
Employed with a side of startup - bhousel
http://blog.asmartbear.com/working-startup.html
======
grellas
I don't know how many hundreds of founders I have worked with over the years
in Silicon Valley who began by moonlighting while working day jobs to get
started.

The process is normally pretty safe and, out of the hundreds of cases, I don't
know of one that resulted in a lawsuit.

On the other hand, since I also do litigation, I have witnessed a variety of
these situations that have resulted in lawsuits and have occasionally defended
them.

What is the difference between the safe and the unsafe ones? The standard safe
zone is well-known in the Valley: do the side activity strictly on your own
time and without using company resources.

Where people trip up:

1\. Doing side activity that is related to the employer's current or
anticipated business.

2\. Failing to comply not so much with the terms of an employment agreement
but rather with "company policies" that large employers will periodically
require their employees to sign - policies that can require the employee to
report all side activity and to sign a form affirmatively attesting either
that there is none or explaining what it is. (If you lie on this, you get in
trouble).

3\. Crossing the line in violating fiduciary obligations that an employee has
to ensure that all activity for which the employee is compensated is done
strictly for the benefit of the employer.

The really critical area tends to be the last point. I don't know how many
times over the years that I have seen founders get tempted to want to: (i)
steer current customers of their employer in the direction of their side
venture; (ii) sign up key customer or supplier contacts of their employer as
"advisors" for their side venture; (iii) talk to co-employees about joining
their side venture; and (iv) the worst temptation of all (but thankfully
rarely done) use an inside contact at their employer's business (or use their
own position) to steer project work toward the side venture.

The simple rule is to play it straight. Avoid conflicts. Make sure any IP you
generate in your side venture has no material connection with your employer's
business. And then follow the standard rules (own time, own resources). If you
do these things, you will normally not incur any significant risk from
moonlighting. (Of course, check with a good lawyer in your local area on
details for your particular situation).

~~~
pw0ncakes
_The really critical area tends to be the last point. I don't know how many
times over the years that I have seen founders get tempted to want to: (i)
steer current customers of their employer in the direction of their side
venture; (ii) sign up key customer or supplier contacts of their employer as
"advisors" for their side venture; (iii) talk to co-employees about joining
their side venture; and (iv) the worst temptation of all (but thankfully
rarely done) use an inside contact at their employer's business (or use their
own position) to steer project work toward the side venture._

On 3, does this mean you can be successfully sued for hiring a co-worker? What
if it's 2 years later?

On a side note, it's pretty damned fascist that relationships can be treated
as corporate property. That only passes because the corporations now own the
legal system.

~~~
tptacek
Nonsolicit is a very common contract provision. As "fascist" as it sounds, my
experience has been that it favors small shops.

They're apparently hard to enforce. That's totally irrelevant to you; just
taking you to court is enough to kill your startup.

~~~
smartbear
+1 on "taking you to court is enough to kill." And you personally -- even if
you win you don't get your lawyer fees back (contrary to popular opinion).

Nonsolicit is actually one of the clauses I think isn't unfair. It's one thing
to leave a company, quite another to cause an exodus.

~~~
cookiecaper
I think nonsolicit is quite unfair. You can't force any of your co-workers to
leave with you, and if they're happy where they are most of them won't. If the
company sucks, a Good Friend would try to take as many with him as possible
when he found something better. That's just people helping other people out of
crappy situations.

I've heard some people espouse the idea that there might be some ethical
misconduct in courting [soon-to-be] ex-co-workers. I don't see any basis for
that belief. Again, the most you can do is make an offer; if your company's
staff is all going to jump ship when someone comes to them with vague and
shakey musings about founding a startup together, that should really tell you
something about the company you work for. There's nothing wrong with making a
proposition, imo.

I have worked with people who have signed oppressive contracts. I find it
deeply sad that some people have done that. Neither of my co-workers from my
last job would be available if I wanted to proposition them, as they are both
engaged in multi-year contracts which state departure before Month Year is
punishable by big, big financial penalties. Only for the employee, of course;
the employer can terminate them at its leisure without any responsibility
according to these documents.

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michael_dorfman
_"I work on my hobby only at home and on my own time; it is not in conflict
with my employee agreement. I own it; [Company] has no ownership or rights to
it."_

That may or may not be true, depending on the employee agreement. Many of the
ones that I've seen give the corporation ownership rights to any software
developed by the employee, even at home and on their own time.

Check this before you start.

~~~
mrkurt
Most states limit the reach of IP agreements. In Illinois, for instance, I was
once presented with an employment agreement that included an IP clause like
that. I looked into the law and found out that it wasn't enforceable in IL. I
quite the job because I thought the people who sprung that on us were fucking
loons.

My current company (Condé Nast) has a shockingly fair IP agreement compared to
other large corps.

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zavulon
I disagree with most of his advice. I really doubt you'll be able to quit your
job and get anywhere with your business if you follow it. I don't really want
to get into details for obvious reasons, but when I worked on my business on a
side last year, let's just say I wasn't following the advice in this article,
and I glad I didn't. If I did, I would still be working for "the man" and
hating my life.

Everything in life takes balls. Decide what's important for you, and go for
it, fuck everything else. You've gotta have the attitude that your business is
#1, and the corporation just doesn't really matter that much. Again, I can't
post that many details, but pretty much reverse most points from this post and
you'll have a good idea of what to do.

