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Strapped startup declines acquihire, Apple poaches key engineers; NP, says court [pdf] (justia.com)
245 points by dctoedt 21 days ago | hide | past | favorite | 425 comments

"That evidence does suggest the engineers drew on knowledge and skills they gained from Hooked to develop a product for their new employer––but California’s policy favoring free mobility for employees specifically allows that. (See Whyte v. Schlage Lock Co. (2002) 101Cal.App.4th 1443, 1464 [rejecting the “inevitable disclosure” doctrine, under which a claim for trade secret misappropriation is stated if an employee’s new job will inevitably lead to reliance on the former employer’s trade secrets].)"

Which is why Silicon Valley is in California, and why attempts to create a startup culture elsewhere have mostly failed.

Exactly correct. I tried to explain this to a public official from an east cost town who was flying back from the Bay Area trying to "learn the secrets" of creating an innovation hub. When I explained this situation (non-competes are illegal, stuff you do at home is yours) to him he literally said "That's crazy! Why would anyone hire anyone if they knew they could walk out the door to a competitor, or even to start a competitor? We would never allow that in our town."

I tried to explain that it puts the onus on the company to adequately reward their employees with equity so that they want this company to be successful, not the possible other company. And it encourages management to be a better place to work than their competitors. Both things lead to better employee engagement and better results. But they couldn't get past the fact that there was no issue with leaving a company and going into competition with it.

Ultimately I believe (but cannot back it up with any sort of data) that non-technical folks don't appreciate how much crappy work is involved in starting from a blank sheet and coming up to being competitive with an already up and running company. But what ever the reason, the unwillingness to "go there" with this sort of protection time and time again has killed innovation. Even when an example that it works, and works well, has decades of history demonstrating that it does.

Your comment reminds me of this tweet: https://mobile.twitter.com/zackkanter/status/130493861651941...

The cognitive dissonance humans are capable of is amazing. To actually say “We would never allow that in our town.” in the pejorative while flying back from a trip specifically meant to learn how to be like another town.

If you’re not going to act on an author’s central point, don’t try to do any of the other parts (they’ll probably actually be harmful). If you’re not going to copy the central parts of something successful, don’t bother copying the other stuff.

The recipe for success of Silicon Valley is pretty straightforward. It has great colleges, great weather, and weak noncompetes. So people go there to start companies. And now it has a compounding cycle of attracting capital, founders and talent (recent events aside).

But a government employee from Boston can’t say that, cause they can’t do shit about it. It’s not like they’ll fix the weather or the noncompetes (too many entrenched medtech companies to change that now).

So they’ll say “they have accelerators!” and open a city sponsored accelerator and maybe some successful company will pop out in the next ten years.

> If you’re not going to act on an author’s central point, don’t try do any of the other parts (they’ll probably actually be harmful). If you’re not going to copy the central parts of something successful, don’t bother copying the other stuff.

> The recipe for success of Silicon Valley is pretty straightforward. It has great colleges, great weather, and weak noncompetes.

There are a couple of interesting things about these comments.

#1, nobody knows which parts of an ensemble of practices are the central parts. It's quite true that, because of this problem, people just try to copy as much as they can.

But then we lead into #2, your comments on the recipe for success. Among your central points, literally placed in the center, is "great weather". That can't be copied. You have the weather you have. What should the other 99.999% of the world do? Is there even a point in trying?

> But then we lead into #2, your comments on the recipe for success. Among your central points, literally placed in the center, is "great weather". That can't be copied. You have the weather you have. What should the other 99.999% of the world do?

Well, the weather probably is a comparatively small factor, but nonreplicable geographic factors are actually a major factor in the success of most economic hubs, including the Bay Area (aesthetically great weather is one, but a great natural port area, and proximity to abundant agriculture, are also factors.)

Yeah, you can't copy some of those things. Geography matters, it always has.

Beauty is in the eye of the beholder though.

Way too hot, hazardous weather, impossible to get around (crazy traffic congestions, no useful public transporation, bicycling being suicidal), have to go to Home Depot to get real Coca Cola.

Overall quite "meh".

> no useful public transporation

it's united states overall, so it doesn't really matter.

Combine it with the

>> crazy traffic congestion

It matters. I once pulled out of the Sutter-Stockton garage and sat in traffic for a full hour without getting to the end of the block.

Why were you driving in downtown in the first place? It's one of the few parts of the city that are well served by transit.

Silicon Valley became SV before most of that.

Now it's SV despite all that.

There are lots of places with a Mediterranean climate.

A Mediterranean climate is actually pretty rare in the world. The only large areas with a Mediterranean climate are the actual Mediterranean, the US West Coast, and some parts of Australia. Apart from that there are only a few scattered spots with a Mediterranean climate.


I don't think that's part of the reason either. Sure, weather might be a factor for employee comfort, but most certainly not for a startup friendly environment. Else why is Stockholm or Copenhagen a bigger startup hub than Barcelona or Rome? Why are all the French startups in Paris and not Marseille, or the German startups in Berlin and not Munich? From even a non-startup perspective: why is Milan a bigger hub for corporate than Napoli or Rome (don't know how true the last bit is, but certainly felt that way)?

There are also historical reasons. Northern italy has long been more industrialized than the south, going back centuries to before there was a modern unified Italy. Paris has over twice the population of Marseille and way more universities which feed the job pool. Scandinavian countries have stronger social safety nets that foster more growth than their comparatively lean budgedted peers in southern europe.

Compared to total land mass, sure. But (as that map clearly shows) most Mediterranean climate is not in California. If it's just about the climate, there are plenty of options.

...or more likely, the weather is not a critical issue.

Why can't the weather be a critical issue that only works in combination with the other factors?

My intuition says that Silicon Valley wouldn't be possible in a beach town nor in a place that's too cold or too hot, simply because of how much the weather would distract you from work. The great thing about the weather in the Valley is that it's pleasantly bland (or blandly pleasant?).

But I think it's very likely that the weather doesn't matter at all if you don't already have some equivalent of the Stanford-Berkeley nexus and California labor law and a lot of very rich people willing to make high-risk investments.

Firstly, I think your number is a little off. Bay Area weather isn’t that amazingly better. Maybe top 10% of cities.

As to “Is there even a point to trying?” No. No in two ways, in decreasing confidence.

Places that don’t have all the parts definitely shouldn’t try to copy Silicon Valley. If you can’t do things the way that they did them then... don’t try to do things the way that they did them. I don’t know how to express that without being circular.

Should any city try to become the next Silicon Whatever* at all? No, probably not. That’s simply because I don’t think there’s a city government in the world capable of doing it. Maybe there would be some benefit in the attempt, but I’m guessing it would be outweighed by the cost. It’s just not the kind of things governments actually do.

*btw all those names make feel a bit ill. Does no city’s Chamber of Commerce see the irony of branding themselves as an innovation hub by copying another city’s nickname?

Editing in more.

> #1, nobody knows which parts of an ensemble of practices are the central parts. It's quite true that, because of this problem, people just try to copy as much as they can.

I don’t know. I think sometimes people know. At least try. Like maybe my description of Silicon Valley is totally wrong. But at least it’s logical and you can choose to follow it or not.

And if you’re going to follow someone as a guru (like the tweet I linked to) then follow their belief on what’s central. And if you don’t agree then don’t follow them! Because you wouldn’t be following them anyway. You’d be following some hybrid half version of them that you created yourself.

I think things get all fucked up when people half follow systems. It’s fine if you take a tiny cohesive piece, like folding your shirts differently cause you saw Marie Kondo do it that way. And it’s fine if you go all in on Tidying Up. But when you rip through every item you own and end up with a giant pile of non-joy in your apartment that you never actually get rid of, you’re fucked. (If anyone is getting Agile flashbacks, I’m inspiring the right vibes).

I mean nobody knows which parts make the difference, but the market will tell after time. The more regions try to change things the more likely it is going to work somewhere. I think that can be great if the decision makers are held accountable / fired if it does not work. Without proper incentives / skin in the game this is just another way decision makers will (subconsciously) implement some crony-sh*t

Southern France has wonderful weather and the Mediterranean Sea. The EU should start a special economic zone for startups there (a split of later taxes going into the EU budget).

Well, there is already a special economic zone in that area: Monaco.

Don't think it's particularly startup-friendly though.

What happened to Sophia-Antipolis near Antibes? That area was spun out as "silicon valley of europe". No tax specialization AFAIK but it did have a dense concentration of tech companies at least two decades ago.

I just read a book about it from the co-creator of Siri, Luc Julia.

He spends a good part of the book complaining about french research, which does not care about products impact and thus is very theoretical, but also about the heavy hand of the government in dictating where innovation happens.

He also talks about Sophia-Antipolis. It started with a boom, and a lot of tax credits to incentivize corporations. But after the subvention dried up, many companies left. It seems to me that most of the companies left do not have innovation in their DNA.

Everywhere is "Silicon Valley of Europe". Silicon Saxony, Silicon Roundabout (London), Silicon Fen (Cambridge), Silicon Docks (Dublin), Silicon Glen, etc

It's still there, and growing.

On the other hand it's France, and the French are notorious for not wanting to speak English, while at the same time not many people from Europe speak French. Hard to build a truly European zone that way.

I think quite a lot of people can speak French, but have a similar stance against the French people, why would we speak French if you can't bother speaking differently language like English.

And further compounding the issue, in a specific part of France, they will give you shit for even trying to speak French. It doesn’t matter if you have good vocabulary and decent grammar / pronunciation, they still will refuse to speak to you or worse insult you for even trying. This certainly isn’t an issue in all of France, just one specific area that I’ll avoid naming to not offend folks from there.

Having been to most corners of France so far, I cannot confirm this. I can confirm so, that French have a tendency to not like speaking English at the very beginning of a conversation. They do appreciate so, if foreigners try speaking French. Some even all of a sudden can speak English.

I live in a bilingual city (english / french), and the french-speakers here that vacationed in France (n=3) all say that the French laughed at them when they tried speaking.

Yep, as I said, it’s a very specific part of France and not a “French” thing in general. Anecdata is anecdata, but I’ve had a lot of friends (some French, some not) agree that this is common in this specific place, so I know I’m not alone.

Currently in Paris as everything is centralized there but indeed, if the opportunity ever presented itself I would move to Nice in a heartbeat, the rest of the bigger cities (Marseilles, Montpellier) suffer a bad reputation though...

Still remember sleeping some nights on the beach in Nice, awesome days.

Marseille is not great, but Montpellier is awesome.

This. It is a stunningly beautiful city. It is also right by the Mediterranean.

Lisbon maybe getting there

I think Lisbon was on the radar a few years ago, but I get the impression it may have blown it. According to folk I know who were looking at it, they had issues with the 'work ethic' of locals (read into that what you will) and high tax.

what I read is when worker's lives arent threatened (by deprivation of health care) we make sensible decisions about balancing a commitment to an employer with our commitments to family and community.

I have no clue about Portugal, just wanted to point out these things are independent, e.g. in Norway/Denmark high productivity ("work ethic") while at the same time leaving the office on time and closing shops early. While Germany does not threat workers life but people stay too long in the office and shops are open to long - but it gets better.

Well Cloudflare has an office there, where their CTO is.

I don't know about start-ups, but I think Portugal in general is still growing in attraction for remote workers. Great climate, still cheap and beneficial tax laws.

If it really was great weather, great colleagues, weak nocompetes why has Australia not managed to create the same culture. AFAIK nocompetes are pretty much unenforceable in Australia, they have better weather than california and lots of people like to live there, so what is missing? Honest question.

Density, first off. You’re comparing Australia to an area of like 100 square kilometers.

My description of why Silicon Valley happened was also based on it being in the US. I don’t think Silicon Valley happens without the rest of the US (obviously this would be so different it’s hard to compare).

I guess my point is that I was saying why the apple grew on this particular branch, and you’re asking why this other tree didn’t grow any apples at all.

I think people left out one important thing: market. Silicon valley can readily sell to the rest of the North American market which is easily the biggest in terms of size and purchasing power. China has found similar success in Shenzhen because the market allowed the ecosystem to flourish in the first place.

2 year no-compete clauses are common at Australian software companies. If they're enforceable or not I do not know, but they are in place.

They are frequently enforceable for some period of time, TBD via expensive court action, via the blue pencil rule, a la:

"The employee non-compete clause shall hold for the greater of:

1- 6 months

2- 12 months

3- 18 months

4- 10 years

5- Until son of the son shall climb Mt Doom and steal the emerald eye from the statue of Xxyctl."

A court then crosses out the single lines that it finds offensive.

What is known to be unenforceable is restrictions on use of general professional skills. The particular IP of the non-compete must be identifiable and recorded (on an ongoing basis as part of a process), rather than vague knowledge of business secrets.

Probably because Australia has a significantly different culture. One factor is that giving equity to employees is rare in Australia.

Its not just those three. Its also local demand, diversity, merit, culture and acceptance and many other things. Plus existing inertia matters too. It takes tons of effort to get the ball rolling.

Im sure there are lots of other reasons too, any 1-1 comparison would be unfair given the differences in culture and overall direction of the societies.

