4 ms·

interesting... so what are the rules here? I mean, you sold a company, now you are thinking about starting another company that essentially competes with it...

by lsc 16y ago

interesting... so what are the rules here? I mean, you sold a company, now you are thinking about starting another company that essentially competes with it... is that legally questionable? is it rude? is there usually a time-limited non-compete written into the sale contract? I mean, I've turned down a few offers for my own business in the same price range. If I could turn around and build another, competing business, it would likely make sense for me to sell. but if I have to find some other line of work? well, unlike you, I value the few grand a month I make over the couple hundred grand I'd get from selling it. I really, really like doing this. But if I could sell out, then turn around and start over, competing with the company I sold, keeping my knowledge and experience uh, I probably would.

rtrunck 16y ago
While I don't have any real-life experience myself, most deals would include a non-compete agreement for a certain amount of time.
- lsc 16y ago
  hm. and after that would it be considered evil or rude to go out and compete with my old company? (on the other hand, nobody wants my target market; anyone who bought me would jack up my prices, if not directly, then by not continuing to lower prices as hardware becomes cheaper.) How long is standard for a non-compete? I'd expect anyone who bought me would want to hire me for a certain period of time afterwards, if nothing else to integrate my stuff with their stuff, train staff, etc...
  - rtrunck 16y ago
    A non-compete is typically for around two years I believe. If they get too broad in length or scope courts tend to limit them or nullify them altogether.
    - lsc 16y ago
      wow, that's a lot more reasonable than I thought. I'd actually consider a deal like that.
      - gommm 16y ago
        If you sell and start a new company I'd like to be informed, because there's little chance I'd enjoy staying with the company who bought you as much as I enjoy staying with your company
        _delirium 16y ago
        Same here. Not that it should be a decisive consideration by any means, but I got a prgmr account precisely because it was a small operation run by a real person I'd interacted with, who seemed to make decisions based on what he thought was a good idea / fair / etc., not a corporation purely out to maximize profit, or a startup looking to scale towards an exit.
        lsc 16y ago
        you don't think being fair is an important part of maximizing profit through a word-of-mouth campaign?
        gommm 16y ago
        Oh I think it is, I'm not convinced most executives do...
        lsc 16y ago
        Eh, I think hiring someone else to run your company /without any supervision/ then expecting them to act in your (the shareholders) interest rather than their own is irrational. Really, setting any employee in a zero accountability situation and expecting them to act in your interest is irrational... but when the worst an employee can do is hang out on facebook all day rather than working, it's not as big of a deal as the executives who can line their own pockets with much more of your money than most employees take home. Executives can and do take home all kinds of rebates, vacations, and other goodies from vendors. so yeah, I think the behavior of your typical executive has very little to do with what he or she believes is the best interest of the company.
mechanical_fish 16y ago
What would be rude about it? They bought you for the term of the non-compete, not the rest of your life. If they wanted to own you for life they should formally negotiate that, and pay you off accordingly. How much is the rest of your career in your field of expertise worth? That's what they should have to pay you. You should talk to a lawyer and get the ground rules for competing with your former company; for example, you may have to take care to document that you aren't making use of IP that you sold to them. But, in general, why not? Ask Steve Jobs about the ethics of starting up NeXT after founding Apple. Ask the Intel folks about leaving Fairchild to found a direct competitor. Ask most founders, really.
- lsc 16y ago
  eh, my expectations are different from yours. I clawed my way up from the bottom, without a lawyer. I contracted for several rather scummy companies, all of whom wanted overly broad and perpetual non-compete agreements for $60/hr (I was rather younger) contracting gigs. (oh yeah, and those contracts? almost invariably they had extremely poor grammar and spelling.) Now, not knowing such things were unenforceable and generally wanting to keep my word, I refused to sign the non-competes. Sometimes I'd get the work anyhow, sometimes not. But when doing business with a larger entity, I expect to get screwed. The deck is going to be unfairly stacked against me; that's just how the world works, and you've got to expect and to deal with that as is. It's not something I feel I can change. also, there are all sorts of spoken and unspoken rules in business... I know when I was primarily a contractor, I, of course, always tried to cut out the middle man, and that is considered /extremely rude/ in that market. (I mean, /I/ was never asked to sign something I wouldn't go direct, but usually the client is.) now, it wasn't rude enough to stop people from pimping me out, but I think it was part of the reason I was never able to become a body shop myself, in spite of having good people working for me. Now, some things are rude, but I do them anyhow, like shopping around for quotes, and telling vendors what other vendors quoted you. I mean, sure, the sales guys think it's rude, but who cares? all the products I buy have many, many vendors, so pissing off any one doesn't matter at all. Still, before I violate a social rule, I'd like to know it is a social rule and why. and then make an informed decision as to if I want to break it or not.
petercooper 16y ago
is that legally questionable? In my case, unless there are statutes about this, no. The contract had no non-compete clause. It had a non-solicitation clause but since I was the only person in the business, there was no-one I'd want to "hire away." is it rude? I think so. It boils down to my sense of "doing right" which has been both called callow by practical and hard-nosed folks or upright and decent by others. I worry about other people's feelings more than I let on, but it takes all sorts to make for an interesting world ;-) unlike you, I value the few grand a month I make over the couple hundred grand I'd get from selling it. I really, really like doing this. At the time of the sale, it was a "never again" experience. A bit like after I finished my first book. I was burned out on the sector. I have to take a little time to get back on the horse. It was only about a year later I even began to think "I should try that again!"
- lsc 16y ago
  hm. neat. I wonder if there is a social/legal difference between "I didn't plan to compete with you, but things changed" and "I fully planned to compete with you as soon as the non-compete expired."
kloncks 16y ago
Isn't that exactly what Crowley did with FourSquare after selling Dodgeball to Google?
- joshfinnie 16y ago
  Or what the pinboard.in people did after leaving delicious?

