyone, far more back and forth than any other blog post I have written. And after the fact it turned out there were still parts of that blog post that made folks on the team uneasy. I think that’s just the nature of the beast when writing candidly about a personal, sensitive topic. We don’t like keeping secrets, and we especially don’t like sitting on bad news. We think it is best to be upfront and honest as quickly as possible, and this is what we did, but it wasn’t easy to craft a message that everyone was totally comfortable with.

Subsequent attrition

In the aftermath of Prerak’s decision, several others decided to leave Proof as well: Beau, Emily, and Brian. In two of these cases it was a direct result of his departure, and in the third it was probably more of a coincidence, but it all felt very related, especially because we have had so little attrition up to this point and it all happened at once.

The Reaction

At least to our face, the reaction we got was far milder than expected. Our investors in particular seemed totally unphased. Whereas for us this was major, scary news, especially in the moment, our investors gave us the impression it was par for the course. It is apparently very common for co-founder/CTOs to leave early stage startups around the 3–4 year mark, and our investors were confident we could weather the storm (maybe even more confident than we were).

On the client side, the response was also encouraging. Some folks asked point blank if everything was okay and if the company was falling apart (given all the attrition), but most just seemed appreciative for our candor and strongly reiterated their commitment and support. We also saw an uptick in client activity after the announcement as a show of support, which was very thoughtful and nice. It’s hard to know what folks really think or what they don’t say in front of you, and it is possible that some prospective clients were scared off by the sudden bad news. Even still, we would rather be fully open when things are tough so that our words carry more meaning when things are going well.

Timing

Probably the biggest question mark through this process was how long would Prerak stay on. Some of our investors encouraged us to see him off as quickly as possible — they advised that once someone has a foot out the door, keeping them around can be terrible for culture and morale. On the other hand though, Prerak was a fountain of institutional knowledge, and it would be irresponsible to push him out before we were ready.

With the other employees who decided to leave, we were comfortable with them going sooner (generally within a week or two), but with Prerak, Allison and I initially had the attitude that we wanted him to stay on as long as he was willing. He was of course eager to start his new adventure, but he had no intention of leaving us in the lurch. Initially, we planned on him staying for at least 3–4 months. In the end, however, he only stayed on for about 2. Basically as time went on, we all got worn out by the knowledge transfer process, and he seemed more and more eager to leave.

Rebuilding the Team

Pretty early on in the process we came to the revelation that we didn’t need to replace Prerak — that we possessed the requisite skillsets ourselves, and that it would be possible to instead have him train up the existing members of the team, most specifically Allison and myself. Even if we found an outside hire much stronger technically than ourselves, they wouldn’t have the necessary institutional knowledge about Proof to hit the ground running, and there would still be a tremendous learning curve. That said, we knew it would be amazing if we found someone with the potential to eventually fill his shoes. We just weren’t counting on it happening before his time was up, so we needed to be able to do his job ourselves in the meantime.

We had already started interviewing for a VP of Engineering role when Prerak made his decision to leave, and it turned out that the stars aligned and we found a viable replacement for him pretty much right away. We feel incredibly lucky and grateful that things worked out so well so quickly. Even with this near perfect timing, given the realities of garden leave, the new hire did not wind up overlapping with Prerak at all. Fortunately we had already decided we would be the recipients of the knowledge transfer anyway, and we charged ahead.

The Knowledge Transfer

At first we had grand plans for how Prerak would plan out months of lessons, personally document every detail of the system, lead us through a slew of hands-on exercises and wargames, and maybe even pump out some more of his famous technical blogs before taking off. Alas, this was too much to expect.

He started by listing out all the parts of the system he was responsible for, and the requisite skillsets we would need to become proficient in to support them ourselves. It was daunting. All told, the list covered nearly a hundred topics ranging from general skills like networking and AWS management to the specifics of individual applications in our system and our various operational workflows.

We then got to work. For the next 8 weeks, Prerak hosted 3–4 hours a day of zoom sessions with the entire team where he moved from topic to topic. We took copious notes, studied and completed homework in between, and captured video recordings of all of the sessions. All the while, we continued to do our day jobs, and took over Prerak’s day-to-day responsibilities as well. Not to mention, this was also when we were scheduling tons of calls with our various stakeholders to fill everyone in on what was happening.

It was exhilarating learning so much so fast. Many of these topics were previously foreign to me, and it was illuminating to have the veil lifted and have all these new tools at my disposal. Prerak is an excellent teacher, and he took his lessons very seriously. It felt a bit rushed, but we did make it through every one of those hundred or so topics. Whew, what a whirlwind!

It’s now been over a month since he left, and we have had a handful of minor tech issues that would have previously fallen under his purview to fix. I am pleased to report that so far we have handled them all in stride, and we have not yet needed to call him in for reinforcements (although it is comforting to know that he is available in case of emergency).

The Path Forward

Now that the transition is complete, we are excited to be back in build mode. We have spent the last few months digging ourselves out of a hole to ensure we can fully support all of the technology in and around our system, and now we are ready to start pushing forward again. We have a lot of ideas, and we feel it is important to reestablish that we are capable of launching new products and enhancing our existing ones.

Prerak was no doubt responsible for a large part of our core system, but a big part of his (and Beau’s) reasons for leaving was that the core system is now quite stable, so in a way their job here was “done.” We are grateful for the wonderful code base we have to work on top of, and to now have the requisite skills and knowledge to fully maintain and enhance it ourselves. Now it’s time for Allison and me to get back to our core competency: researching and developing trading algos. We expect to have a great deal of productivity and output on this front in the coming months.

Conclusion

This transition was probably the most intense period we’ve experienced since starting Proof, even more intense than launch. It was tense and emotionally draining, even with everyone acting upfront and with the best of intentions.

That said, there were a few bright spots that made it all possible. The first was Han, one of the engineers on our team who has been here since the very beginning. Han stepped up in an incredible way, taking on a great deal of responsibility and significantly easing the burden on Allison and me. Han also put together an incredible Figma diagram of our system architecture, complete with infrastructure, networking, application logic, and information flow. This diagram became our Rosetta Stone and made the task of understanding the deep inner workings of our system far more concrete and approachable throughout the transition period.

Han’s Figma diagram: our system isn’t *so* complicated…

Second, we have gotten a major burst of energy from the new hires who are joining our team, especially Marcio (the new VP of Engineering). It is wonderful to have some fresh blood arriving to give us a jolt of positivity and remind us of all the reasons why we love this company and are committed to this mission.

Finally, we of course have to thank Prerak himself. Without his sincere commitment to the future of Proof, both during the transition and afterward, his exit would have been nearly impossible to survive. He’s left us in a great position, and we are forever grateful to him for that.