> Its also local demand, diversity, merit, culture and acceptance and many other things. Plus existing inertia matters too. It takes tons of effort to get the ball rolling.

I think the last point is the most important one. It also took a lot of government/military/intelligence funding to get the ball rolling, and a time where the government/military/intelligence wanted to fund specifically that, something you cannot simply copy. The weather, local culture etc were available before, but SV didn't become a major player before all the stars aligned just right.

California is part of the US, and the US was one of the (at the time) two world superpowers. The economic advantages that come from being part of the US (the US simply being a much larger country high among them) are hard to overcome.

I've happily signed non-competes here in 'straya, confident that they were so unreasonable as to be unenforceable.

Beware. A friend signed a ludicrous non-compete as a consultant which disallowed him from working with any company the company had approached. Was layed off, got legal advice: his lawyer told him not to fight it :(

He changed industries.

In my limited experience with lawyers, they always advise conservatism. That's not to say they're always wrong. But they don't have much incentive to say, "Go for it!" Even if you're 95% chance likely to have things work out okay, what would the lawyer get in that situation? Nothing. And in the 5% of cases they'd be excoriated for giving their client bad advice.

The core task of a lawyer is risk identification and mitigation.

If everything else goes south, the client sues the lawyer — and the best defense is “here’s where I said that might happen.”

> Even if you're 95% chance likely to have things work out okay, what would the lawyer get in that situation? Nothing. And in the 5% of cases they'd be excoriated for giving their client bad advice.

Spot on. EDIT: On further thought, there's a wrinkle, which is that NOT being super-conservative can be good marketing for a lawyer. In a 95% confidence situation, consider the lawyer who tells the client, "here are the pitfalls, but IMHO they're an acceptable business risk [one of my favorite formulations], so if you want to do it, then go for it!" That lawyer is likely to have a happy client who, if asked for a recommendation by a third party, might refer the third party to the lawyer.

(Of course, this presupposes that the lawyer has enough experience to be able to confidently weigh the business risks — and that a 5% disaster doesn't befall the client.)

IANAL, but from my understanding, it’s a bit more complicated than that. If a lawyer tells you something is “probably ok”, but doesn’t cage that “probable” in enough legalese, then they can potentially be held liable in court. This is why you’ll rarely see a good attorney saying things like you suggested.

Ultimately though, there is an important thing that GP’s friend missed out on. Lawyers do not tell you what to do, rather instead they advise you of risk on what your options are. It’s your responsibility to decide how much risk you are willing to bear.

Thanks. FYI, IAAL; I don't claim to be the world's greatest, but my clients seem to appreciate it when I tell them that I think that Contingencies X, Y, and Z are acceptable business risks for their situation — after explaining the nature of the risk — and I've never had any kind of malpractice claim, knock on wood.

Example: Many years ago, on the afternoon of the last day of the quarter (when lots of business gets closed for financial-reporting purposes), a software-company client's VP of sales — with whom I'd worked for years — called me and described a situation, saying "the customer wants to change our contract to say X." I asked a couple of questions and then said "there's always the possibility of Bad Situation B coming up, but it's unlikely, and it'd be manageable if it did — go ahead." The VP said "Thank you — bye!" and slammed down the phone. (That VP went on to CEO positions at two other companies and uses me to this day.)

Thanks! Curious, as a lawyer, how do you feel about what I said in the second paragraph? I like to ask whenever I get a chance, most agree, some don’t, so I’d love your perspective.

> as a lawyer, how do you feel about what I said in the second paragraph?

I agree with it completely. But I've been doing this long enough that I'm not embarrassed about telling clients what I think and what I'd do if I were in their shoes, and my clients aren't the sort to just passively do what I tell them.

(It also helps that I've been a solo public-company general counsel — meaning that for a number of years I worked very closely with sales people and became acutely aware of the importance of getting deals done, as opposed to just identifying and flanging up risks.)

  >The recipe for success of Silicon Valley...
You seem to have left out "Tons of government money funding early electronics and aerospace development"... a bootstrap factor that should not be forgotten.

"Just why is Silicon Valley so successful?" asks a VC as they fund yet another startup within an Uber ride of Sand Hills Road.

Lots of places had lots of government money funding.

Italy literally invented universities, gets comparable climate and unpaid non competes are not enforceable.

no silicon valley equivalent in sight tho

so I strongly suspect the whole thread so far it's projection and wishful thinking.

Second world war pretty much made Europe much poorer than US. At the same time, Silicon valley a) was not wrecked by war b) had extravagant funding by US state c) had direct access to the (already then) remarkable US market.

So it's not just the current conditions, need to look at history as well.

And the marschal plan laid the basis for the German Wirtschaftswunder and made Germany the industrial powerhouse it was for quite a long time.

Italy is a really interesting case for me as the birthplace of the renaissance. What happened there? And when? For an interesting deep dive into the role of Government in innovation there is a report from Price-Waterhouse Cooper[1] that I found interesting if a bit jargon laden :-). But it definitely calls out for a public/private partnership to be successful.

I think governmental and banking stability has hurt Italy in this regard but I am certainly not an expert.

[1] https://www.pwc.com/gx/en/technology/pdf/how-governments-fos...

An important piece of context for the renaissance, which is often lost in modern discussions, is that it was not a movement which was attempting to be "innovative" or conceptualised itself as such. Rather, it was fundamentally backwards-looking: an attempt to recapture the glory of antiquity. People were digging up the ruins of a conspicuously more advanced civilisation -- which could do mind-bending things like draw in perspective, pour stone like liquid, and build vast spanning domes that lasted for millennia -- and wanted to reverse-engineer how those things were done. That was the genesis of the renaissance: reverse-engineering. Part of the reason Italy was the centre of this was because it had more tech to dig out of the ground.

Even the Enlightenment saw itself as largely backwards-loooking, again inspired by antiquity, this time in more philosophical terms. It's only since the industrial revolution that the framing has started to be more about "innovation towards the future" than "reclamation of past glory".

Afaik, the old civilizations were rather rudimentary in perspective? There are some traces of it, but no mind bending anything.

They had stuff like theatres, temples, and aqueducts that still stood after being utterly neglected for a millenium, whilst their fancy new churches took centuries to get built and needed constant maintenance. It’s easy to see how this would seem wonderful, or how they would take ancient Rome’s engineers and architects as models.

Also, we tend to take things we’re familiar with for granted, and overlook them when comparing different societies. So of course, ancient civilisations were terrible for other reasons, but still...

Roman artists used vanishing point perspective, which to medieval artists -- who had no grasp of perspective at all -- was pretty amazing. What the Romans didn't do was use vanishing points systematically -- they would have multiple contradictory vanishing points in a single image. Brunelleschi's invention of 3-point perspective was much more systematic than what the ancient world had done, but it was very much inspired by the desire to reverse-engineer Roman techniques.

Roman artists use of perspective is not really level that would be "mind blowing". Once in a while you got there little bit of it.

Medieval artists knew things far away are smaller, they did not knew all paralel lines have to go to one one point. But 3-point perspective is just another formal choice, simplification.

We have been trying to reverse engineer Roman cement for quite some time. There are quite a few things that past civilizations did that are impressive by today’s standards and then lost to time.

the Italian industrialization crisis case isn't that hard to crack: there are many factors leading to it, for sure, but the central choke point was the subdivision(=lottizzazione? I don't think subdivision really renders the term) of banks for local political interests.

the push from local industries to large conglomerates to global multinationals was sustained by a strong economy and easy access to large banking institution that could finance their operations at reasonable risk for themselves.

the small local banks in Italy could never sustain such a growth, and production remained local, with few notable exception.

sure politicking, corruption and mafia had a part in it, as they will reduce competitiveness of a company compared to others having none of such issues (i.e. the state deciding where to build factories based on unemployment and not efficiency) but a large enough company can absorb that in the bottom line and continue operating.

Medium companies are, however, completely suffocated from this.

the Italian startup stagnation is more confounding, but my personal belief is that it's likely a result of the absurd taxation the middle class gets. It's basically impossible to build up any saving to start entrepreneurship around here, as everything in welfare comes from the middle class. And existing entrepreneurs have little incentive in branching off to new unexplored areas. Without the fuel and ferment from solo founders making it, there's no culture and no substrate to fall into if a business fails. Everyone is just grabbing at their own chair, hoping not to be knocked into poverty by the next round of financial crises.

Thank you for this. It does sound like some systemic issues are at work here.

That said, this "my personal belief is that it's likely a result of the absurd taxation the middle class gets. It's basically impossible to build up any saving to start entrepreneurship around here" reminded me that many of the people who start new companies in the Bay Area have often accumulated a bit of wealth from the equity sale of the previous company they worked for.

For example, estimates vary on how many millionaires Facebook created when it went public and its stock value grew, on the low side it is a one to two thousand. Of those, over 200 according to Crunchbase have founded or co-founded new companies on their own. I'm more familiar with Sun Micro since I joined the day after they went public and was in the first 2000 employees. Of the 1999 that came before me, over half started new companies. At least 8 that I know of became general partners in VC firms that went on to fund hundreds a companies. There are also outliers like Eric Schmidt who got both the Sun boost, the Novell boost, and then the Google boost after that.

The point being that spreading out the success of a company widely is likely a big component as well.

I’ll also add the pitiful condition of the judiciary.

“Well then, sue me” is as middle-finger as it gets when quarreling with underhanded competitors or non compliant parties.

Getting justice - whatever that is, in Italy laws constantly change to favor whatever is the current favorite in power - is an such an excruciatingly long process that most will just give up and take the loss.

Corruption has to have an effect. In SV it's common to shout about the success of your business. It would probably be foolish to do the same in Italy.

likely, but I didn't see 'lack of corruption' in the parent post sv pillars, which is the whole point of the counterargument.

All the good engineers are working in Switzerland because of the money and the close proximity to home.

What about other labour laws? Isn't it hard to fire people in Italy, whereas CA has at-will? My friend whose father ran a well known cultural institution there also says organised crime is a problem, effectively an extra tax. Basically he was told he'd have to "hire" certain people, or else...

On top of other issues there's the fact that once SV is established somewhere, it turns into a magnet for all the new startups.

yeah Italy got it's problems, but it's a easy counter-example of what parent posts proposed as a thesis: that the secret ingredient was non-competes, education and climate.

it is readily apparent that the success pillar from silicon valley were not these three.

Since this was about the difference between US East and West coasts, I think the assumption was that the basic ability to be flexible economically would be the same. Obviously "not in the middle of a bitter civil war" is a pretty hard requirement as well, but nobody feels the need to mention that one either.

From what I can tell, Italian universities churn out some really great programmers, which mostly end up moving to other countries where it's easier for companies to actually run. Kind of a shame -- in addition to climate, Italy has food and history going for it as well.

In Italy you cannot fire anyone. Like a marriage. And taxes on wages are the highest in Europe. This is why they cannot easily compete globally.

which is all true, and further support the point that the three pillars pointed by parents (non competes, climate, colleges) are not the primary conditions for creating a silicon valley.

Inventions from centuries past notwithstanding, what universities does Italy have that are in the same league as Stanford and Wharton?

is going to be very hard to directly compare public and private universities.

alumni average results and achievements will vary a lot, because of open access, and population size and economic stagnation would screw other metrics like employment rate, wages etc. other metrics like staff size are pointless as well, unless maybe proportioned by participation over population size, and then one would need to carefully define what each university catchment region it.

That was in the context of the US. And Italy is a whole country, so the density is going to be different.

which is a fair point, but I don't see density as a key success factor in the parents comments.

So they’ll say “they have accelerators!” and open a city sponsored accelerator and maybe some successful company will pop out in the next ten years.

...and promptly relocate to Silicon Valley.

>It has great colleges, great weather, and weak noncompetes.

Massachusetts certainly can't do anything about winter although by "great weather," depending upon your preferences most of the world is pretty much screwed relative to the Bay area.

But great schools relative to the Boston area? They're probably as good overall.

And, while California has particularly weak enforcement of non-competes, Massachusetts recently weakened non-competes and, in any case, there's a pretty long history of people moving among tech companies in the area. And many companies in the Northeast don't have non-competes.

Maybe it depends on what you mean by "recipe for success of Silicon Valley" but I doubt weather has primary influence on the recipe. Sweden, South Korea, and Switzerland are considered the top 3 "innovative economies"[1] in the world and aren't particularly notable for their weather.

[1] usually this means a mix of #patents filed, number of phds/100,000 and r&d expenditure/gdp. Not sure how you would rather measure the success of silicon valley to set it apart.

> The cognitive dissonance humans are capable of is amazing. To actually say “We would never allow that in our town.” in the pejorative while flying back from a trip specifically meant to learn how to be like another town.

That is not cognitive dissonance. They flew in trying to learn how other town achieved goal. Once they know, they are still allowed to dislike the method or part of it.

But also, I don't the the non competes are the key part, because many parts of the world have weak non competes too.