~~~
tptacek
The logic you've employed here works for stealing cars, too. If cars are
really important to you.

~~~
zavulon
Ok, maybe I should be more careful, what I wrote could definitely be
misconstrued as that. Obviously I'm not saying to do anything illegal.

But - telling your employer in advance that you're working on your own
project? Really? What's the advantage in it? What you do in your off time is
100% yours [unless you signed something that says it's not], and letting your
employer know about it will not bring you any additional benefits. On the
other hand, the disadvantages are huge - everybody will start mistrusting you,
knowing that you're looking for a way out, you'll never get promoted, etc.

And that's just one point.. Not doing business phone calls in the day hours?
C'mon, how realistic is that? How is anybody going to take you seriously if
you don't pick up your phone during the day? Instead, you should FIND time
during the day for important business-related phone calls. When I was
employed, I always ate lunch at my desk in about ten minutes. At lunch hour, I
found a nice quiet place in a plaza 2 minutes from the office, brought a
notebook to take notes, and made 2-5 business calls.

My point is, while you should definitely not do anything illegal, if your #1
goal is to quit your job and make your business your primary source of income,
you should find creative ways to reach that goal, and stop at NOTHING before
you do that.

~~~
tptacek
The treacherous thing about these precautions is that they don't matter to
most startups, because most startups don't succeed. It's only when what you're
doing _actually matters_ that it starts to make a difference whether, in year
1 of the company, there are phone records of you fielding tech support calls
from your cube.

~~~
pw0ncakes
The "assume Big Brother is watching" advice seems to be good in all cases. If
the startup doesn't succeed, then you need the day job and don't want to be
found out and lose it. (Your company is not likely to think "startup" when
they see "strange activity", but rather "interviewing elsewhere"; that,
however, will get you just as fired in a lot of places.)

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ErrantX
One reason I love working for my current employer is he really cares not a jot
about what we do on the side (and even if it leaches into the day job at
times).

Actually he'd even part funding a current pet project of mine :)

It's at the point where I dont even have a contract any more because of the
limitations it actually put on our relationship (note: not generally
recommended - before everyone sprays tea/coffee on the keyboard)

You just have to find out if your employer is going to be a douche or not -
and if not then be open about what your up to.

~~~
mattm
This becomes really apparent if you live in a country with a less-capable
legal system. Contracts are basically meaningless. It's the people behind the
contracts - and their character - that are more important. That is why if you
try to do business in a place like China or Brazil, the hosts will take you
out to dinner and events to get to know you first before talking business.

This is even true in North America although you don't need to spend as much
time getting to know someone as you have a little more safety.

------
vl
There is interesting story about moonlighting at Microsoft.

For many years Microsoft required employees with side projects to submit and
get approved moonlighting request. The problem was that it was not easy to get
approved for start-up-like projects: neither management nor legal didn't want
to take responsibility and were pushing requests back and forth for months.

Finally, in the beginning of 2006, some brilliant legal head solved the issue
once and for all: they removed approving process entirely and released set of
guidelines you have to use _yourserf_ to determine if there is conflict of
interest. So in one simple move they not only reduced amount of work legal
department has to do, but also reduced possibility that employees would choose
to create start up by pushing everyone in gray area and keeping door open for
later litigation threat.

BTW, if you have day job you want to incorporate early so you can do proper
assignment of invention related to your start up (in addition to incorporating
for liability reasons).

------
nfriedly

      3. You can't afford to hire three developers to add features and bugs.
    

I got a kick out of that one - Everybody know that only big businesses can
afford to hire developers to add bugs.

~~~
smartbear
Awesome, I'm glad you got that joke! I don't think anyone else mentioned it.
:-)

I've seen studies too on things like "Developer Productivity" or other such
crud where they didn't even measure stuff like "new functionality added" but
ONLY "how many bugs were injected."

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johnrob
"If they decide to sue, they get to look through your email records (it's
called "discovery"). Then they have 100 emails you sent during work hours. You
lose."

The simple solution that PG has recommended in the past is to rewrite all the
code. Does that protect you from the above?

~~~
tptacek
No. You still invested your employers resources in your business.

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migpwr
Great bit from the article:

"If they decide to sue, they get to look through your email records (it's
called "discovery"). Then they have 100 emails you sent during work hours. You
lose."

Weird. I submitted this article but my submission has now disappeared and it's
now on front page under bhousel? Probably just a coincidence?

~~~
byrneseyeview
They get to look through your _personal_ emails?

~~~
apr
Sure,

<quote> Under the law of the United States, civil discovery is wide-ranging
and can involve any material which is relevant to the case... </quote>

<http://en.wikipedia.org/wiki/Discovery_(law)>

------
FreeRadical
Does anyone have any insights into how Google handles this? What approach they
take?

