The best technologist I’ve ever worked with: dealing with the attrition of our CTO

Our CTO Prerak is leaving Proof. He has given us three amazing years as we have gone from launch to a mature and stable institutional trading platform. Every new technology system eventually transitions from being maintained by its original builder to being maintained by people they’ve trained, so in a way this was inevitable. It is just happening sooner than we had expected.

When Prerak and Beau joined Proof, I wrote, “they are the two most talented engineers I have ever come across. I feel incredibly lucky to be working with them again at Proof.” Those feelings have only grown stronger as I have gotten to know them better, spending day in and day out together in the trenches. Prerak is brilliant, experienced, practical, hard working, thoughtful, creative, and an excellent communicator. He is outstanding under pressure and poised in front of clients and investors. I still feel incredibly lucky to have had him steering our technology for the past 3 years.

At past companies, when a key person left the team, the messaging from above was often spin. “It’s actually good, it’s a blessing in disguise!” Maybe it was sometimes true, but it often felt self-serving and insincere. Prerak leaving is not a good thing. I am confident we’ll get through it, and there may even be some silver linings, but the transition will be challenging.

Founder responsibility: when the company is your baby

Back in 2012, about six months after we founded IEX, our CEO scheduled 1-on-1’s with each member of the founding team to discuss our personal goals and aspirations.

We had a wide ranging conversation about the plan for the company, as well my personal hopes and dreams and priorities. He wanted to understand all of our individual reasons for devoting ourselves to IEX. I don’t remember most of the details, but one part is crystalized in my memory: he asked where I saw myself in ten years — what would be my dream scenario.

I said my number one priority was learning and growth. I hope to start my own company one day. “Don’t get me wrong, I care deeply about this company, and I will give it my all. But this company is your baby, and one day I’d love to run my own company.”

I remember because he got quite upset at this answer. “You need to treat IEX like it’s your baby too — you need to be all-in.”

And I said something along the lines of “no, no I am all-in — you don’t have to worry about me. I am so excited about this company, and I am fully invested and will do whatever I can to make it succeed.” It blew over, and I wound up working at IEX for 7 years. I loved IEX. I was a major culture carrier. But in truth, IEX always felt like his company, his vision. Not ours.

The reality is there is a difference between being a part of the team and feeling full founder-level ownership over the company. As a father of two (soon to be three!), I think baby is the right term. Proof is not just a job — I feel an incredible degree of attachment and responsibility to the business, the mission, the vision, our clients, our investors, and most of all to the rest of our team. Allison shares this visceral feeling of ownership and responsibility.

We did everything we could to instill this feeling in Prerak and Beau, even though they joined 6 months in. We made them full equal partners, same equity as us, board seats. A full seat at the table. In the rare cases where we weren’t in complete agreement on how to handle a situation, we treated their stance as strongly as our own. We never played the CEO/President card.

The only examples that come to mind where we weren’t totally on the same page are around fundraising or potential acquisition. In fundraising, Prerak would generally push for us to raise more money more often — de-risk the business with a longer runway and a higher valuation; whereas Allison and I would generally lean toward smaller fundraises and ceding less control. In the handful of times when we’ve gotten poked with acquisition inquiries, Allison and I would generally have little to no interest in even having a conversation, but Prerak would push for us to at least hear them out. These few times over the years when we did meet in the middle illustrate our different risk tolerances and goals and attitudes.

I previously thought Prerak did share this feeling — that Proof was his baby too — but it seems I was wrong. Prerak clearly cares deeply about Proof. He has worked so hard and given so much to it. But when we had our first conversation about Prerak feeling intrigued by a potential opportunity away, there was a noticeable shift in his language: “this is Allison’s and your company — it always was; you two are the face of the company and soul of the company. I am replaceable.”

Why he’s leaving

This is a question we grapple with — why Prerak is leaving Proof for another company. Was he down on our prospects? Was he burnt out and/or unenthusiastic about the work ahead? Is he more excited about their mission and vision than ours? Was the opportunity just so good, he couldn’t pass it up? Or maybe it is a hedge. Maybe he was just ready for a change of pace or felt the grass was greener.

Honestly it is probably some combination of the above, and only he can say the true drivers of his decision. It is not a great external signal that our CTO is relinquishing half his equity and abandoning ship, but it would not be our style to hide from the truth or try to sugarcoat it. I do think a huge part of it was simply that the new opportunity is phenomenal. I am proud of him and excited to see him succeed in his new role.

I am also proud that Proof was able to give Prerak a platform to further develop his talents and also finally get the external recognition he has always deserved. Through the experience of building Proof, Prerak has become one of the leading experts in high performance cloud-based trading systems. It is no surprise that his skills would be highly desirable throughout the industry. Even though this situation is causing us short-term pain, we are well-served by encouraging our team to grow and learn, to build an external presence, and to be honest with us about their career goals and ambitions, even if they involve leaving Proof at some point. We were a little bit blindsided here, mostly because he is our co-founder, but it could have been a lot worse had we not built such a strong relationship of mutual trust and respect.