CA law around non-competes is great and all but:

1. It's not like CA doesn't have NDAs, trade secrets, anti-poaching, IP restrictions, etc.

2. It's not like everyplace else in the world (or even in the US) you're an indentured servant who is never allowed to move to another company (occasional man bites dog headlines about a fast food worker notwithstanding)

> So they’ll say “they have accelerators!” and open a city sponsored accelerator and maybe some successful company will pop out in the next ten years.

How is that not cargo-culting?

> Perhaps the other 90% work for the government.

What a poisonous attitude.

what about the tax regime?

It's worth noting that there are a number of other similar reactions from a European point of view

- You allow Trade Unions in your company? But how do you keep their noses to the grindstone?

- You have workers representatives on the board? How, what, where ... that's crazy !

Of course regulating to force this to happen often has unintended consequences, but then ending non-competes in Wisconsin might not lead to the next Silicon Valley either.

But we should still do it.

(I think my best explanation is that I don't look like Chris Hemsworth, but eating healthy, regular exercise and good lighting in photos will certainly improve my situation, even if the "next Silicon Valley / film stardom" is not within reach. )

> "That's crazy! Why would anyone hire anyone if they knew they could walk out the door to a competitor, or even to start a competitor?

He needs to flip that around... why would any employee agree to be hired when they can't leave, and can't work on things in their own time?

He doesn't understand that in this industry, it is the workers who are in short supply, not the capital. The best companies go to california and play by these rules because the best workers want to work by those rules.

"Workers" are abundant. It's the human capital associated with the workers that's expensive. Engineers moving to California should be considered like other capital flows: there are unlikely to be major flows into places where their flexibility is unduly impaired by regulations structured to favor existing, powerful incumbent interests (in this case, the noncompetes).

High quality software developers are not abundant.

And becoming good at writing software is an investment in your human capital.

Are you sure that forbidding non-competence clause was really a big factor in Silicon Valley success. This sounds a little bit to simple. I was reading that it was all about initial founding from the military, access to large capital investments, proximity of good universities and existence of whole ecosystem targeted into making creation of startups easier.

In Poland non-competence exists too, but in theory - it can last one year at most and employer has to pay 25% of the last employee income (missing a single payment invalidates clause), so, giving the trouble of paying, handling accounting, etc. companies rarely use that (oddly enough, if this clause is used, it is used for sales people) and I don't see another SV build anywhere here.

It basically all derives from Fairchild Semiconductor, which only existed (as did its fairchildren, the companies spawned off it like Intel, AMD, National Semi, etc) because non competes have been unenforceable since 1941.

Texas Instruments was also heavily bankrolled by the military and NASA, just like Fairchild. The godfather of venture capital in America is Don Valentine, who founded Sequoia Partners in 1972 - after working for Fairchild and National Semi.

There are other places that have good universities and access to capital, like New York City and Boston. Plenty of government spending has gone to tech companies there too. They have noncompetes, we do not. They certainly have their successes, but not to the same degree as Silicon Valley.

It's worth noting that it depends on employment contract in Poland. Rules (if any) are different for B2B(freelance) contracts. Also NCA itself can differ, from forbidding to work with other companies, or simply forbidding you to poach clients(I've only ever seen this one in use).

>simply forbidding you to poach clients

Which my understanding is you can absolutely do in California as well.

IMHO there is more to SV than just that. Case in point, in Germany non-competes are basically non-enforceable, patentble inventions have to be offered to your current employer so. But only if they are directly linked to your current job, not which equipment yu are using. And if it is not directly linked to your current job, it's all yours.

And still, we don't have anything near to SV over here.

There are soooo many regulations that add barriers to mobility in Germany. The weird employment recommendation coded letter, and the fact that you literally cannot fire anyone.

> And still, we don't have anything near to SV over here.

You don’t? I mean, Germany is a technology powerhouse, with arguably the best engineering sector on the planet. It just has a different set of technology products than Silicon Valley.

If I were a public policy leader interested in building a more durable, equitable economy for my citizens I would gladly choose the German model.

True that. We seem to struggle so to get all that power on the road for quite some time:

- TVs: Went first to Japan and then Korea then China

- Cameras: Went to japan

- MP3: Went to the US

- Cars: We totally missed the trend to EVs

- Big engineering projects: Pretty bad track record so far, e.g. the Berlin airport. German companies are still supplying components and sub-systems to these projects worldwide, but they are rarely the general contractor anymore.

It would be nice to see that being changed, but everything that is new tech just seems to be an unsurmountable obstacle for a lot of German companies and institutions.

I think 'the stuff you do at home is yours' might be a really important part. The reason I do not launch (my probably unsuccessful) saas is because boss would claim ownership once it is succesful (or worse get fired even if not succesful)

This is why it's a feature that the original design of the US was a loose federation of independent states, with an intentionally very weak and restricted federal government. States are free to try different modes of governance and different levels of regulation, different levels of pro-employer or pro-employee legislation, etc. Ideally other states see what works and adopt the better models over time, and continue experimentation. For whatever reason though states seem very reluctant to take the stuff that is obviously working in another state and apply it at home, particularly when what is obviously working is the opposite of their system which isn't.

Yep, and the thing is, this is better for workers too. We get more competition in the marketplace, and workers get paid more because their employers want to retain them, because workers have the freedom to go work for a competitor anytime they want.

> it puts the onus on the company to adequately reward their employees with equity so that they want this company to be successful, not the possible other company

I'm happy with invalid not competes, but equity? How does that protect startup X against poaching from an already very successful company like Apple? They can offer (example) a real million now against the promise of millions in 2025. Or real millions against promised millions.

And even for real money vs real money they can outbid the startup easily.

Today perhaps. Pre-IPO stock from 1980 to roughly 2008 was always a huge multiple over BigCorp stock. That largely evaporated in the Unicorn bubble AFAICT. I suspect because pulling the value out pre-IPO was a better deal for investors.

Even today restricted stock grants (RSUs) serve the same purpose and act as a multiplier on compensation which is "better" if the company does better and "worse" if the company loses out to competition.

> non-competes are illegal, stuff you do at home is yours

For “stuff you do at home” is there any limit to that?

Like if I’m on my own time and my own computer/internet, and I worked at say, a search engine company, and I made my own search engine in my free time (a huge project, but we’re talking in hypotheticals here)

Would my current employer in this scenario be able to sue me?

What if it’s “my own time” during the day, but I’m working from home and I switch from my company’s work to my own for 20 minutes before going back to my employers?

What if the project is only tangentially related?

Trade secrets are a thing, and enforceable in California.

> Would my current employer in this scenario be able to sue me?

They can always sue you even if it unlikely they would win.

> What if it’s “my own time” during the day, but I’m working from home and I switch from my company’s work to my own for 20 minutes before going back to my employers?

> What if the project is only tangentially related?

You should speak to a lawyer. It will depend on the details and your exact employment contract.

Short answer what does your employment contract say?

I live in the southern U.S. Non compete clause are 100% enforceable here, and have a ton of case law backing them. I generally won't take a job if it requires me signing it.

I have more than 20 years of experience, and I personally feel I am far more likely to bring knowledge to them rather than then providing it to me.

Anecdotally, regarding IP assignment policies: All large and medium-sized companies I've worked with in the Bay Area have a section in their employment agreement that says something to the effect of "We own everything you work on, using our equipment or yours, on our time or on yours, on company property or at your home."

California law restricts employers' ability to claim ownership of inventions made by employees on their own time.

(Self-cite: A flow diagram with statutory citations at https://www.oncontracts.com/docs/Who-owns-an-employee-invent... )

Its normally only "related" to your day job so in your example yes.

But if say your an amateur musician your day job employer has no lien over your compositions.

The funny thing about that it is a perfectly understandable perspective from someone bent on wooing companies to come to his town (i.e. focused on the immediate needs and demands of his perceived clientele), but at the same time completely misses the big picture.

I guess it would be an easy trap to fall into, but you would hope that someone going to the trouble of trying to learn about how another place did things would be a little more receptive to unexpected things.

I have always deeply deeply disliked non-compete clauses. The only thing that I could come up with is that it’s akin to indentured servitude. But this is much more eloquent way of putting it in language that the businesses and politicians would understand. Thank you.

I like the variants that say "non compete last at most 1 year, and company pays 100% of your salary whilst the non-compete is being enforced".

They seem like a decent middle ground between all parties interests.

Doesn't it just solidify status quo where the always richest companies can afford buying whoever they want this way and hollowing out all potential competitors? Honestly curious, maybe it was great for innovation 15 years ago but now the market has solidified.

"our town" FFS that attitude is why the USA needs one set of employment laws

maybe it's not about what the workers want, it's that it ends up allowing so many new companies to start up that wouldn't have otherwise

Although we also know that Amazon wouldn't be such a big success without all the NDA's. There is no knowledge dilution because of this legal setup and this secrecy of real innovation in Bezos company has given him a three year advantage with AWS on Azure around the corner and Google cloud in Silicon Valley not to speak of Apple.

While you could rent GPU's in 2015 from AWS the competition could not deliver a GPU without calling it Alpha until the end of 2018.

Labor mobility is really low in Europe. In france you can be tied up in litigation (tribunel through appeals) for 10 years easily on an employment termination (my info is from 2016 time frame so may be dated). There is no such thing as at-will employment.

Also, noncompete's are weird. If someone is receiving full pay on gardening leave they can work for someone else. If you instead have them work till end of notice period you can usually pay some % of salary (ie, 50%) to totally block their ability to work for any competitor.

So you can't fire the horrible workers (without insane headaches) and you CAN block good workers from moving too quickly to competitors (ie, take a year or two out of their working life for a price - which is usually tied to cash salary and is low). All to say - not the fluid labor environment that startups would generally be at home in.

France != Europe. This sort of thing doesn't exist in the UK, for example.

As for firing people, perhaps France, but not UK. Most jobs have a 3-6 month probation period, with a week's notice either way, and in the first 2 years you can fire anyone for no reason (apart from reasons of race, gender, pregnancy, etc.).

After that, by which point it's obvious they can do the job, generally you have to give a progression of verbal, written, last chance warnings to an employee to change their behaviour before you can fire them.

UK is trying hard not to be a part of Europe it seems :)

Anyway I've seen similar laws in several countries in EU, but I talked to a lawyer friend and he said he looked into it (briefly) and couldn't find examples of it being enforced through court in my country (Croatia).

As for termination - probation periods exist for sure but passed that it's really hard to get rid of people, the two year thing exists if you give someone extended temporary contract but that really sucks for people because it messes with their credit score etc.

I remember working in a company where a woman got hired to work in office A she was then moved to office B because of a reorg (15km away from office A) she refused to accept this - got fired - sued - got pay for the time she was without work, times two in damages and got reinstated to previous position.

I can't imagine how toxic it is when person are being reinstated to position in court. What did she do afterwards? Did she happily work at the position or dismissed voluntarily right after reinstating?

> Did she happily work at the position

Yep - I mean once the company is >500 employees and has mixed ownership (funds etc.) it's mainly just between her and management that got overturned and they know better than to keep pressing on it.

This story sounds like there's much more to it than meets the eye.

Again, UK, but you can't just move an employee around willy-nilly. This could be construed as constructive dismissal.

You might know the employee can't relocate, and are trying to force them to quit so you don't have to pay redundancy pay.

But this wasn't about relocation - there are regular bus lines between her previous place of work and new one (it was basically an office outside of city and she then got moved to office inside of city, distance is less than 15KM by car) - it's just that she was hired to work in place A and she wasn't willing to travel, also she's not exactly an agreeable personality. Court ruled that she got hired in position A and that was in her work description and they couldn't change that without good cause (and they were doing office rotations I don't know exactly why)

> got reinstated to previous position

In which office? A or B

Office A

>UK is trying hard not to be a part of Europe it seems

In what sense?


It's not just an amicable separation of bureaucracies.

If you're in the UK (as I am), the kinds of headlines coming up regularly make it really clear the UK government is trying to not be part of Europe in all sorts of bizarre ways.

For example the most recent big deal was the UK has formally decided to break international law by reneging on the UK-EU withdrawal treaty it signed up to less than a year ago.

That's a very unusual thing for the UK to do, and it has people up in arms because it means the UK will now not be taken as seriously when it makes future international commitments (including trade deals), and when it is finger-pointing to other nation-states breaking their international commitments in future.

It's keener than ever to trash human rights and civil rights enshrined into EU law and show that it wants to take them away from people in the UK, which is a curious turnaround because at one time the UK was a leading champion, drafting the legislation and putting them into place.

It is all very tribal and symbolic, and doesn't appear to be rooted in any kind of advantages for the UK or people and businesses within the UK. Costs to businesses are going up (new tariffs on import and export). Trade deals are defaulting to worse terms (there's no good trade deal with the EU). Cooperation on major scientific projects is breaking down. Financial institutions are starting to move headquarters out of London. UK citizens living abroad are losing rights (a UK passport is much less useful than it used to be), and the cost of travel for UK citzens is going up (need more visas, need to pay for medical treatment, can't retire in the EU any more, if you already did you may have to move back and be poor).

