

Massachusetts Bill to Ban Non-Competes backed by Spark Capital - alexbeaudet
http://www.xconomy.com/boston/2009/04/08/spark-capital-backs-brownsbergers-bill-to-ban-non-competes/

======
sachinag
I would _love_ to see what the folks at Harmonix think about this. If it
passed, they'd probably be decimated by publishers grabbing teams of three to
work on various rhythm games.

That said, I'm fully in support. :)

------
dmillar
I agree. If you feel your employee is a value to you and potentially a
competitor, you ought to compensate them accordingly. Personally, I would
never sign a non-compete unless there were not only adequate considerations
for compensation, but also equity.

~~~
electromagnetic
I agree with a ban on putting it into an employment contract, however I don't
agree with them being banned completely.

I don't think my getting a job should hinge on if I agree not to use my
knowledge for my own best interest. If a company wants to offer me something
that (from my perception) is of better interest to me than competing with
them, then I'd possibly sign it.

If it's that important to a company that I don't compete with them, they
should be willing to pay me enough that I have an interest not to compete.

------
ivankirigin
I didn't get a job at a startup in MA because they feared my last company's
non-compete.

~~~
tptacek
I've been involved in legal posturing between companies over noncompetes
before, too. I wonder if, even if courts refuse to enforce noncompetes against
individuals, the agreements will still have teeth between companies; just the
cost of taking an ultimately doomed lawsuit to court might be deterrent
enough.

~~~
ivankirigin
Indeed. Their fear wasn't the lawsuit, but delaying a product launch by a few
months, at best.

------
alexbeaudet
To what degree banning non-competes will fuel the tech scene in Massachusetts
is tough to say - obviously there are a lot of other variables separating it
from Silicon Valley - but it's nice to see that Spark is practicing what it
preaches, having stopped requiring non-competes in 2007.

------
tjic
I dislike the government asserting that I am not a fully competent adult,
capable of making my own decisions about what agreements I enter into and
which I do not.

If I'm not competent to read a non-compete and agree, or not agree, to it,
then why do they think that I'm competent to drive a car, or vote, or sign a
lease?

~~~
biohacker42
I agree with the core of your argument, however in this instance we have
private market manipulation.

In most situations the employers have more leverage then the employee. The
very best hires will not accept sub par offers. But a lot of others, including
some very good ones, will.

The result being that private companies influence the labor market for their
own benefit and everyone else's detriment. That includes other employers and
employees.

Think of non competes for utilities, as in only one cable co. can serve your
area. Does that make the private market manipulation more obvious? Private
market distortion is no better then public market distortion.

Cartels, non-competes, etc, are legitimate targets for government busting from
my libertarian perspective.

~~~
tptacek
This move doesn't do anything to reduce the "market manipulation" you allege.
If employers are negotiating from a position of strength, they'll get all
manner of other concessions, starting with wages and benefits --- which is all
most people care about. I don't see the principle that you're arguing from
here.

Your comparisons are a little silly, too. There are good reasons (right of
way, regulation) and bad (monopoly concessions, lobbying, corruption) that
private utilities own entire markets. These have nothing to do with the forces
behind noncompetes. No noncompete has helped establish any company's monopoly
in any product or service you can name, even regionally.

Noncompetes are a trade. Companies provide employees with access to resources,
client lists, and trade secrets. They want to ensure that rolodexes aren't
shopped and product plans aren't bootlegged. These are reasonable goals.
Employment contracts are blunt and inefficient instruments for accomplishing
those goals, but that doesn't make the intent corrupt.

~~~
biohacker42
_Noncompetes are a trade. Companies provide employees with access to
resources, client lists, and trade secrets. They want to ensure that rolodexes
aren't shopped and product plans aren't bootlegged._

Isn't that an NDA?

I see non-competes as nothing but attempts to reduce competition. Except that
is exactly how markets are NOT supposed to work. You're supposed to _out-
compete_ , not simply reduce competition.

~~~
tptacek
No. A sales account manager at AcmeTron can dump the entire CRM database, walk
it over to WidgetCorp, and run all those same accounts for them without ever
once violating an NDA.

Frankly, and I hope respectfully, if you can't see the distinctions here, I'm
not sure why you'd expect anyone to take your opinions about noncompetes
seriously. You might also consider wording your ideas better: "noncompetes are
nothing but attempts to reduce competition", for instance, might not be your
best rhetorical play.

I'm pretty ambivalent about noncompetes. They've hurt me more than they've
helped me, both as employee and (in concert with) employers. But I don't like
shoddy arguments.

~~~
biohacker42
I'm not a salesman so I wouldn't know but it seems to me _A sales account
manager at AcmeTron can dump the entire CRM database, walk it over to
WidgetCorp, and run all those same accounts for them without ever once
violating an NDA._ is the very definition of why you need NDAs.

But again maybe I'm looking at this from an engineer's perspective and it's
different for sales.

In either case, I don't think we'll change each others minds here on the
Internet.

~~~
tptacek
In a consulting agreement, you may find "Non-use" terms along with "Non-
disclosure" terms in the IP language; technically, this would prevent a
consultant from stealing the sales rolodex and then using it to contact
customers.

Otherwise, you violate an NDA by disclosing to someone not bound under the
same NDA actual confidential information. Nothing prevents you from using
confidential information to compete "unfairly" with your employer.

You can add whatever terms you'd like to whatever you call a "confidentiality"
or IP agreement, but now you're on a slippery slope that leads to de facto
noncompetes.

------
jfarmer
I read this as [Massachusetts Bill to Ban] [Non-Competes backed by Spark
Capital], rather than [Massachusetts Bill to Ban Non-Competes] [backed by
Spark Capital], so it's good to see that Spark is backing the ban.

In general I think the state should take a utilitarian perspective in matters
like this. If non-competes hurt the economy more than they help it would be
self-defeating for the state to enforce them.

I'll leave the rest for politicians and pundits.

~~~
sfg
How do we measure the utility?

------
bdr
I'd guess that people often agree to non-competes because they don't know how
bad a deal they are. This could be solved if (1) people checked their
contracts with lawyers more often, or (2) contract terms were standardized in
such a rigid way that people could quickly learn about all the potential
clauses.

Why don't people check their contracts with lawyers? If it's because of a high
estimated cost, is that estimation right?

Part of the problem (and therefore part of the solution) is that the choosing
of contract terms asymmetrically benefits the employer, since they only have
to do the lawyer work once.

------
jhancock
I've had lawyers in Georgia tell me a non-compete has no teeth under GA law.
You still might get sued, but apparently, the law leans heavily towards the
employee.

Intellectual property and trade secrets are however well protected for the
employer.

~~~
tptacek
That's the case in most jurisdictions; judges will tend not to interpret
contracts in ways that preclude individuals from earning a living. In a lot of
states, judges also have the authority to modify noncompetes on the fly, so
that they aren't confronted with the choice of screwing a former employee and
throwing out an entire contract term wholesale.

------
sscheper
Excellent movement on Spark's part. I've personally been handed a non-compete
by a venture capital fund that would make a producer blush. It's preposterous
what some firms try to con entrepreneurs into.

~~~
tptacek
I'm really not sure why I'm expected to muster sympathy for entrepreneurs
facing noncompetes from VC's. Isn't this an eminently reasonable use for
noncompetes? You're epsilon from corporate-to-corporate contracts in this
scenario.

~~~
sscheper
The vc will issue non-competes relating to its portfolio companies and future
investments. That, to me, seemed unreasonable

~~~
tptacek
But the VC market isn't the labor market. I don't see why the response to that
isn't simply not to take their money.

