> why are you not cutting them a deal to make it worth them staying?
It’s a fair question. Workers absolutely deserve a fair cut of the pie in that scenario. Non-competes have been pretty ridiculous lately, and companies had to provide little to no justification.
But the incentives of workers might not be entirely aligned with the “Netflix” or even their coworkers. Blockbuster wouldn’t hire the whole team unless they had to: one or two people who understood the core algorithm is enough, and for 10x their old salary it would be hard to resist. That leaves the startup and everyone else who works there out in the cold.
The second thing is that people aren’t rational expected value maximizers. You can’t pay rent with equity, and a startup may not have the cash to compete on salary.
Finally, it’s possible that allowing the larger incumbent to hire all of a competitor’s employees is actually not in their best interest. After strangling/eliminating the competition, an incumbent has no further need for those employees it poached.
> Finally, it’s possible that allowing the larger incumbent to hire all of a competitor’s employees is actually not in their best interest. After strangling/eliminating the competition, an incumbent has no further need for those employees it poached.
And even if the do, it isnt at the inflated pay rate.
It’s a fair question. Workers absolutely deserve a fair cut of the pie in that scenario. Non-competes have been pretty ridiculous lately, and companies had to provide little to no justification.
But the incentives of workers might not be entirely aligned with the “Netflix” or even their coworkers. Blockbuster wouldn’t hire the whole team unless they had to: one or two people who understood the core algorithm is enough, and for 10x their old salary it would be hard to resist. That leaves the startup and everyone else who works there out in the cold.
The second thing is that people aren’t rational expected value maximizers. You can’t pay rent with equity, and a startup may not have the cash to compete on salary.
Finally, it’s possible that allowing the larger incumbent to hire all of a competitor’s employees is actually not in their best interest. After strangling/eliminating the competition, an incumbent has no further need for those employees it poached.