What it does appear to be rooted in is the UK Brexit leaders being able to see "we did it, as you can see we are visibly not part of Europe any more".

The European Union is a political and economic union. Europe is a continent. It seems strange to refer to wanting to leave the European Union as wanting to leave Europe.

Of course, I'm sure those who support the European Union are generally also very much in favour of it being treated as synonymous with Europe. But it sounds like nothing short of absurd rhetoric to me.

"Europe" is how it's often described in the UK.

There's a long history of using "Europe" in news or political writing to refer to the continent (excluding the UK), and also to the various political and administrative entities such as the European Union, EEC, EC, ECHR, ECJ, etc. Also referring to "Europeans" as people in those countries.

Much as, say, "China" is use to refer to the political entity that is the Chinese government rather than the geopgraphy, and "America" is used to refer to the USA government, not the continent.

The way language is used, with "Europe" in the UK usually taken to mean "that landmass on the other side of the English Channel to the East of the UK, not us", might be a reason why a lot of people in the UK have such cognitive dissonance over it that most don't recognise they had "EU Citizenship", including some great citizenship rights, which they will now lose at the end of this year.

Because for many, "EU Citizen" conjures up images from other countries to the East, immigrants by definition it they are in the UK. Yet in reality all UK citizens have been EU citizens for decades.

Ireland is also in Europe and the EU yet people don't think of Ireland when thinking about "Europe", and sometimes not even when thinking of the EU, although the last few years of politics have raised the profile of the EU Irish border issues.

If you're thinking it's absurd rhetoric, fair enough, but you would be mistaken to think it's just language of those who support the EU, within the UK. It has a long history.

Only 27 out of 44 countries in Europe are part of the union. Governmentally speaking, Europe and the EU are not at all synonymous.

>Much as, say, "China" is use to refer to the political entity that is the Chinese government rather than the geopgraphy,

That's not at all a fair comparison. China is country, not a continent, and thus is pretty much defined as being the area under control of the PRC (and other Chinese regimes). Europe, being a continent, remains (in all relevant senses) constant in size, regardless of what happens to the European Union.

>and "America" is used to refer to the USA government, not the continent.

That's absurd rhetoric, too. I don't refer to the USA as America (well, sometimes I do, but I try not to). Besides, it would be strange to talk about California leaving America. One would say California left the USA.

The European Union is definitely not a political union. Full stop.

It seems that whenever there's a substantial difference in practices between continental Europe and USA, it seems that the UK practice is somewhere in between but closer to USA than the rest of the Europe.

Not least the legal system (Common law) feels quite foreign to me. Labor laws are more US-like. Just two examples.

Brexit, perhaps?

I honestly think something like this makes a lot more sense.

First year or so, you're in a probationary period. Unemployment benefits will kick in, but you and the company are still feeling each other out.

After that, you get certain protections, whereby firing you becomes a more lengthy (3-6 month) process with specific regulatory milestones.

Speaking from a management perspective, if I have had an employee that has been solidly meeting the bar for a year, I am better off to work with them to remedy performance problems afterwards, then I am to fire-and-replace.

Training costs are a thing, and there's also a real benefit to not having your workforce continuously worried about being fired on-the-spot.

It is fair for newcomers to "earn their stripes" as it were, to show that they can productively participate in and contribute to the organization, but people that have cleared that hurdle do deserve some protection from bad actors in their management chain.

As always, I like to hear from others where they think this doesn't work. :)

But it is part of the reason these countries don't have startup cultures. In the US you can just try stuff out including hiring someone who may not be a perfect fit.

In the US you can pivot your startup if something isn't working, roll off 20% of your staff and you don't have to talk to a govt tribunal or go through appeals.

You can make your own management calls on who you want to work with - you don't have to justify things or provide the verbal -> written -> tribunal -> appeal cycles process.

And founders are notoriously bad managers - while they should perhaps spend the time to do PIP's and training plans and being better managers, most of them are very focused on outcomes - so startups can be a very self managed area.

> In the US you can pivot your startup if something isn't working, roll off 20% of your staff and you don't have to talk to a govt tribunal or go through appeals.

You can do this in the UK too, without a tribunal or appeals.

What you've described is covered by "redundancy", and it's completely fine legally to make people redundant, in large numbers or small numbers.

In france you these need to be pre-approved, you have to have an employment protection plan, and even then the court can overturn all this and make you hire everyone back.

"Collective redundancies can be void by an administrative court, if the latter recognises shortfalls in the employment protection plan or if an administrative authority did not validate or approve the employment protection plan at all. In case the administrative authority validated or approved the employment protection plan without stating sufficient reasons, its decision might be invalidated by the court."

In the UK (which is MUCH more liberal and I wasn't considering the UK part of the EU) there are still plenty of steps.

For the UK "Non-compete clauses and restrictive covenants are highly enforceable in the UK in order to protect the business the employee is leaving."


Redundencies can be overturned if the selection criteria for them is "unfair" or discriminates.

"You can select employees based on their length of service (‘last in, first out’) but only if you can justify it. It could be indirect discrimination if it affects one group of people more than another".

Because often some type of group is affected more than others if you lay off new hires you get into a quagmire pretty quickly.

NC and restrictive covenants are not "highly enforceable" in the UK, I do not know where you got that idea from.

Limited NC for v senior people for short periods possibly - and by v senior I mean board level.

They are relatively enforceable as part of a compromise agreement. However the last one I signed was quite restricted in that it was for 12 months and only listed 4 direct competitors. Normally the companies lawyer tries for more and your lawyer tells them to get real.

If you don't sign the agreement I suspect a lot of the time you'll just have to do gardening leave for the rest of your contract. Also don't forget if you were a director you still have a fiducary duty to the company once you've left.

What I'm slightly unclear about is how practical this is for sales folks where this is an expectation they will steal prospects or existing clients. I suspect you might only bother with lawyers if it looks like they are poaching from your existing clients.

In the UK non-competes in my view for engineering staff are basically unenforcable, IP theft is much more likely to succeed (and I've been involved in a direct copyright theft case).

24/7 IP ownership is enforcable but my experience is that most places don't care if you're not going to be a direct competitor. I always feel it's worth getting that in writing though, my current contract limits this to areas of the companies business. Our corporate lawyer limited this when we had to sign a new contract post a takeover (it was a bit broad and could have covered things like photographs of your kids). Also I have in the past asked if I'm contributing to open source as part of my work as like things to be clear.

IP rights is probably the one area I check in a new contract and usually it's fairly easy to get agreement for some minor changes.

And if those 4 competitors are the industry? and 12 months you where had mate (unless your a C level )

Your right about trade secrets though.

But what's the notice period? 3-6 months may be enough to kill a pivoting company when otherwise IP and team could be packaged up and sold off. One of the things people seem complain about on HN is that founders of failed companies in SV seem to make off quite well. In fact I believe this mentality helped me take the leap with my startup. The only problem is that I moved to Europe to do it, and the prospects for failed founders are basically lost years.

When I was last made redundant, in the UK, the notice period was 1 month and there was no redundancy payment.

They let me go just before 2 years of employment, when a redundancy payout would have started. I don't think there would have been a longer notice period after 2 years, just a payout.

It was legitimate redundancy because they let go of a number of people at the same time. So it wasn't personally targeted, though of course there was an element of deciding who to let go of.

Wow, thanks for sharing. One month up until 2 years is surprisingly good for outside the US. Do you feel the decision to terminate you then may have been linked to your impending protections after two years?

> Do you feel the decision to terminate you then may have been linked to your impending protections after two years?

Yes I do because it was so close to the 2 years, and that did leave me feeling slightly cynical.

But I wouldn't call it "protection", because the only benefit would have been a small cash payout, worth a lot to me, but small relative to the company's ongoing salary bill for people staying behind, so easily affordable to them.

That led to financial hardship for a little while, but I recovered, set up as self-employed, and to be honest I was glad of the new freedoms to work on my own projects from then on.

The takeaway here is that businesses below a certain size should face less regulation. This makes sense, both because regulatory capture is a real problem, and because smaller businesses have far less legal and economic leverage.

Modulo EBITDA per employee.

Of course, those regulations should step in gradually -- sharp cliffs are pretty much always antipatterns when it comes to regulation, law, and government services.

Yes, I know in France that companies try and get around this by splitting into lots of smaller firms, but that's an issue for the regulators and the specific legal framework.

Nobody ever said these things are easy.

> Speaking from a management perspective...

Why would labor protections be needed if the rational move would be to work with the employee to improve their performance?

> > Speaking from a management perspective...

> Why would labor protections be needed if the rational move would be to work with the employee to improve their performance?

Because management isn't necessarily rational?

Because people are often irrational.

Dilbert's pointy-haired boss resonates with a lot of office workers for a reason.

We've all had, or at least heard about, that boss who was utterly incompetent, who masked that incompetence in self-important blustering, and who were physically unable to listen to the rank-and-file.

Regulation is and should be there to deal with the abusers, and not with the companies that do, in fact, look out for the long-term welfare of both their employees and their customers.

If only we could fire the pointy haired boss.

In California you can - non-competes are basically unenforceable, and what you have in your head you can basically use. So you fire them by getting another job.

Sorry - I wasn't even thinking of UK. And UK is very different in this area for sure!

>Labor mobility is really low in Europe

Like the other comment mentioned, this is a very France-centric description - in the Netherlands, for example, you can't block workers from leaving their company in this way.

In the netherlands you can have them sign a non-compete clause, generally for 1 to 2 years.

"This clause prevents them from working for your competitor or from starting a similar enterprise after resigning. A non-solicitation clause forbids your employee to contact your clients after resigning."


In the US, lots of folks have famously started up their own ideas if they are frustrated with a big corp. In California that can't be blocked.

Is there something I don't know about NL law (very possible!).

> Is there something I don't know about NL law (very possible!).

Not sure if it already happened, but they're moving towards having the (previous) company pay for the non-compete period. Meaning: if you hire someone on a non-compete and the person cannot find work in another field (or lower salary) the previous company has to make the employee "whole".

Non-competes are also meant to not be applied to everyone. Only certain employees should have these. This as having every employee on a non-compete is too restrictive for the employees.

All of this is/was mentioned on various Dutch sites. It's a bit weird it's not explained on this English one.

Those non competes cannot be enforced under EU law of free movement of labour.

Exactly. If I read my contract carefully I'm sure it has clauses saying I can't compete for N months, and that everyting I create on weekends no matter how unrelated (A hobby piece of software, a novel, a pop song...) is immediately the IP of my employer no matter which equipment I use or if anyone asked me to create it.

All of that is obviously non-enforcable nonsense.

Hmm I also have that in my Dutch contract. I really don't like the way my current employer handles their market and I'm eager to do it right myself (I feel that with the right technologies I could really build something nice myself.) This part of my contract has kept me from it (the "we own what you make at any time of the day"-clause). I do understand the clause though, it's just to easy to claim you made up some valuable IP outside of office hours. Maybe I should keep a log regarding the actual dev work...

With respect to the non-compete clause, it says in my contract that they can keep me from going to a competitor for a year, but they'll pay me for that year. I wonder if they'd ever enforce this.

If you want to go for it, have the company or zzp registered under your spouse's name. The spouse can employ you legally and even transfer ownership once the contractual time is up. This allows you to go ahead with your plans while saving you from all potential headache. Of course, never brag about this online.

Ok, thanx for the advice. They do pay me quite ok and offer me stability, so I would be very open about this to my boss. I was thinking about building something unrelated using the same tech first, for fun and possible profit. Then later I can decide what to do. I already did look for another position (at another company) specifically to have more freedom in this regard, and they (the boss) knows this.

Yeah, so this is mostly unenforceable. Dutch law prescribes that a non-compete can never block you from practicing your profession as a whole, so at most it can block you from working in a very specific, limited sector of the market (e.g. direct competitors). The burden of proof seems to be on the previous employer to show that you potentially could do damage by working at your new employer. In addition to that, non-competes added to a limited time contract are invalid by definition. Non-competes should also be limited in time to a reasonable duration (commonly understood to be 2 years)

It's much easier to instate a 'relationship'-clause in Dutch employment contracts, where you forbid ex-employees from contacting customers/suppliers at their new employer in a professional fashion. Those are much easier to enforce.

And then, you have Indian government jobs.

  Indian civil servant finally fired after epic 24-year absence

Indian government jobs are just something else altogether, there is literally no accountability, or reward/punishment for good/bad performance. Promotions are almost always based on seniority, nepotism and political influence. The whole system runs on insane levels of corruption at nearly every level. And on top of these are there cream pensions.

Its really like the stuff of the dreams/nightmares based on what you get.

There is no pension except military anymore

That's only recent. But they have a default NPS enrollment, which is more or less the same.

Another way to describe "low labour mobility" is "high job stability". It's easy to sit in an ivory tower on a $200k+ silicon valley salary, with a healthy job market if you get the sack, and bemoan the fact that workers have rights and can't be fired because their employer feels like it.

Actually, FANG job stability is surprisingly high - the big corps have gobs of money and are big - so it takes a lot to actually push you fully out the door sometimes.

