Proof Trading Progress Update: Q1 2022

This first quarter of 2022 has been the most up and down period since we started Proof — it has been a rollercoaster. Up to this point, our journey had been extraordinarily smooth and steady: we would set ambitious but achievable goals each quarter, we would consistently hit them (or at least get close!), and the progress has really added up. No real hiccups, until now.

First the bad: we are suffering three key losses on the personnel side. Our CTO Prerak, our Chief Software Architect Beau, and our Head of Sales Brian are all transitioning out of Proof. Though the timing is unfortunate, the circumstances are all unique. We wrote at length about Prerak’s upcoming departure and the transition plan last week. Beau took a step back from his leadership role about a year ago, and he’s been with us part-time ever since. With Brian, it simply wasn’t a perfect fit. We expect Beau and Brian to depart this month, and Prerak has agreed to stay on until we are fully transitioned. We are grateful to them for the way they are handling their respective exits, ensuring knowledge transfer and leaving us in as good a position as possible. Dealing with attrition is never easy, but it is especially painful when you lose a colleague for whom you have great deal of admiration and respect. We are grateful to all three of them for their contributions to Proof. We celebrate you all, and we wish you the best.

On a brighter note, as we have moved beyond our pilot phase and begun marketing our flagship liquidity seeking/impact minimization algo, we experienced some major wins on the sales front this quarter. We had 5 new clients enter the onboarding process, 1 of whom has already gone live. We also made 1 new hire this quarter: Emily Barrett joined us as a Senior Software Engineer. We are excited to have her on the team!

For Q2, our most critical task will be knowledge transfer, particularly from our CTO Prerak to the rest of the team. If this is the only thing we accomplish in Q2, it will be a successful quarter. That said, we would love to keep up our positive momentum on the sales and product fronts, and if we can replenish the team with 1 or 2 additional key hires, that would be outstanding!

Major updates from Q1 2022

• Three key departures (CTO, Chief Software Architect, Head of Sales); one key hire (Senior Software Engineer).
• Five new clients entered our onboarding process, one of whom was fully onboarded and went live.
• Published our new client trading data policy as well as our approach to maintaining client privacy.
• Published engineering articles on building a cloud-based trading system, market microstructure considerations, and our security master.

Goals from our previous update

Technology

Hire 2 additional engineers. For now, we’re looking for senior candidates that are familiar with US equities. Please reach out here if interested.

• (5/10) Emily joined the team as a Senior Software Engineer, and we have a few other promising engineering candidates in the pipeline.

Explore the possibility of productizing our core technology platform.

• (3/10) This item was based on a potential external partnership, which we did explore, but we did not move forward.

Begin work on a client portal.

• (6/10) We planned out the architectural changes required for securely hosting public facing applications and added new CI/CD pipelines to better service the upcoming client app. We will pick this back up after we finish knowledge transfer.

Enhance resilience and scalability of the trading system.

• (9/10) For Beau’s final project, he did a major resiliency upgrade to our platform. He added the ability to spin up new algo engines and suspend and reroute parent orders between them. We will be rolling out this new functionality this week.

Product/Research

Increased focus on metrics: iterate on high-level metrics to try enhance robustness and meaning, and continue to develop mid- and low-level metrics that are robust while also ensuring they meet the privacy requirements of our data policy and can be shared externally.

• (5/10) We were able to share some Q4 2021 metrics that passed our newly designed robustness checks. We also developed preliminary frameworks for additional metrics that will help us evaluate the behavior of our flagship algo.

Iterate on the algos based on performance and client feedback.

• (3/10) At this point, our sample sizes remain too small to do much performance-based iteration. But we are screening for any unusual or unexpected behavior, and we enhanced the level of randomization for our algo tactics.

Sales/Marketing

Significantly ramp up our sales efforts, now that we have a stable platform and our “full” offering. We would like to have at least 5–10 new clients enter the onboarding process this quarter.

• (7/10) We did hit this goal, and we are very excited about the new clients who are coming onboard! However, with everything going on in the world we weren’t able to do as much new outreach this quarter as we had initially hoped.

Publish our new trading data privacy policy and pricing policy.

• (5/10) We published our trading data privacy policy, but not our pricing policy. We plan to publish it this quarter.

Operations/Regulatory

Successfully complete our annual audit.

• (10/10) Successfully completed our annual PCAOB audit as well as our annual compliance report.

Goals for the next 3 months

Technology

• Knowledge transfer from our CTO Prerak to the rest of the team. Focus on teach-ins and documentation of core technology and operational systems, and plan out our future roadmap.
• Continue work on our client portal.
• Complete all necessary external integrations to onboard new clients in the pipeline.
• Hire 1–2 senior engineers.

Product/Research

• Continue progress on metric design and publish our current TCA framework, as well as the stats for Q4 2021 through Q1 2022 that pass our client privacy and robustness checks.
• Iterate on the algos based on performance and client feedback.

Sales/Marketing

• Go live with at least 3 new clients and begin the onboarding process with at least 2 new clients.
• Publish our client pricing policy.

Closing Note from Allison and Dan

So much has changed since we started Proof. We fundraised, built a trading platform, obtained a broker-dealer license. We built our algos and launched, brought on clients. We have added people to the team, and now we are losing some of those people. And of course all of this happened with the backdrop of a global pandemic.

But also, so much has not changed: we want to build a business that demonstrates you can succeed and be transparent. You can publish your tech stack and your algo research. You can try to have fair pricing and fair pay. You can support your employees, both when they stay and when they leave. Some things have been easier than expected, and some have been harder. But the fact remains that we want to build the best algos, and do it accountably — that is still true. We want to run a company in a way that is different from any place else — that is still true.

Just like at the beginning, we see Proof as a 10+ year commitment. We have come a long way, but we are still early in this journey. We want to change this industry for the better. We have massive ambitions, and we believe we can achieve our goals while remaining true to our values. The only way for us to get there is to innovate. We are working on hard problems that affect a lot of people. We have to keep chipping away, making progress, being creative and coming up with novel solutions. Keep treating people the right way. We have made incredible strides with a small team, but we haven’t done it alone. We are grateful for all the support and help we’ve gotten from our colleagues, clients, investors, friends, and from our families — thank you for everything! We have a long road and a lot of work ahead, but we are as excited and enthusiastic as ever. There is nothing we would rather be doing than Proof. The journey is the reward.

-Allison and Dan