Kairos founder fires back at alleged corporate coup leaders
Kairos founder Brian Brackeen has not actually been terminated from his position as CEO of the company, as the attempt to do so did not meet the legal requirements for such an action, according to an open letter from Brackeen to company shareholders.
The letter has been published in the midst of a legal battle with interim CEO Melissa Doval, COO Mary Wolff, and board chair Steve O’Hara, setting out his interpretation of events and countering the claims made in support of his recent dismissal, or attempted dismissal, from the company, and the suit it has filed against him.
Brackeen writes that as of late 2017, the company was strategically placed to generate revenue through sales to sustain it, but was out of cash. Kairos was licensing close to half of its IP, and needed to acquire the licensed elements to offer its products in a manner and at a price point that would be competitive. The company was also making an expensive transition from machine learning to artificial intelligence.
In order to raise the funds, Brackeen proposed an initial coin offering, which was accepted by the board. At this point, things began to go sideways.
The ICO raised $13 million, but the funds had to be returned due to problems in the execution of related legal documents, and when the round was relaunched, the cryptocurrency market had crashed. The second ICO still raised $6 million, according to Brackeen, which allowed Kairos to pay its staff, acquire Emotion Reader to bring its IP in-house, and hire research staff in Singapore.
In August, funds began to run out again, and Brackeen sought funding to last through the launch of Kairos’ on-premise API and keep the company afloat while the projected $8 million in annual revenue came in. While presenting to potential investors in Singapore during September, Brackeen writes, his access to company email and documents was blocked. He says he was fired by voicemail the day he returned, after having completed a $200,000 deal with a major retailer, and lining up several other potential sources of investment, including the potential acquisition of Kairos.
Brackeen claims that weeks earlier he became aware that Wolff was complaining to the board about his absences from the office, and lobbying for his termination. The decision to replace him with Doval, who he says has only 6 months of experience in the industry and none as a CEO, came at a board meeting to which he was not invited, in violation of company rules.
The lawsuit filed against Brackeen by Kairos alleges that Brackeen spent less than 30 percent of his time in the company offices, and that he used his position with the company to further his own agenda and build his personal profile.
The allegations of Brackeen’s improper spending by the board are disputed in detail in the letter, though he admits that between $3,500 and $4,500 of the $60,000 in expenses disputed by the suit against him could fall into a “grey area.” Brackeen alleges that not only was his firing not carried out legally, and therefore effectively not carried out at all, O’Hara has withheld documents he is entitled to, and that he has acquired some of those documents through investors.
“It is my belief the Steven O’Hara has allowed himself to be manipulated, and is currently following direction from two women who know absolutely nothing about face recognition technology, the market, or effectively operating a startup,” Brackeen writes. “Yet, I suppose it’s not impossible for me to believe that he let this happen— because I have to admit that in the end—they manipulated me, too. Because they have no real interest in the company, before they admit that they are in over their heads and step aside, Melissa Doval and Mary Wolff will kill our company dead, step over its carcass, and move onto their next victim.”
In a recent interview with Biometric Update, Brackeen warned of the dangers inherent to successful entrepreneurship.
“This is your classic coup situation,” he said. “One of the things I’ve now learned is that as the company gets more and more valuable – and in the last round it was valuated at over a hundred million dollars – you get these things pop up more and more where people try to extract the value for themselves.”
Brackeen also provides a legal analysis, which includes a proposal for an informal meeting of stockholders to discuss the situation, and a request for help in acquiring the governance and corporate documents he has requested through council but not obtained.
TechCrunch reports that Arlan Hamilton of Kairos investor Backstage Capital has come out on social media in support of Brackeen. It also notes that in an interview with Doval, she declined to commit to the same position as Brackeen regarding sales of Kairos’ technology to law enforcement.