The Direct Cost of Horrific Ego

I felt insecure when choosing co-founders, but I ended up with an impressive group. One was a Harvard graduate who consulted for every big tech company in California; the other was a PhD leading quant operations for a major bank.

At first, things seemed to work. We were meeting deadlines for product development, and each week, we hosted multiple sales meetings.

The product was based on my findings when researching Benoit Mandelbrot's study of markets, which was made famous with his book The Misbehavior of Markets. Trying to avoid the fractal math, we set out to use AI as a means of forecasting market volatility—a replacement for the aging VIX model.

We were given a new set of asset forecasts that the model produced each week. Our graphic designer converted them into sales presentations that we showed potential clients and investors.

One day, while checking our GitHub repository, I noticed that it was empty. When asked, our quant assured me he was busy and would publish the code soon.

A week later, the code was still not published, and a board member requested an emergency meeting with me. It turned out that our impressive co-founder was not really working for the company. Instead, he was using us to pad his resume.

In the end, we had to pay several hours of attorney fees to remove him from the company and find another expert to finish the product. Eventually, we cleaned up the cap table and had a product, but trusting the wrong co-founder cost the company thousands and set us back months in revenue.

The lesson

An impressive background is not an indication of startup success. What is more important is the drive to solve a specific problem. If a co-founder can solve the problem, their academic or professional background does not matter.