by lsc 16y ago

rtrunck 16y ago

While I don't have any real-life experience myself, most deals would include a non-compete agreement for a certain amount of time.

lsc 16y ago
hm. and after that would it be considered evil or rude to go out and compete with my old company? (on the other hand, nobody wants my target market; anyone who bought me would jack up my prices, if not directly, then by not continuing to lower prices as hardware becomes cheaper.) How long is standard for a non-compete? I'd expect anyone who bought me would want to hire me for a certain period of time afterwards, if nothing else to integrate my stuff with their stuff, train staff, etc...
- rtrunck 16y ago
  A non-compete is typically for around two years I believe. If they get too broad in length or scope courts tend to limit them or nullify them altogether.
  - lsc 16y ago
    wow, that's a lot more reasonable than I thought. I'd actually consider a deal like that.
    - gommm 16y ago
      If you sell and start a new company I'd like to be informed, because there's little chance I'd enjoy staying with the company who bought you as much as I enjoy staying with your company
      - _delirium 16y ago
        Same here. Not that it should be a decisive consideration by any means, but I got a prgmr account precisely because it was a small operation run by a real person I'd interacted with, who seemed to make decisions based on what he thought was a good idea / fair / etc., not a corporation purely out to maximize profit, or a startup looking to scale towards an exit.
        lsc 16y ago
        you don't think being fair is an important part of maximizing profit through a word-of-mouth campaign?
        gommm 16y ago
        Oh I think it is, I'm not convinced most executives do...
        lsc 16y ago
        Eh, I think hiring someone else to run your company /without any supervision/ then expecting them to act in your (the shareholders) interest rather than their own is irrational. Really, setting any employee in a zero accountability situation and expecting them to act in your interest is irrational... but when the worst an employee can do is hang out on facebook all day rather than working, it's not as big of a deal as the executives who can line their own pockets with much more of your money than most employees take home. Executives can and do take home all kinds of rebates, vacations, and other goodies from vendors. so yeah, I think the behavior of your typical executive has very little to do with what he or she believes is the best interest of the company.

mechanical_fish 16y ago

What would be rude about it? They bought you for the term of the non-compete, not the rest of your life. If they wanted to own you for life they should formally negotiate that, and pay you off accordingly. How much is the rest of your career in your field of expertise worth? That's what they should have to pay you. You should talk to a lawyer and get the ground rules for competing with your former company; for example, you may have to take care to document that you aren't making use of IP that you sold to them. But, in general, why not? Ask Steve Jobs about the ethics of starting up NeXT after founding Apple. Ask the Intel folks about leaving Fairchild to found a direct competitor. Ask most founders, really.

lsc 16y ago
eh, my expectations are different from yours. I clawed my way up from the bottom, without a lawyer. I contracted for several rather scummy companies, all of whom wanted overly broad and perpetual non-compete agreements for $60/hr (I was rather younger) contracting gigs. (oh yeah, and those contracts? almost invariably they had extremely poor grammar and spelling.) Now, not knowing such things were unenforceable and generally wanting to keep my word, I refused to sign the non-competes. Sometimes I'd get the work anyhow, sometimes not. But when doing business with a larger entity, I expect to get screwed. The deck is going to be unfairly stacked against me; that's just how the world works, and you've got to expect and to deal with that as is. It's not something I feel I can change. also, there are all sorts of spoken and unspoken rules in business... I know when I was primarily a contractor, I, of course, always tried to cut out the middle man, and that is considered /extremely rude/ in that market. (I mean, /I/ was never asked to sign something I wouldn't go direct, but usually the client is.) now, it wasn't rude enough to stop people from pimping me out, but I think it was part of the reason I was never able to become a body shop myself, in spite of having good people working for me. Now, some things are rude, but I do them anyhow, like shopping around for quotes, and telling vendors what other vendors quoted you. I mean, sure, the sales guys think it's rude, but who cares? all the products I buy have many, many vendors, so pissing off any one doesn't matter at all. Still, before I violate a social rule, I'd like to know it is a social rule and why. and then make an informed decision as to if I want to break it or not.

petercooper 16y ago

is that legally questionable? In my case, unless there are statutes about this, no. The contract had no non-compete clause. It had a non-solicitation clause but since I was the only person in the business, there was no-one I'd want to "hire away." is it rude? I think so. It boils down to my sense of "doing right" which has been both called callow by practical and hard-nosed folks or upright and decent by others. I worry about other people's feelings more than I let on, but it takes all sorts to make for an interesting world ;-) unlike you, I value the few grand a month I make over the couple hundred grand I'd get from selling it. I really, really like doing this. At the time of the sale, it was a "never again" experience. A bit like after I finished my first book. I was burned out on the sector. I have to take a little time to get back on the horse. It was only about a year later I even began to think "I should try that again!"

lsc 16y ago
hm. neat. I wonder if there is a social/legal difference between "I didn't plan to compete with you, but things changed" and "I fully planned to compete with you as soon as the non-compete expired."

kloncks 16y ago

Isn't that exactly what Crowley did with FourSquare after selling Dodgeball to Google?

joshfinnie 16y ago
Or what the pinboard.in people did after leaving delicious?