Kairos Founder Brian Brackeen Countersues His Own Company For $10M After Coup

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Written by Dana Sanchez

Brian Brackeen, founder of Miami facial recognition firm Kairos, has filed a counter lawsuit against his own company, seeking $10 million in damages for alleged damage to his reputation, his livelihood and the company’s refusal to pay him money he was owed.

Brackeen’s brainchild, Kairos is an artificial intelligence company specializing in face recognition and human analytics. Under his leadership, Kairos gained national and international recognition as a pioneer in facial recognition technology, attracting customers and investors from around the world.

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Brian Brackeen talks about his path to starting Kairos, how blockchain can be applied to the NFL, and whether Disney’s’ “Black Panther” is revolutionary.

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Face recognition technology notoriously fails Black people, Brackeen said. He worked passionately to solve the problems with the algorithm. It’s part of a bigger problem — technology’s diversity problem — where algorithms written by mostly white men are biased and have a hard time understanding different skin colors, different shades and genders.

Although face recognition tech is used by law enforcement, there’s insufficient training data to teach the algorithm what women are vs. men, and what people of darker shades are vs lighter shades, according to Brackeen. The consequences have been catastrophic for people of color.

Some members of the Kairos board of directors do not share Brackeen’s vision and management style, according to the countersuit:

In recent months, these board members have masterminded an illegal coup to forcefully remove Mr. Brackeen from Kairos. Given the support and confidence Mr. Brackeen has earned from Kairos’ investors and customers, the plan to remove him could succeed only if Mr. Brackeen’s good name and excellent reputation were dragged through the mud. To achieve this objective, the board enlisted the commitment of Melissa Doval, Kairos’ Chief FinancialOfficer for less than five months. Doval implemented or supervised all aspects of the calculated strategy aimed at tarnishing Mr. Brackeen’s reputation so he could be forcefully ousted from the company he founded.

Brackeen, who founded Kairos in 2012, was replaced by Doval, who joined his company as a consultant in May, and became CFO In June.

Kairos fired Brackeen from his job as CEO on Sept. 28, saying he misled shareholders and potential investors, misappropriated corporate funds, failed to report to the board of directors and created a divisive atmosphere, TechCrunch reported. Kairos followed that up with a lawsuit alleging theft and breach of fiduciary duties among other things.

Brackeen is countersuing for libel, civil conspiracy, violation of statutes and breach of contracts.

A Kairos’ token sale was expected to raise $30 million by the end of Q3 2018, but the last dated update to the page for the ICO on the company’s website “seems to be for the generation of tokens on July 31,” BiometricUpdate.com reported on Oct. 3. “The first $10 million portion of the offering is closed, and the rest was also due to close on July 31, but the status of the process in unclear.”

Brackeen has spoken passionately about limiting the use of facial recognition by law enforcement. Under his leadership, Kairos refused to provide its technology to police body camera maker Axon, according to a June report.

Brackeen learned to write computer code before he was a teenager. After high school, he got a tech job at Comcast, where he honed his project design and management skills. He had a long stint in a senior management at IBM, and worked as a senior project manager at Apple, Inc. , where he managed projects at the intersection of tech and human resources. That’s when he realized that face recognition innovation had a role to play in optimizing productivity in the workplace. Understanding AI’s potential in the marketplace propelled him to launch Kairos, which means “opportune moment” in Greek mythology.

Brackeen founded Kairos with his life’s savings and a clear vision about the future, the countersuit asserts. He initially focused on the development of face recognition software to solve workplace problems, but soon expanded to apply the technology to multiple facets of everyday life.

Brackeen traveled extensively, believing it was vital for Kairos’ success that he be as visible as possible — at least until Kairos had met and exceeded its financial goals and no longer relied on outside investment for survival, according to the countersuit.

Conferences, summits and podcasts featuring Brackeen were accessed by thousands of people worldwide, further enhancing his and Kairos’ profile and marketability.

As Brackeen’s name recognition reached global scale, so did his reputation in his personal and professional life. Kairos’s profile and popularity also increased, making it one the most best-known and respected facial recognition companies in the world.

Brackeen’s success in raising the company’s profile worldwide helped the company attract investment and a growing list of clients.

Kairos
Brian Brackeen, founder of Kairos. Photo: Anita Sanikop/Moguldom

 

In 2014, New World Angels (NWA) — a group of accredited private investors with a strong South Florida presence — decided to invest in Kairos, culminating in a Series A financing round and the official formation of Kairos’ first board of directors.