Entry level wages are perhaps $190K (right out of college / entry level) at google and others. There is definitely a job for you at $60K

Unless one is somehow inconvenient for the company e.g. involved in employee organization or tweeted some wrongthink. Then they get thrown out faster than they can say "is this legal?".

Can't believe someone's praising the US job market during the pandemic.

Although it must be said that the FAANG & co employees are insulated from the effects of it and maybe unaware of the drama unfolding right now.

You can have high labor mobility and high job stability by reducing supply of labor and/or increasing the demand for it.

IANAL, but French, working in the hedge fund industry since a while, and had numerous non-compete clauses over time. Also have had some experience negotiating then from employee and employer perspective.

The French landscape is a bit more subtle that what you mention here.

The first thing to understand is that everything in your contract is not always 100% legally applicable, and companies play with this idea. The local laws often dictate the overall rationale that a non compete can address, and companies play with that interpretation in the contracts (more on this with examples later) . In practice though, if there was an occasion to defend it in a tribunal, the company's interpretation would definitely be discarded. 90% of the non compete clauses that I had to negociate, either to get out of it myself, or as an employer to hire a talent, revolve around this idea: the clause is legal, but its not possible to enforce really, because the interpretation would be trashed in a tribunal. This is especially true in France where tribunals (prud'hommes) are free, and very favorable to employees. This is also true for other countries though, I had cases in Hong Kong where the landscape is quite similar.

Now, it is true that France allows for unusually long non compete clauses compared to other countries. More than 12 month would likely be trashed by a tribunal though.

As for the compensation of the clause, I feel like France is actually quite good. If there is a non-compete, then it is mandatory that there is a compensation, and in practice you can expect the tribunal to require at least 40% of the salary.

Note that the employee definitely has a great negociation capability here, because the company has to choose whether to apply the non compete up to 2 weeks after the departure of the employee.

That means, if you plan on doing something unrelated to your previous job, you can bluff a bit for the clause to be applied, and enjoy a nice bonus of 40% of your old salary on top of your new job.

If you plan to work for a competitor, here are some examples of what to look for in your non compete clause:

The French non compete has to be limited in space, time, and focus.

Limited in space means than it cannot be worldwide, there has to be a list of regions where you are prevented to work, and this list cannot be too long. I had an example with a clause that listed 10 major financial places (US, UK, Germany, etc) and actually the end result was that more than 5 countries and the clause starts to be pretty much unenforceable.

For the time constraint, the general assumption is that 12M is the upper possible limit (18M for non poaching).

And for the focus, that basically mean that in case of litigation, the company would have to prove that: 1. You have market edge knowledge from the company that would result in an immediate and material advantage to the competitors (this one is very hard to prove for the company, and a lot of negociations revolve around debunking this argument) 2. You are going to work on the exact same subject in your new company, it cannot be just based on your field, it has to be very specific to your role in both companies.

Thanks, very helpful! The tribunals decisions (which have employees on them) can be appealed to courts can't they?

My point - in California this isn't even a question. There is no need to negotiate. It's a matter of both policy and law that you can get another job.

In Europe there is a lot more careful thinking, a great thing actually I think in areas of social safety net, public / govt function etc.

Startups with 2-3 folks are just not well equipped for the EU intricacies - look at GPDR, all the employment laws and keep on extrapolating.

I have NO idea how Tesla managed to get their factory going in germany so quickly - I'm serious - there is almost NO way france would issue permits as quickly as germany apparently did. So I def don't understand it all!

The Netherlands in nothing like this, fyi. France is not Europe. It's a flavour of Europe.

> There is no such thing as at-will employment.

And that is a good thing.

> Which is why Silicon Valley is in California

I don't think that's the reason -- California's labor market hasn't always been so fair and for that reason it makes complete sense why the court ruled in Apple's favor.

Apple, Google, Adobe and some other companies used to have anti-poaching agreements with each other. But, then the courts found that to be unfair to the labor market (people) and the companies settled for $415 million:


So, now they're doing the opposite and people are upset? I mean, I guess so, it obviously hurt this company. But, in fairness, they did try to do the right thing and in the end they had to hire the people they wanted to hire because that's what the courts told them was the right thing to do.

Anti-poaching agreements are bad, but they aren't nearly as bad as non-competes. Anti-poaching agreements mean one company won't cold contact employees at another. But employees who want to switch of their own initiative are still able to do so. Non-competes blocks even employees who want to switch of their own initiative.

> Anti-poaching agreements are bad, but they aren't nearly as bad as non-competes.

Anti-poaching agreements are non-competes, just between firms rather than a firm and their employees.

> Anti-poaching agreements mean one company won't cold contact employees at another

No, that's not all they mean. The most trivial anti-poaching agreement might restrain itself that way, but anti-poaching agreements can and regularly have included agreements not to employ workers from the other firm, not merely to avoid certain active recruitment/solicitation steps.

> Anti-poaching agreements are non-competes, just between firms rather than a firm and their employees.

I don't see anything about non-poaching agreements in a cursory look at Wikipedia's article non Non-competes[1].

> No, that's not all they mean. The most trivial anti-poaching agreement might restrain itself that way, but anti-poaching agreements can and regularly have included agreements not to employ workers from the other firm, not merely to avoid certain active recruitment/solicitation steps.

Yes, you're right. Thanks for the clarification. I guess what I should have said is the specific anti-poaching agreement that bonestamp2 mentioned was only about active recruitment. But still even with this broader definition of anti-poaching, they're not as bad as non-competes. A non-compete would prevent the founding of Intel (by former Fairchild Semiconductor employees), but a broad anti-poaching agreement would not prevent the founding of Intel.

[1] https://en.wikipedia.org/wiki/Non-compete_clause

The Apple et all antipoaching agreement was illegal the whole time and they knew it.

It wasn't that the courts found it happens to be illegal. What Apple under Jobs' watch did was illegal at a critical time for the industry.

> Which is why Silicon Valley is in California

It is absolutely why Silicon Valley is in California. As someone who lives in a state where non-competes and non-solicits are strongly enforced, they completely stifle new company formations. Just look at the "founding" of Silicon Valley with Fairchild Semiconductor, the "traitorous eight", and Intel. Those stories would be impossible with enforced non-competes and enforced non-solicits.

the $415m is kind of a slap on the wrist, the amount of benefit gained by those companies is probably a lot higher.

Right to work law is really good in Ontario. Heck I had a CEO who threw a tantrum because I took my skills to another company (that isn’t even a competitor) and demanded I quit with threats. My lawyer basically laughed at him and he went away.

Ontario’s tech sector is growing a lot but hopefully the salary issues will improve.

Just FYI that’s not what right to work is. You’re talking about at will employment.

Right to work means they can’t make you join the union.

Thanks. I mean the laws and precedent that made it clear my non compete is unenforceable based on the idea that I have a right to... work.

Oh hey and there’s the name right there!

> Thanks. I mean the laws and precedent that made it clear my non compete is unenforceable based on the idea that I have a right to... work.

> Oh hey and there’s the name right there!

I wish non-competes being unenforceable had a pithy associated phrase, but it doesn't.

There are nuances to non-competes that sometimes get glossed over, such as non-solicitation of customers and co-workers. I believe those types of clauses are enforceable in CA.

Oddly enough, the union neutering that is encoded as "right to work" is usually cited as a factor that makes a state more "business friendly", and so are enforceable non-competes.

can-compete state/province?

... maybe. Doesn't seem quite right, but perhaps it just needs to grow on me for a bit.

It does potentially allude to making the state/province more competitive with other regions, which is a plus for neutering the "business-friendly" framing.

Yes, the term is intentionally misleading in an attempt to get people to vote against their best interests

Why can no one but the US pay developers well? The GDP per cap is there in many countries... but for some reason developers are only key employees in the US?

Because the US has more companies that make software than anywhere else, and therefor has a greater demand for software engineers than anywhere else in the world. The supply of software engineers hasn’t kept up with the demand for their labor, so salaries go up. This has happened all over the world, it’s just more pronounced in the US because the demand is so much greater.

The situation in the US does impact salaries all over the world though. A lot of software engineers over seas work for companies that are either US based, or who primarily do business in the US.

Or are developers paid a disproportionate wage in comparison to other jobs?

Why should a software developer get paid hundreds of thousands of dollars a year, while those who weren't lucky enough to be born with the required intelligence (despite what coding bootcamps say, not everyone is cut out to write code) are doomed to work a low-wage job for their entire life? It's the height of privilege. And if you subscribe to the theory that intelligence is a product of a child's developmental environment (nature over nature), it serves to increase social stratification and decrease class mobility.

Builders and electricians are just as much key employees as software developers. In Australia, a skilled electrician can earn the same salary as a software developer, and that's the way it should be. My job is easy, I sit at a desk all day. I don't have to wake up at 5 AM every day and spend 8 hours a day (more like 6 in Australia, thanks to the unions) running cables in a construction site.

I'd love to see most software developers try their hands at a trade, it's backbreaking work.

Because the companies that employ them make lots of money from their labour. Paying them less would mean tech shareholders and CEOs make more profit. Electricians wouldn't somehow magically get paid more if software engineers made less. I guess you're asking society to value buildings more and software less?

The wage paid to programmers is a function of supply and demand just like everything else in the market.

Investment bankers and programmers earn more than your typical American because the supply of bankers and top-level programmers is much tighter. Goldman Sachs and KKR hire from Wharton or HBS, and Google hires grads from CMU or Stanford. Whether they should or shouldn’t restrict their hiring practices is another matter, but their insistence on hiring only the “elite” causes salaries in those fields to skyrocket.

Welders and electricians make more money than say a landscaper because you need more training, certifications, exams, and experience to do the job, greatly reducing the pool of available labor.

If you want programmers to get paid less, make it easier to become a programmer and get Google to hire more broadly.

That’s perhaps why bootcamps and code camps are looked down upon by existing programmers — not just the belief in the superiority of a traditional 4 year computer science education (whether founded or not), but also a realization that if these things catch on they might be paying us all less in the future.

Google is a pretty bad example, they are well known for not caring where did you study. As long as you pass their (hellish) interview, they will take you.

And bootcamps are not going to help you with that.

they are well known for not caring where did you study

No, this is incorrect -- Google has a list of “favored” academic institutions. It’s not used to filter out candidates, so they’ll still hire people from other backgrounds, but studying at a top university is considered to be a positive signal.

(Possibly this has changed recently, but it was true through at least 2012 or so.)

Often it's simply the signal to noise ratio. It varies tremendously between institutions.

Your post is a literal summary of why the attitude and performance of software engineers in other countries is so utterly subpar. Having spent a lot of time in Australia, I found the work ethic and culture of the office-bound workers there to be completely unacceptable by American standards.

You wouldn’t understand American standards because you don’t understand the difference in work intensity and performance. There’s a reason all of the good workers still head to California.

All my colleagues are good workers and none of them have the intention to move to California. In fact, a good chunk moved out of California.

"work ethic" : right, huh..

I think part of it is that a builder’s work has no leverage behind it. A day of work might positively affect the 5 or so people whose house was repaired. A day of software development may impact millions of people.

Yes, this. Compared to a lot of other building professions, software engineers have higher leverage (the same effort can benefit more people). Other careers I'd put in that same boat:

* authors * artists * judges * motivational speakers

The difference is that I think leverage is more diffuse for software engineers, and it doesn't require fame.

You briefly grasp the answer in your post: skill

>In Australia, a skilled electrician can earn the same salary as a software developer

What about the unskilled electrician? Are they paid the same as the skilled one?

Because a good team of software engineers can bring a lot of value. They can write a software that saves company millions of dollars. They can can make a product which will bring millions of dollars of profit. And for all that, their labor and equipment expenses will be a fraction of that amount.

There are very few professions with profit/cost ratio this high. Writers and media creator come to mind. Definitely not electricians or builders.

(Of course not every software engineer is like this. But there are plenty of $60K software jobs in US too, nit everyone gets six digits)

> In Australia, a skilled electrician can earn the same salary as a software developer, and that's the way it should be.

The issue here is that the work of a skilled electrician doesn't scale, unlike a software engineer. The classic example is process automation.

I would argue software, and engineering in general, is one of the few disciplines where that's possible.

I see several factors here.

There's non-compete in most places that makes it hard for employees to switch jobs. Since there's none in California, the strategy to retain employees is to tie their income to equity in the company. That creates a moat around hiring engineers from a competitor (you'll have to match the equity if you want to hire!). There's also labor laws that makes it hard to fire someone; these incentivize the business owner to pay less so that a bad hire has less of an effect. There's also, in a lot of EU countries, so much taxes that it's helpful early one to hire specialized accountants just to claim all the possible subsidies for the business. It can be worth it for businesses with 5 employees. Adding that extra salary will leave less for the early employees.

There's also the fact that some companies simply don't see the value of software, at all. They have a software division but don't treat it as the core of their business. In their mind, it's simply a tool for the business (despite the whole business depending on it sometimes!). So they treat software as a cost center and that drives engineers to tech-focused companies that are clustered in the US. Prime example of that is banking, where no matter how much revenue is directly tied to software, it's still considered a cost center.

