It would be irresponsible to not be very skeptical of the code as it's usually trash, and trash code will scare away any and all future tech employees. The annual turnover will be >100%, guaranteed. No company can sustain that level of turnover.
That is a big "if". A good technical cofounder will identify the latent technical debt that exists in an outsourced prototype and if that number is too high, a rewrite can be justified.
He hired a CTO, who took a look at the current code, list of bugs, and new features desired, and made the call to do a complete rewrite.
In retrospect, this was absolutely the right call. It can definitely be wasteful, but sometimes starting with a completely new design is the right thing to do.
Every time I have to use an iPhone app with broken non-standard UI components and UX it makes me sad.
I find that the real key is working with coders who can refactor one component at a time, without requiring a re-write from scratch. Then you actually can iterate on a junk codebase.
A prototype is something that you build and then throw away, a MVP is the minimum feature set that can be given to customers, developed with the same quality and values as your eventual product that can be expanded upon.
So be clear what your trying to built at the start, and make sure you build the right thing.
I think it's a mistake to not throw away a prototype. You could be starting day 1 with so much tech debt that it would take longer to fix it all vs. design and develop an MVP properly in the first place.
If the offshore stuff works, great, build on it. If it doesn't rewrite it.
If the architecture is good, but not the implementation, incrementally swap out what you can, as you need.
If the offshore team works just stick with it so you can focus on technology strategy.