I will note that I am very glad that Allison and I had the foresight to institute longer founder vesting schedules. We made that decision long before Prerak and Beau even joined the team, but in retrospect our thinking was spot on. Now that they have both made the decision to step back, a 1/2 founder stake for Prerak and a 1/3 founder stake for Beau feels appropriate given their (still massive) contributions.

What happens from here

As Allison and I discussed the possibility of a future without Prerak, we thought through all sorts of things: new folks we could bring onto the team, how to redistribute the work, the path forward in terms of fundraising and growth. We even thought about various scenarios that this change could open up — for example, might it be possible now to restructure the business to make Allison a 51%-owner of the broker dealer and go for WBE certification? After all, when we first started the company, Allison and I were 50–50 partners.

Our biggest initial concern was what would we do when the system inevitably had issues in the future? Our platform is extremely robust and resilient, but no piece of technology is 100% bulletproof. A huge part of system reliability is having the tools and expertise to quickly assess and remedy the unexpected failures. Prerak is calm, collected, and strikingly efficient in those rare circumstances, and he would be difficult to replace.

Fortunately, we came to a major revelation: we don’t actually need to replace Pre with outside hires. Allison and I are technical co-founders too, and we are already intimately familiar with our platform (though not yet to the level of depth we’ll need). I have actually written before about how Allison, Prerak, and I could all fill in for each other in a pinch — well, we are now in that pinch! We don’t purport to match Prerak’s technical expertise or talent, especially when it comes to designing and building a trading platform from scratch. But we don’t need to be able to build another Proof — we just need to be able to operate it, fix it if something breaks, and build further on top of it (and teach others to do the same). If Prerak was willing to put in the effort to train us up, which surely he would be, that was at least completely within our control. Allison and I already wear a lot of hats. We don’t necessarily want to wear the CTO hat too for the long term, but it would be fine in the short term. In fact, it would likely be a great learning experience and add a valuable skillset to our repertoires.

Allison and I are 100% committed to Proof. We are not going anywhere, and the company has plenty of runway and traction. We are going to buckle down and focus on knowledge transfer for the next few months. Prerak still cares a great deal about Proof, and he has graciously agreed to stay on full-time for several months for an extended transition period (exact timing TBD). Once we are feeling confident and stabilized, Allison and I will get back to focusing on research and algo development, recruiting, sales, and probably fundraising. That’s not to say we won’t be doing these things in the meantime as well — they just won’t be the primary focus. Prerak will also likely stay on as an advisor even after he transitions to his new job. It is a great comfort to still have him on our side, even if he will no longer be with us in the trenches.

There are two main pieces we need to knowledge transfer: the tech system (e.g. core codebase and applications, infrastructure, networking, database, market data, reference data, etc.) and the operations (e.g. cloud management, deployment, maintenance, failover, integrations and certifications, clearing and other post-trade processes, and regulatory reporting). It is still evolving, but our transition plan involves exhaustive documentation, twice daily Zoom teach-ins, and a lot of rolling up our sleeves getting our hands dirty. Many of these items are best learned through experience, and we need to build up that muscle memory. Prerak will be assigning us tasks and projects. He’ll be around to teach and to guide and to help, but we need to achieve self-sufficiency as quickly as possibly, and that will only come through individual dedication and hard work.

Though backfilling the team is not our primary transition plan, now is a perfect time for additional engineering talent to join the team. The next few months will a hyper-focused period of knowledge transfer, learning, and growth, and at the end there will be ample leadership opportunities at Proof. If you or someone you know might be interested in joining us, please let us know!

The silver linings

I don’t want to overstate them, but there are at least a few silver linings to this tough situation. This experience has and will continue to bring the team closer together, those of us who keep on trucking and pull through to the other side. We are in this together. It will be a lot of hard work, but the light on the other side of the tunnel is bright.

This is also a wonderful opportunity for all of us to learn and grow, and we do have a excellent teacher to guide us. We have no choice, and there is no greater motivation than necessity.

Finally, on the leadership side, Allison and I have always been more in sync with each other than we were with Prerak. He was a voice of reason and a voice of practicality, but he didn’t feel as strongly about certain aspects of the mission that the two of us feel are essential. Prerak was also more intrigued by the idea of rapidly scaling up by getting acquired, even though we felt that would massively dilute the qualities that make Proof unique and compelling. Those conversations were probably a worthwhile thought exercise, but they were a distraction. This is an opportunity for Allison and I to refocus and redouble our mission and vision.

Why write this post

Building a startup is not all puppy dogs and rainbows, and full transparency means sharing the bad with the good. I am so grateful to have wonderful teammates and partners who work with us and who trust us, and we will continue to do everything we can to earn and deserve that trust. This is possibly the toughest challenge we have faced yet as a young company, but I wholeheartedly believe we will come through it and thrive. I do feel great about our transition plan. And no matter what happens, we will be fully transparent every step of the way!