Finally, in some market there's simply a talent gap. Ontario, and Canada, strikes me as one since I've met a few Canadians who jumped the border to Silicon Valley but never actually met a Silicon Valley engineer moving up north.

Developers work in many different companies, and most of them don't make products that can, or could in even in theory make enough money to make paying as much worthwhile. It's a chicken and egg problem.

In my experience, the "Software is Eating the World" thesis is looking largely correct. The number of software developers at modern non-tech companies can be surprising.

Even in my limited experience, I have seen big, well-funded software teams in companies doing retail, manufacturing, transportation, shipping, food service, etc. Those developers do not typically make SV wages (and generally have better work-life balance), but they do frequently earn comparably to lawyers in their cities.

An example in the insurance industry from Dallas, a city not known for being a tech hub: https://stackoverflow.com/jobs/417604/mid-senior-level-net-d...

Or telecom in Atlanta: https://stackoverflow.com/jobs/392595/senior-software-engine...

It might be fair to say these industries have more leverage in the US because they can serve a bigger market. But it's not all about the types of products they make, there are definitely bigger issues that drive the comp differential. I would love to learn more.

That was traditionally the case, it was only when the outsourcing fad came along that these companies started to shed developers.

>Which is why Silicon Valley is in California, and why attempts to create a startup culture elsewhere have mostly failed.

Silicon Valley's origin pre-dates these labor laws. Hewlett-Packard was started in the late 1930's. Silicon Valley's success has much more to do with a critical mass of talent and infrastructure that started a long time ago. The labor friendly laws were created as part of California trying to nurture that success.

> The labor friendly laws were created as part of California trying to nurture that success.

Which ones? Because California has banned noncompete agreements since the 1800s, and that is a big reason Silicon Valley ever got off the ground. Fairchild was literally founded by people who left their employer to compete with it directly, and they definitely took their knowledge with them.

Another commenter already responded, but some more details:

California's pro-employee stance starts with section 16600, which states "Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade or business of any kind is to that extent void." That was passed in 1872 and has effectively banned non-competes in CA.

Bah humbug. Westinghouse was in New Jersey, as was Bell Labs, and IBM was in New York. And there was, at the time, a much larger population base in the East Coast. California had to try harder, and in the end, they won.

Don't forget a lot of government investment.

There has been lots of government investment in many areas - the question is why was SV different.

> Which is why Silicon Valley is in California, and why attempts to create a startup culture elsewhere have mostly failed.

Except Apple and Google both hate it when it's done to them which is why they illegally colluded and agreed to not poach from one another and why they lost a lawsuit for $415M:


Long after neither of them were startups anymore, yes.

Really naive question:

I can see why an individual company would include non-compete clauses if legally allowed to. But who actually benefits from non-compete clauses being allowed? Aren't companies hurt more with hiring difficulties and unmotivated employees sticking around than whatever benefit they get avoiding raises?

Are there really a bunch of managers thinking "I want an engineering team that is stuck here and just plods along fixing one bug a week".

It’s not about the employees being stuck there. The employee can quit for a new job and then just gets sued before they can start work. So then the employee either has to wait out the non-compete period (sometimes these are paid out), losing valuable work time, or they have to get a job in a demonstrably different sector/area, where skill transfer may not be as advantageous.

You’re right that this does create a toxic, unmotivated workforce. That said, it can also instill fear in employees from looking for other positions and helps keep wages depressed, since people can’t be persuaded to leave for competitors with higher salaries.

It’s about control.

For a pretty length defense of this thesis (specifically comparing SV with Route 128), see Ronald Gilson's article, The Legal Infrastructure of High Technology Industrial Districts [1].

And for a more global perspective see Anupam Chander's How Law Made Silicon Valley [2].

[1]: https://www.nyulawreview.org/wp-content/uploads/2018/08/NYUL...

[2]: https://law.emory.edu/elj/content/volume-63/issue-3/articles...

>Which is why Silicon Valley is in California, and why attempts to create a startup culture elsewhere have mostly failed.

FWIW, non competes aren't enforceable in much of Europe unless the employer pays the person who left. This is known as Garden Leave in the UK.

Which is why Silicon Valley is in California, and why attempts to create a startup culture elsewhere have mostly failed.

I doubt that that is the main reason. Also, in this case it worked against the startup.

The just so story that is told about this is with no non compete there would be no Intel. The founders would have all been stuck at Fairchild.

> The founders would have all been stuck at Fairchild.

The founders of Fairchild would all have been stuck at Shockley.

That was one key factor behind the original growth of Silicon Valley. The others were the presence of several excellent universities, and a high level of funding from the military-industrial complex during the Cold War.

Its a key reason.

Mindshare evolves faster because cognitive IP is usuable.

What happened to the startup is the expected outcome and they should have known not to use California’s courts.

The CEO of Hooked missed their shot by declining the first offer. All of their employees were at-will and could always have been extended offers which is what subsequently happened.

Press F to pay respects.

Of course it would also apply the other way around - if some Apple employees decided to leave and start their own competitive VR project, Apple would be just fine with that.

Wouldn't it?

I'd love to believe this, but given the law is California wide why doesn't this also apply in other California cities (e.g. LA, San Diego)? Or does it?

Is that the only fundamental reason for SV?

I thought it was an historical process with billions of government subsidies spent in military tech and research that drove the belt.

I admit my ignorance about the place so you might have a point, but it feels a tad too ideological to take it at face value. ;)

That has almost nothing, if not nothing entirely, to do with why SV is in California. Also, are you stating that no other jurisdictions, at all, have this in place?

SV is in California because William Schockley moved to California. It's that simple.

I'd recommend reading Regional Advantage, the dominance of Silicon Valley/Bay Area is a lot more nuanced than just noncompetes, good universities, etc.

Indian labor laws across the whole country operate like this.

Non-competes are useless..

Its a little different in India. Legal knowledge is negligible among most employees. Even thought the law says a thing, intimidation and threats always do the trick. No one really drags companies to courts given the long intervals of a case, costs, plus mind boggling amounts of corruption involved in anything.

Secondly even things like notice period are not enforceable. I have seen situations where a manager would block a person's relieving letter for standards 3 months waiting, while the receiving company wants the candidate to join in a month. The candidate asked for manager to give it in writing in a mail and the manager instantly approved the notice period to be reduced to a month.

These days the internal separation portals block such approvals, and getting it changed is a long drawn process which will spawn beyond a person's notice period. And if a person requests a change while they are employed they will be fired.

Existence of a law means nothing in India.

that is a very scary FUD perspective you have and it is not based in reality.

Non competes have been tested in indian courts and thrown out. This is fairly established and not a situation that is common practice.

the other things you talk about are not standard practice and things that may happen anywhere

>>Non competes have been tested in indian courts and thrown out.

Are you from India?

People here are afraid to approach the police station even for small issues, let alone take on billion dollar firms and fight expensive cases for years. Even winning means losing in a context like this. People even settle traffic violation tickets with bribes, and you are talking about taking on billion dollar companies.

Also no one even goes this far. Programmers earning 4 LPA are not going to spend years in court, many times its just a hack and most people understand this is just how the system works, and get over it.

this is a civil case. this is not criminal. there is no police.

the onus is on the company to go to court and do this. And this gets rejected. because indian courts have rejected non-competes as a matter of policy.

I would suggest you recheck the ground reality. And yes i do run a company in India.

>>this is a civil case. this is not criminal. there is no police.

That is in theory. In reality people in power have more than sufficient means to intimidate you and bring you trouble.

>>the onus is on the company to go to court and do this. And this gets rejected. because indian courts have rejected non-competes as a matter of policy.

That is if you decide to stay put despite all this for years and fight it out. Also note I myself pointed out most companies won't bother with this. Because they often have bigger fish to fry.

>>I would suggest you recheck the ground reality.

Would give you the same advice. In fact just try walking into the city civil court in Bangalore and see for yourself how it works there. Many times the advocate has to plan the exact statements to speak, write them down on paper and quickly spit them out in front of the Judge, because there is no time. The Judge himself is generally swamped and has to listen to dozens of cooked property litigation cases everyday. Your case will go sandwiched some where in between, and it will keep accumulating dates and legal fees until you give up. Long before that your will power will run out.

If you are an individual wanting to fight a company that's taking you to court for non-compete stuff the company lawyer will show up do the routine. You have to take leave from your job and deal with all these court hassles. Might as well for your own sanity give up.

Look man I get it, you are trying to sell India in a predominantly US forum. But seriously, none of what you are saying works. In fact not even remotely close.

i see what you are saying and categorically (but politely) refuse what you are saying.

whether you want to take it or not is upto you. India is far far more employee friendly than Europe and most parts of US.

The point of what you are talking about from a legal system is inapplicable to labor laws. I can throw the same Black-Lives-Matters issues in US courts to you and ask you to go and check New York courts for the same.

In the same vein, I can throw Anthony Levandowski case and make the claim that California is unfriendly to employees. Neither of them is true and neither is the fact that India is at all unfriendly to employees.

Quite the opposite we have a rich ecosystem of employees founding startups - Flipkart, Ola, Unacademy, Paytm are the new founding "mafias" of India. There is exactly zero cases of employees have lawsuits by their employers.

Indian (and the US) legal system and their myriad problems are true - with all its racist vs religious biases - but that has nothing to do with California employment practice or the Indian ones

The US courts aren't as much burdened as India's mostly because the society in US works with relatively high degree of fairness, merit and justice in the system. For this reason there is also immense trust in the system. Its not exactly 100% but its high compared to India. I have personally lived there and it works for the most part. It is possible to impeach a president in US on grounds of merit. Try doing this in India without triggering a pogrom, or a major civil strife.

They don't have land sharks raiding and occupying lands illegally, or people faking documents to sell the same lands to 10 people, like its common in Bangalore. The system as a whole doesn't have as much fraud, dishonesty and cheating as much as India. When you have this your courts don't get flooded with pointless cases, which shouldn't even exist at the first place. This allows the courts to focus on real issues, and helps fast track clearance of cases and quick delivery of judgement. You won't have this in India until the society as a whole reforms and moves towards developing universal qualities of merit, fairness and justice. Im not talking of enforcing them, but these values existing and being respected in our society as a part of our culture.

>>India is far far more employee friendly than Europe and most parts of US.

Not even remotely close.

>>There is exactly zero cases of employees have lawsuits by their employers.

Hard fact! That's for a simple reason, these employees don't matter :-). Most hop jobs every 1 - 1.5 years. Until you land a big cheque from the VCs. Then you rewrite your systems anyway.

By the time you settle your case over a decade they might have hopped like 7 companies. The original case is largely meaningless.

I don't understand why there is no Silicon Valley in Europe then

Aversion to risk. I was told by German entrepreneurs that they can get funding only when they give bank/VC/investor a collateral of the same value or if they are already profitable and don't need it anymore.

That's the reason Nassim Taleb gave in Black Swan as well. He said in Europe and Asia, failing is looked at negatively, while in the USA failing is fine, as long as it wasn't due to lack of effort. So the USA has a lot of failures, but also a lot of innovation, whereas European businesses are more stable, but also don't innovate as much.

Even a generation back, failures were a taboo in India. Risk aversion was to a point that would discourage people from even trying. Suicides dues to social shaming are common till date. The only way to make a living in India for a long while was like going through an established social heuristic. Any deviation used to be frowned upon.

These days things are diluted to an extent. May be due to overall effects of globalization and people just moving on due to cultural dead ends.

Look at the consequences of personal bankruptcy in Germany [1]. They are severe and permanently close off entire career paths. Europe’s culture is less risk tolerant, fundamentally, than America’s.

That said, entrepreneurship isn’t the sole path to innovation. Germany has a solid history of non-entrepreneur value finding.

[1] http://www.privatinsolvenz-hilfe.org/en/german-bankruptcy-la...

Personal bankruptcy does not apply to corporate contexts. And it is much rarer than in the US

> Personal bankruptcy does not apply to corporate contexts

Most entrepreneurs have leveraged their personal finances at some point. I personally remember running payroll off a personal credit card in a particularly tough quarter. That route is prohibitively risky in most European countries.

> it is much rarer than in the US

That is the point. There is reduced risk taking in Europe. Many entrepreneurs’ successes are preceded by failures of varying magnitude. The American system’s willingness to forgive and forget creates lots of problems, but it also fosters an innovative culture that is comfortable with risk taking.

> That route is prohibitively risky in most European countries.

I'd say this is risky everywhere and regardless of the fact that personal bankruptcy is a thing in the US. Heck, running big debts on credit cards is a pretty unique US thing, because usually the limits are either little and/or the interest rate is prohibitive.

I agree the risk taking is smaller in Europe, but if you need a loan go talk to your bank, putting a debt in a credit card is a stupid idea period even in the US.

Tolerance for risk by entrepreneurs is low too. I used to read the German blog ,,Gründerszene’’ — “founder scene” but all the companies they covered were just retail shops without a physical presence: organic oats on the web! Nothing technical and nothing high growth. Tragic.

