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>Non competes are silly beyond measure. Maybe. Maybe not. Here is a mental exercise for you. Suppose that you meet a cofounder with a fantastic idea, that r
by logicallee 9y ago
>Non competes are silly beyond measure.
Maybe. Maybe not. Here is a mental exercise for you.
Suppose that you meet a cofounder with a fantastic idea, that requires a modest amount of research to work the kinks out of, and you bring almost zero value to the equation other than having the vision to know that their idea is great - and of course, your willingness to work 100 hours per week until you're both rich off of it. They bring almost all of the value to the equation and have a great resume and background and degrees in that field. You're a code monkey or something. maybe you're a good one, but you certainly don't do the work of fifty or a hundred engineers. maybe 3-5. sometimes. you're nothing special.
so you enter into a contract with your partner under some terms, doesn't really matter what. you're cofounders.
Now here is the question: what is the outcome for you if as you begin to prove the technology together your cofounder gets a fantastic, amazing offer from a huge mutibillion dollar company, for millions of dollars, to leave you, join them, and compete with you. They don't want you, you don't add any value. Your company doesn't have any assets or IP. They just want your cofounder to go leave you and compete directly with the company you poured a lot of time into together and co-own.
if your cofounder does that, then this is awful for you. you've just wasted whatever time you spent working together as you don't bring all that much to the equation. your company becomes non-viable.
So how do you avoid this? Well you can trust each other: you can straight-up say at the start of the partnership, hey (cofounder's name), I know you bring a lot more value to this venture than I do and I am honored that you are letting me help you bring this to market. Before we enter our partnership, will you PROMISE me that you are not just going to leave and start directly competing with us?
Your cofounder says, sure, okay, I promise.
If they're a person of their word, this effectively solves the problem you had been having.
The thing is, this is a non-compete agreement. That's literally what it is. The legalities don't matter.
Do you guys think this agreement is "wrong"? After all your friend is severely constrained and must refuse offers of millions of dollars to leave your joint company and compete with you, if they keep their word....
I am not asking about whether courts should enforce these contracts. I'm asking whether the agreement itself is something that is wrong to enter. Is it wrong to ask for and receive that promise?
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EDIT: Despite my very clear signposting, a lot of people are misinterpreting this. I was asking what you all thought about the morality of such an "extreme" example.
I did not include any value judgment.
- stephencanon 9y agoAny such IP would have been assigned to the company you are forming; if the large corporation wants to use it, they need to aquire the IP or the company itself, in which you are part owner. There's no need for a non-compete here.
- logicallee 9y agoThere is no IP in the situation I have outlined. (I said this very specifically: "Your company doesn't have any assets or IP. "). The cofounder doesn't need to bring anything with them to the company that wants to acquire them. I was super-clear on this point.
- stephencanon 9y ago"Suppose that you meet a cofounder with a fantastic idea, that requires a modest amount of research." This is IP.
- logicallee 9y agoI'm very sorry but this is simply not true. It's only IP if it's subject to copyright or patent protection AND in the latter case if your company is spending money on a patent strategy. There's no IP from simply seeing if something works, if that is not subject to patent protection and you are not pursuing a patent strategy, and you don't bring any of it over with you to another company. The know-how you acquire from having done it before (and which would make your cofounder likely to be hired away to compete with you) is also not "IP". Quite simply I am asking you to assume the time you put into the joint project is not subject to patent protection and you are not pursuing a patent strategy, and to assume that there is no IP at the company that the cofounder would take with them. Under this assumption (which is realistic) I asked you to make a judgment about the morality of the promise you solicit and receive from your cofounder not to go off and compete with you. My question is quite narrowly phrased.
- stephencanon 9y ago