Stephen O’Hara, who later became NWA’s president, has served as chairman of Kairos’ board since March, 2014. “His primary interest and focus are to leverage NWA’s investment in Kairos to obtain the highest short-term return as quickly as possible,” the countersuit asserts. “He and NWA let it be known early on that their goal was to reap short-term profitability at all cost.”

O’Hara’s management style and vision for Kairos’ future differed from Brackeen’s:

O’Hara decided that Brackeen was not the right fit to run Kairos because he viewed Brackeen as a technology and communications person who lacked the business pedigree and experience to oversee Kairos’ growth.

In addition, O’Hara did not share Mr. Brackeen’s commitment to scrutinize Kairos’ technology to prevent racial bias and social injustice. O’Hara put pressure on Brackeen to break his vow not to profit from the sale of Kairos’ software to law enforcement until such time as the technology could reliably be applied on persons of color. This fundamental clash between O’Hara and Brackeen set O’Hara on a mission to push Brackeen out of Kairos.

Revenue wasn’t growing fast enough for O’Hara, who had been a board member of multiple startups and the CEO of private and public companies. “He knew very well the usual playbook whereby the board could be justified in seeking the immediate removal of Mr. Brackeen from the company he founded without alienating investors, employees and customers: he needed to turn Mr. Brackeen into a villain who was out to harm Kairos,” according to the countersuit.

O’Hara saw the right opportunity to make his move in May 2018, when Mary Wolff and Melissa Doval joined Kairos an in-house corporate counsel and chief financial officer. Wolff and Doval became Kairos board members, “and they used their position to plot against Mr.Brackeen,” according to the countersuit.
On Oct. 23, less than a month after Brackeen was fired, Entrepreneur Magazine published an issue devoted to the “50 Most Daring Entrepreneurs of 2018,” featuring high-profile CEOs of the world’s most successful companies, such as Elon Musk, GM’s CEO, Mary T. Barra, Chef José Andrés, Anne Wojcicki of 23andMe, and Brackeen as CEO of Kairos. 
The article was widely distributed online and in print all over the U.S and world. It presented Kairos in a positive light before a large and diverse audience, according to the countersuit. Many of Brackeen’s colleagues and friends congratulated him.
 
O’Hara, Doval and Wolff demanded that the magazine remove Brackeen from the list, implying that Brackeen was a thief, had mismanaged Kairos, committed illegal acts, and had been fired from the company as a result of those misdeeds.
 
Entrepreneur removed the article from its online publication and issued a statement saying one of the entrepreneurs had been fired by his company and sued for alleged corporate misdeeds, and that the list was now 49, not 50 entrepreneurs. Brackeen’s friends, colleagues and family members were shocked.

Soon after he was fired, Brackeen’s laptop was locked, preventing him from accessing personal and private information, including health information. Then Doval viewed all information, data, videos and pictures of a personal and private nature belonging to Brackeen, the lawsuit alleges.

Doval identified personal emails between Brackeen’s friends and disseminated defamatory information about him or tried to obtain negative information about him and sow discord between him and his friends, according to the countersuit.

What’s next

Kairos plans to hold a meeting of the shareholders in the next few weeks, where Brackeen hopes they will vote to remove the board and reinstate him as CEO, TechCrunch reported. Brackeen says he’s trying to get enough shareholders on his side to force a vote.

A recent emergency offering was made to raise $500,019 in “emergency capital” to able to pay Kairos employees and continue operating into 2019. The offering valued the company at $1.5 million — a huge drop from Kairos’ previous $120 million valuation. Shareholders were able to purchase 43,366,780 shares at $0.01153 per share. One of the conditions of the offering is to reconstitute the Kairos board of directors as a three-person board consisting of O’Hara, Kairos Director Mike Gardner and Doval.

Brackeen, meanwhile, says he has been able to raise $3.5 million in venture funding from Beyond Capital Markets, an impact investment fund, with a target of $5 million. He hopes it will persuade shareholders to vote to replace the board. But that money is contingent on Brackeen rejoining the company as CEO and the board resigning.

“It’s like riding a bike backwards with one arm — and blind,” Brackeen told Techcrunch’s Megan Rose Dickey:

The lesson for founders, Brackeen told me, is “when you’re taking those first investments and you’re really excited, you need to have callouts for the founder versus the current CEO.”

He added that “angel groups shouldn’t have that kind of power too late in a company’s lifecycle.” Additionally, once founders are starting to raise a Series A, “you need to make sure your lawyers are not meeting them halfway on docs and not necessarily playing nice.”