If I were to start my business, that's what I'd set out to do though. I'd want to start a company that could grow from just me, to maybe 10 people in 10 years. Doing round the clock coding and VC pitches hoping to be sold to Google to me seems like a nightmare compared to trying to make a cereal store on the web with products I really enjoy.

This isn't just risk aversion, it's really that the tiny changce of being a billionaire doesn't really appeal to me more than a solid chance of just building a business and having a healthy work/life balance the whole way.

Nothing to be about "startups" means you have to have things that "scale" or hope for exponential growth or being able to sell the company, or even some new or impressive tech. To me it literally means "a young company bootstrapped with a small amount of cash, hoping to grow".

Then it's simply a business. Nothing wrong with that but calling your local grill or clothes shop a "startup" turns the term into just a synonym for "small business".

I use it as a term for "just-started company hoping to validate business model then grow". Not just "VC funded company looking to grow exponentially".

E.g. wikipedia

"startups refer to new businesses that intend to grow large beyond the solo founder"

I don't mind that definition. But I also wouldn't call my company not a startup if it doesn't want VC funding or doesn't hope to grow more than linearly/organically.

Also German law doesn't make easy allowances for employee ownership / stock options. There's a hack to get around this where you write a contract for a percentage of the eventual exit, but this limits what sort of exits are possible.

European laws, regulations, and investor culture are all setup in ways that hurt startups.

> Also German law doesn't make easy allowances for employee ownership / stock options.

Airbnb gave me plenty of RSUs while I worked in Berlin. No problem.

The Berlin startups with their shit together also know how to use UK (now Irish) Limited companies, which have no issues with offering options to employees.

It’s a German tax law issue. It’s legal to do but not advantageous to the employee, because they don’t allow things like 83(b) elections. Not sure how Airbnb made it manageable in your case, but incorporating elsewhere doesn’t fix the issue.

RSUs are working just fine. I got them from Amazon, I was able to get largely discounted shares from EADS back the day. Tax wise Amazon RSUs were treated like part of my salary, covering taxes when they vested ranged from selling all and selling parts of the RSU or covering taxes cash and keeping all of the RSUs. The discount at EADS was treated as part of my salary. No problem whatsoever. INAL, but all these instnces had in common was the legal entity being stock based (AGs in German parlance). Most companies in Germany end to be GmbHs, in that case ownership is harder to change but accounting is a lot easier.

That being said, Berlin start-ups have a tendency to complain a lot. If they wanted, they could make a lot of things work.

I’m talking about startups, not big public companies. That approach doesn’t work so well when the startup shares are illiquid and no market exists to sell them at vesting or tax time. In the USA this isn’t an issue because you can make an 83(b) election with our tax authority which basically means “I elect to pay taxes when I sell, rather than at vesting.” So as your illiquid startup shares vest and you accumulate paper wealth, you pay zero taxes on those vested options unless and until the company goes public, is acquired, pays dividends, etc. If the company goes under, as most startups do, you owe the tax man nothing.

To my knowledge no equivalent setup exists under German tax law.

Which doesn't prevent companies from issuing them, does it? Obviously, I'm no tax expert. I did hear of enough instances where people in the US owed taxes for basically worthless shares here on HN.

And in case you assume the shares are going to be worthless, just sell to cover taxes when they vest. No harm to your bottom line. And a potential upside.

Yes, because both you the employee and the company have to make active steps to structure the equity grants in a very specific way to get the favorable tax treatment, and if you screw up or skip a step you can get hit with an unexpected tax bill.

But there IS a process. AFAIK there is no such thing in many European jurisdictions, like Germany.

> And in case you assume the shares are going to be worthless, just sell to cover taxes when they vest.

...how? Sell to whom? On what market? I think you’re missing the point. These are pre-IPO shares with explicit sale restrictions that prevent you from selling.

> Yes, because both you the employee and the company have to make active steps to structure the equity grants in a very specific way to get the favorable tax treatment, and if you screw up or skip a step you can get hit with an unexpected tax bill.

Not offering options because you're employees have to pay income tax on all the value rather than capital gains tax on most of the value is ridiculous.

Back to the start-up? Or just combine the RSUs with a cash bonus large enough to cover the taxes? Both solutions would work.

Both solutions would require the company to have a prohibitive amount of their investment money set aside to cover the tax costs to employees of vested options. That both has perverse incentives and is a very substantial innovation tax—making investments in startups even more risky, and raising funds more difficult (since doing so at an increasing valuation also increases the capital requirements needed to cover the tax bill of future veering events).

The American approach is simple: no sale, no profit, no tax. If Europe wants their own Silicon Valley, they need to adopt similar startup-friendly tax laws.

We talk about companies awash in VC money. This whole tax discussion looks a lot like helping VC more than actual employees. Or like finding excuses and scape goats why these companies aren't doing such things right now.

There is nothing like 'companies awash in VC money' in Europe. The investments here are laughable compared to US, or China, and the products are mostly not really innovative, because of the risk, as discussed here.

Advice I had via work and my Steuerberater is that options are taxable on excise rather vesting. What you can't do is early excise while also deferring the tax until sale.

If you sold them, what was the taxes to pay?

It’s funny though. Everyone has free health cover, so they should worry less about failing.

I saw similar things when I last looked into the Australian angel/VC startup funding works. This was 10 years ago however so things may have improved since then. But at the time it was most definitely due to a risk averse stance by investors.

I believe Europe can create its own SV by following the USA's route: the Europe's equivalent of DoD (which has access to unlimited funds, tens of trillions of euros), needs to come up with a grand multi-decade project and invest into companies that are going to work on related sub-projects. For USA it was the worldwide surveillance system, but for Europe it may be something else, like ITER (but on a bigger scale) or micropayments system (I don't know if it would be big enough). That grand project needs to be useful and reachable, though. One thing I'm certain about is that VC-style micro investments into micro projects with micro objectives will bring only micro results.

I think many/most people ignore this, that some of the mega defense projects spawned many companies that led to huge growth in tech industries. The VHSIC program was one of them. I saw dozens of people from the big defense tech company I was working at go on to found design software companies after their experience designing VHSIC chips, chips that are small by today's standards put pushed the limits of design tools at that time. Same thing was happening at the other VHSIC contractors.

Europe does not exist in the relevant sense. Germany does not exist in the relevant sense which is why this is so hard. Start up ecosystems are highly localized, like any other knowledge worker employer ecosystem. Silicon Valley managed to spill over as far as San Francisco and the rest of the Bay Area. LA is as tightly coupled to that ecosystem as Boston, New York or Montreal. You can’t evenly divide an ecosystem. In the EU it looks like Berlin might have one, maybe. Europe won’t. The closest you could get would be a border spanning metro area, like Aachen or Strasbourg.

There are some science and technology investment projects like this in the EU.

For example:

> Horizon 2020 is the biggest EU Research and Innovation programme ever with nearly €80 billion of funding available over 7 years (2014 to 2020) – in addition to the private investment that this money will attract. It promises more breakthroughs, discoveries and world-firsts by taking great ideas from the lab to the market.

Horizon is much bigger than ITER, and like the DoD it covers a wide range of R&D areas with industrial collaboration, and says what its main areas of interest are.

Those 80 billions are the micro investments I was talking about. EU needs a 100-trillion-dollar project for the next 50 years + change some laws to improve competition. With 80 billions EU can build a wooden airplane at best.

Horizon 2020? Yes, lots of paper was pushed and lots of fantastic reports written. It promised more breakthroughs and discoveries, but it only delivered tons of reports printed on dead trees.

Maybe so, and I'm not going to say Horizon 2020 is equivalent to Silicon Valley investment.

But it has funded lots of small companies doing R&D, which I thought was the subtopic here comparing with DoD funding, which also involves lots of paper and fantastic reports...

The issue with Europe is that it's all decentralized by nature. They can't expect a company in Prague or one in Madrid to move to Strasbourg, unless given strong incentives, which the EU is pretty loathe to give.

Yeah, but instead of technologists, we'll hire consultants from Big4 and MBB and SAP and ask them to do some magic with computers. In the end, we'll get potatoes to show for and billions of euros under water.

Honestly, if they want a solid challenge, here's one: get a unicorn tech company public over the next decade for each major EU nation.

A first step might be to expand the European University system to handle the influx of Graduate students that were previously headed to the US. Give funding, poach the frustrated non tenured profs from the US.

Essentially reverse what happened during and after WW2, when the anti semitism caused Germany and then mainland Europe to lose all the amazing talent to the US.

No, a first step would be increasing social mobility. It's pretty hard to attend school in large parts of Europe. If you are from Europe realize you might be in a bubble of people that speaks English very well -- in general, I've noticed such people are high performers relative to many.

Most EU countries have higher social mobility then the US.

I've read the opposite, or at least that they are very close, from an unbiased (as far as I can tell) source. Couple that with all the reports that investors in e.g. Germany are extremely conservative and it seems social mobility would be lower.

> A first step might be to expand the European University system to handle the influx of Graduate students that were previously headed to the US. Give funding, poach the frustrated non tenured profs from the US.

There is no European university system. There’s a French one, a German one etc. They all pay much, much worse than their US equivalent because they’re substantially poorer than the US. Remember, if Germany was a US state it would be poorer than every state but Mississippi. And this probably understates the difference. By average household consumption the US is $10,000 ahead of Switzerland, number 2 after Hong Kong. The money to massively increase research spending isn’t there.

I’m not sure where you’re getting your numbers from. Assuming by “poorer” you mean nominal GDP, Germany would be the richest state in the US.

Presumably they mean GDP per capita, which slots Germany[0] just under Alabama[1].

[0] https://www.macrotrends.net/countries/DEU/germany/gdp-per-ca...

[1] https://en.wikipedia.org/wiki/List_of_states_and_territories...

My numbers were out of date. Germany has a higher GDP per capita than South Carolina, Alabama, Idaho, West Virginia, Arkansas and Mississippi.



Interesting. Why does Washington DC have almost triple the gdp/capita then California? What do they do that California don’t?

Much smaller area (DC is something like 65 square miles) and population, for one.

But beyond that, my thought is that although you probably have fewer super rich people in DC, you also have way fewer poor people. So the average is going to be higher than even SV.

Plus, the types of jobs in DC proper (so we’re not talking about the extended Maryland and Virginia suburbs) are almost entirely professional/government. It’s also a very expensive place to live.

DC has higher GDP per capita than California for the same reason NYC would have higher GDP per capita than NY state, or San Francisco than all of California. Cities are more economically productive than areas that also have lots of low value added activities like agriculture, mining or forestry.

Also that Europe lacks large pension funds that are legally allowed to invest in Venture Capital, or a large class of super-rich that will invest in Venture Capital, or a large class of moderately wealthy startup veterans that like to do angel investing (the last one is changing).

I don't know how much of a role this plays, but even with lower market rates, employing a team in Europe can be an expensive, unwieldy task. Firing in particular seems to be a lengthy, drawn out process. I don't think that's a bad thing, but I can imagine how a significantly increased cost for every bad hire might increase the risk profile of a small startup.

It is also a big brake on salaries, too. If employees are difficult to let go, and the cost of a bad hire is compounded by that, then it stands to reason that you wouldn't want to pay high salaries.

Some companies in the US are terrible at getting rid of bad workers- too many cracks for them to fall through. Some, however, are known for paying high salaries and letting anyone go who doesn't live up to them.

I think at-will employment in the US is key to their startup ecosystem. It makes their market very "liquid", as you can hire fast and fire fast.

> I think at-will employment in the US is key to their startup ecosystem. It makes their market very "liquid", as you can hire fast and fire fast.

Is that really the case? I would have naively assumed the typical (median) startup path is something like hire, hire, hire, go-bankrupt? And the successful ones more like hire, hire, hire, hire, hire, go-public?

Easy firing doesn't seem relevant to either of those?

Companies in Europe are much more reluctant to hire precisely because it is so much harder to fire. When I lived in the US, and got offers, the company’s first question would be: what’s the earliest you can start? In Europe my experience has been long processes that are dragged out unnecessarily.

Hiring is riskier, and therefore slower. There are 2 sides to it of course, on one hand employees are much more protected from losing their jobs, but on the other one innovation and fast access to jobs is also slower.

Also, it is not only about firing. Hiring is also slower because of all the paperwork that needs to happen. For example, in Spain you cannot just hire someone. You need to draft out a contract, cover every possible detail related to the work that the person will be doing, etc. it is just slower in general.

This brings me back to my min point though: employment at will.

Because Europe is not at all competitive for tech talent. Fresh graduates earn significantly more money in America than senior-level developers in Europe, with the quasi-exceptions of London and Switzerland (neither in the EU).

Why would European developers allow themselves to be shafted out of millions of dollars by staying in Europe?

In London it's only fintech, rest of the IT salaries are a joke compared to SV.

London is still in th EU, maybe not for much longer but still there.

This is false.

The UK left the EU on 31 January. It is now in a “transition period” where it follows EU rules and trade is the same. But it is out of the EU. If you’re going to make factual corrections please check your facts.

