Proof Trading Progress Update: 4 Years

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Proof Reading

5 min readJan 4, 2023

It has been a wild four years since Allison and I started Proof. In preparing to write this post, I looked back through our initial announcement as well as our 1, 2, and 3 year updates. We have certainly come a long way!

In year one, we assembled the founding team and raised seed capital. In year two, we built the platform and our initial VWAP algo. In year three, we began trading, onboarded our first five pilot customers and released our flagship Proof algo.

For the first three years, Proof was a slow and steady climb. We knew well what we were getting ourselves into, and we set ambitious but realistic goals and timelines, and we consistently met or exceeded them. Everything pretty much went to plan.

2022, on the other hand, was an absolute whirlwind, by far the most tumultuous year we have ever experienced. In the first half of the year, Allison and I were forced to overcome the hardest challenges and the lowest lows our young company has ever faced. Although our product and technology were solid and performing well, we had to rebuild our team, recapitalize the business, and reestablish our client pipeline. Allison and I were spread thin and pulled in many different directions.

But it was a tale of two halves. These past six months have exceeded even our wildest expectations, and Q4 in particular was simply magical! Please see our major updates and upcoming goals and priorities below. I am proud of how our team weathered the storm and came out the other side stronger than ever. Our client pipeline is fantastic. We are well capitalized and on the cusp of profitability. We remained level-headed and optimistic during our most difficult times, and now that the business is humming, we must remain humble, hungry, and vigilant.

Half way through 2022 we announced six major initiatives that we would be embarking upon. The idea was to plant many seeds and see which ones blossomed in the hope that we could regain our positive momentum. Now in 2023, our plan is to refocus and not overextend ourselves. We will double down on the things most essential to the business: improving and expanding our core product offering, delivering an outstanding experience to our existing clients, gradually increasing our client base, and adding resilience to our technology and team.

Proof’s startup journey has not been a straight line, and it has not been easy, but these first few years been incredibly rewarding. I cannot imagine doing anything else, and I cannot wait to see what the next four years will bring!

Major updates from Q4 2022

This quarter started out on a high note with our first major press: a Bloomberg article by Katherine Doherty about our recent executive hires Nila and Marcio.
We successfully completed our largest fundraise to date, securing multiple years of runway (even assuming zero revenue).
Our broker-dealer received FINRA approval to restructure as a WBE.
Allison published a powerful piece for Domestic Violence Awareness Month.
Went live with Portware and Flextrade.
Migrated our production trading database (SingleStore) from an “on prem” solution, to a managed solution.
Our trading platform suffered its most severe technology disruption to date, and fortunately our failover mechanisms worked as designed. On December 9th, AWS experienced a hardware issue that caused an entire server rack to power cycle in the middle of a trading day. That server rack contained our primary OMS and sequencer, our algo trading engine, and our monitoring app, and this caused all of our upstream and downstream FIX connections to drop. We were able to failover to our backup sequencer and restart the failed applications within about 30 minutes. The impact to clients was minimal, although we hope to recover even faster in the future. This was the first severe outage we have experienced with AWS in our two years of live trading.

Goals from our previous update

Technology

Migrate our database to SingleStore Managed Services infrastructure

(10/10) This migration was not without its hiccups (and probably warrants a dedicated blog post of its own), but Marcio managed it effectively with no adverse impact to production.

Conduct testing in the AWS NY local zone, and relocate our production trading platform there once it is ready.

(5/10) AWS has made available capacity for our needs into their Local Zone in the beginning of December and initial tests sounds very promising. This work will continue in the next quarter.

Complete all necessary external integrations to onboard new clients in the pipeline.

(10/10) We went live with two new EMS’s: Portware and Flextrade.

Product/Research

Design, build, test, and release our third algo: an aggressive liquidity seeker.

(4/10) We completed an initial design of our third algo, but rather than pump it out quickly, we have decided to take our time refining the design with client feedback and conducting more quant research. We will be publishing a blog post about our approach in the coming weeks.

Publish our quant researcher training materials as a freely available course.

(3/10) These materials are extensive and still in development, but they are coming along.

Complete several quantitative research projects for clients and prospective clients.

(8/10) We delivered a few projects of this type over this quarter. It remains unclear if we should expand our bespoke research into a consulting offering. We feel our work on this front is unique and high quality, but there is a challenge with setting expectations. Data is typically much noisier and less definitive than people are hoping for.

Submit theoretical research on information leakage to a scientific publication venue.

(5/10) We are making very good progress on this research project, and the paper is currently being drafted. Now aiming for a submission in February.

Sales/Marketing

Go live with at least 3 new clients and begin the onboarding process with at least 2 new clients.

(8/10) We went live with 2 new clients, and 2 additional clients entered the onboarding process. Things are going nicely on the sales front.

Develop and begin implementing a more systematic business development strategy.

(9/10) Nila has gotten the team far more organized and systematic about regular and consistent outreach to prospective clients (without being overbearing). We hope to realize the benefits of our new approach in the coming months.

Operations/Regulatory

Continue the process for our subsidiary, Proof Services, to become a certified WBE broker-dealer.

(10/10) Our broker-dealer’s restructuring was approved by FINRA, and it became a WBE in December! Next step is to get NY state certification.

Successfully complete all year end audits and exams.

(N/A) Our end of year audits are currently underway, but have not yet been completed.

Goals for the next 3 months