There are lots of theories.

One of the main ones is that national policies around employee equity vary throughout Europe and are often severely disadvantageous (particularly Spain and Germany). Lots of European entrepreneurs are calling on policy makers to both normalize this within the EU, as well as making the policies competitive (e.g., [1]).

Of course that statement misses some of the “why not < state in the US >”. The tax treatment in other states is the same, and several have similarly employee friendly policies. If anything, Seattle has become a clear rival to San Francisco, and has restrictive employee policies with regards to non competes (c.f., Microsoft used to sue high profile transfers to Google, Amazon sues ~everyone who leaves AWS, etc.).

I think the combo of those things suggest that it comes down to density and freedom of movement. Silicon Valley leapfrogged other places thanks to Shockley => various forks => Intel, Apple and others offering serious equity (the Boston scene didn’t keep up on this front). That fed on itself over and over again, leading to persistence. Seattle is now a powerhouse as a legacy of Microsoft and then Amazon, and all the folks that have come out of it.

By contrast, Europe has only had a broad single market for ~30 years. But it’s still super fragmented both in terms of laws and some would argue more importantly by language. 45 years ago when Apple and Microsoft were founded, they were able to hire any engineer in the US (and beyond) that spoke English. By contrast, most European companies were highly national with fairly minimal migration between countries.

Europe is closer now to the conditions of the initial Silicon Valley setup (freedom of movement, access to knowledge, everyone speaks a common language), but its decades behind in terms of a history of successes. I believe that the companies spawned from Spotify employees, and so on will spread throughout the European startup scene. But it still takes time.

tl;dr: Europe still has some structural barriers, and just a much “younger” startup scene.

Edit: plus it’s always important to remember that post WW2, most of Europe was spending its time recovering from the war.

[1] https://notoptional.eu/en/policymakers

> One of the main ones is that national policies around employee equity vary throughout Europe and are often severely disadvantageous (particularly Spain and Germany). Lots of European entrepreneurs are calling on policy makers to both normalize this within the EU, as well as making the policies competitive (e.g., [1]).

I would also add that employee perception about the value of equity vs salary varies across countries in Europe. High stable salaries could be preferred over equity in good welfare states with employee-favorable legislation where firing people is harder (Germany & France for example).

Absolutely. Though even the base salary pay differential between European hubs and the Bay Area are substantial.

I think the firing people thing is good to point out, but many startups end up not needing to fire individuals: they just go out of business :).

Maybe it's because Silicon Valley occurred first, and then oppressed most of Europe's "native" companies?

It seems that there are some massive sources of wealth for tech companies, such as search, social networks, and e-commerce companies. In Europe, these have all been supplanted by Google, Facebook, and Amazon respectively.

In China, on the other hand, these companies were free to grow and establish their own nexuses of tech talent. As a result, China is the closest to having the Silicon Valley of <x>.

Perhaps Europe should take a page from China's (and the US now, I suppose) playbook?

Don't mistake government-sponsored protectionism and corporate espionage for innovation. I don't think Europe can copy China's playbook without also banning all American tech from their economy.

I expect you will see barriers come up over time that make it more difficult for American tech companies in Europe. It makes no sense for the EU to outsource such a valuable part of the economy.

Again, protectionism is a dangerous road. If the EU blocked American tech companies, the US would retaliate in kind. While it's possible that Europe could eventually become self-sustaining if given a friendly environment to grow indigenous tech companies, losing access to every major OS overnight (as just a small example of the potential retaliation) would be a pretty devastating experience for Europe. You can't replace Microsoft, Apple, and Google overnight.

It already exists, there are tariffs for American vehicles entering Europe and the US for instance.

>losing access to every major OS overnight

That wouldn't really be in America's interest would it?

I don't think we would lose access to the Finnish operating system Linux, also

I’m assuming this is a joke but Linus Torvalds is a US citizen, and the Linux Foundation is based in the US.

AFAIK non-competes are enforceable in Europe, unless they're unreasonable.

To pile on, Europe also makes it difficult to raise venture capital funds—particularly smaller micro funds as the startup cost is so high. Europe is going to regulate their way back to the dark ages.

IMHO it is much more connected to lack of capital.

Lots of money, private and public (DoD)

The reasons are:

1) The California employee rights, which allow an employee to resign and start a new company in the same area. Boston doesn't have an IT industry because of their onerous non-competes, even though DEC and Wang were located there.

2) European nations often have onerous pension requirements that must be met even before hiring a new employee.

3) Silicon Valley has willing investors.

4) Governments across the world prefer dealing with large entities because of the overhead in dealing with multiple companies, so without the right startup culture, new companies just won't happen.

It's funny as workers get caught up in notions of 'individual freedom', which they see as a benefit, but don't realize that systematically what this favours is simply power.

A company with 100x the resources of another, never needs to worry about IP or innovating, because it just plucks off other people's work, integrates into it's own machine and receives the market surpluses, risk free.

So yes - by getting tons of young people to drink the koolaid 'work hard for startups' knowing the surpluses, if any, will largely be concentrated in the hands of literally 5-10 behemoths, the Valley has played a neat trick.

IP rules favour the little guy: it's how they can keep their innovation by being taken from much larger companies. IP filed by large corps is often protective in nature, so as to protect themselves from trolls and obvious copy-cats.

> A company with 100x the resources of another, never needs to worry about IP or innovating, because it just plucks off other people's work, integrates into it's own machine and receives the market surpluses, risk free.

Which is why we're all typing this on DEC machines running OS/2 on AOL internet with 3Com modems.

Funny you have to pick all 30 year old examples.

We have been running almost entirely Windows and Mac for over 20 years (at least in consumer land).

We have been running mostly Intel and nVidia for over 20 years.

We have been running mostly Chrome and maybe 2 others for 10 years.

We have 1 comprehensive social network (FB/Insta) for over 10 years.

We have 3/4 major internet providers and 4 wireless carriers - forever.

We have essentially 1 Search Engine.

We have 2 smartphone platforms for over 12 years.

... when there are 'new markets to be exploited' or a fundamental shift in a market (ie feature phones to smartphones) - new entrants have a chance, but outside of that, they don't as incumbents win relatively easily unless they get lazy.

Each of the major players above has been able to leverage their market power into domination.

IP is one of the few vectors of power for smaller companies (often the only vector) that stop these behemoths from wiping them out. Sadly, depending on the scenario, there are often few material IP protections to be had.

Of course, 20 years ago there were no smartphone platforms at all, no social networks, Internet Explorer was the dominant browser, Google was an upstart competing with search "portals" like Yahoo, a 3dfx Voodoo card was the hot thing to have, Apple was nearly dead, and Amazon was a place to buy books and CDs.

At the time people thought Microsoft was so dominant that most of the innovations of the past 20 years could not have happened, because Microsoft was a behemoth that would simply take over any competitors. But they lost on search, phones, browsers, etc.

I don't really see how it's different this time around. There is currently no company as dominant over the entire industry as Microsoft was in 2000, or as dominant as IBM was in 1980.

That sounds like something someone who has never been taken to court over IP rights would say. I have, and it cost us $10k to get told "you're screwed." by the lawyer that was suggested by friends as one of the better ones for startups.

Without IP laws, you would be even more screwed. By virtue of your existence, you would be there as little fish literally to be eaten by larger one's.

For every time a large company trolls a smaller one, there are 100 times one company decides not to infringe on some other work.

For example, I work with a hardware company that has patents. We freely send our products to larger competitors. Why? Because they know we have good IP, and were they to copy our approach, it would be a straightforward infringement on us, and it would risk their entire business.

Admittedly, we are luckily that infringement in this case would be fairly clear because that's not always the case.

So your company engages in sales practices that would be foolish without IP. That doesn't prove it is the only way to sell, or that it true for all fields. For that matter, why are the big fish able to continually have so much margin in the first place except for patents? Microsoft has made how many billions over control of a narrow programming layer to run other tasks in a loop that's been covered in sophomore year of college since at least the 80s? Competition should destroy their advantages once the market gets so big and mature. Instead such companies capture a market while it's still small, then pivot from hiring engineers to hiring lawyers.

Seems to me that certain industries like software are able to have so much startups and innovation because the legal system is just less effective at capturing and crippling them, despite heroic efforts.

"then pivot from hiring engineers to hiring lawyers."

MS keeps it's monopoly via market power, generally not IP protections (though partly).

MS is large enough vis-a-vis fragmented hardware vendors and distribution networks that it can do play all sorts of hardball. It has deeply entrenched sales channels in to the corporate world. Most significantly, it's a platform which means huge switching costs - and - it can use that platform as leverage into other spaces i.e. desktop software.

Take a moment to contemplate out how Coke and Pepsi (ostensibly commodities) can dominate their channels in a supposedly free market - it's a little bit similar.

Google's monopoly in search can be leveraged into all sorts of other areas.

IP laws are beneficial for 'either side' and of course they are abused willy nilly, but by and large, they are beneficial to a lot of small companies.

Weirdly, even Open Source is helped by IP laws - by 'turning them upside down' using 'copyleft', they wrestle the IP laws into their favour, as the means to 'protect' Open Source, if you will.

We are so wrapped up in software - consider physical things. Often, they have very long development cycles, very expensive. Also - huge operating capital requirements and capex as well. (Why do you think there are so few YC hardware companies?). Also - distribution networks are locked up and very different from software where it's almost direct.

It would be almost impossible to make a hardware company without IP protections, because those with market power would instantly commoditize the competition.

Many other businesses are a little bit similar: as soon as it's not 'pure software' then you realize how fragile new companies are.

For 'very new domains' (i.e. 'blue oceans') it's one thing, but most markets are not that.

Once you put your 'anything but software' hat on for a bit, and see how those companies sit in the value chain, IP looks a little different. That understanding can map to software.

If anything, we need better, more nuanced IP laws, not to get rid of them.

> Take a moment to contemplate out how Coke and Pepsi (ostensibly commodities) can dominate their channels in a supposedly free market - it's a little bit similar.

You're comparing beverage companies with a market share of 30-40 percent (or less depending how you narrowly you define competitors) to Microsoft with a market share ranging from 70-90 percent. Note microsoft was able to come from behind and succeed mostly before the days of software patents.

Open source is perversely helped by IP laws because it's the only way to create an alternative that can survive. Like bitcoin being anonymous, versus e-gold which was shut down by the govt. Great except we have to wait for hobbyists and others with free time to waste before competing ideas can get implemented.

As for hardware being worse than software without IP protection, well it sure is worse than software with IP protection. So I guess it'll stay consistent. Maybe the lesson is the nature of hardware is to be commoditized, so you need to put your value in the bundled software.

There are 100 companies that decide to infringe on your patents in China anyway.

This way we get the worst of all possible worlds.

Had we been more desperate and not using other peoples money we would have started negotiating with car bombs as our Eastern European engineer suggested.

> IP rules favour the little guy

This is one of the most absurd and backwards claims I've seen on this site. Large companies are members of patent pools that prevent them from being sued by other members, whereas small companies without a large IP portfolio can't do anything without inadvertently violating someone's patent.

The trick for small companies is to have a few good patents and leverage the profit/revenue imbalance with BigCo.

When BigCo comes calling with their stack of patents demanding a license or profit share, you break out your few key patents and demand one back from them. BigCo has a lot more to lose compared to SmallCo.

SmallCo has little or no profit and little revenue so BigCo gets no money from them for patent infringement. BigCo has a bunch of money. If SmallCo has good patents BigCo will go away or make SmallCo a deal to avoid millions of dollars in damages or license fees BigCo would owe SmallCo for infringement.

IP litigators will take such cases on contingency.

If you don't have good IP you are a commodity.

You're raising a secondary IP issue to a concern much larger than it actually is, causing you to misinterpret the situation.

IP is one of the very few areas wherein smaller companies can have any hope of leverage over larger ones.

That small companies are blocked from some other patents is an issue, but a lesser one - and it applies to big and small alike.

"whereas small companies without a large IP portfolio can't do anything without inadvertently violating someone's patent." - is plainly false.

Obviously, companies continue to innovate.

Large companies have much more to protect, and far from 'being safe' - IP laws make them more risk averse if anything because they put a lot more at risk than smaller one's.

Google has outright banned their employees from even downloading MongoDB etc. due to lack of clarity over licensing. Without IP protections, Google wouldn't care one bit what they did.

Large companies play against each other mostly in the domain of competition, without IP laws they would step on every smaller company like little ants, without any concern.

> IP is one of the very few areas wherein smaller companies can have any hope of leverage over larger ones.

Leverage over another isn't the only way to compete.

If there was no IP, smaller companies would have alternatives such as blatantly copying the larger companies' better product features, while being nimbler to innovate with those ideas, and to blend features from different companies into a new product.

Not every small company would be good at that. But some would. Some smaller companies would have more ability to out-innovate incumbents.

Of course that already happens, but it could happen more freely without IP.

The smaller companies would still have the problem of being noticed, selling their products, and getting investor interest (which I'm told IP helps with), but those problems aren't new.

So it would be better for these employees if they were barred from going to work for Apple?

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