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Strapped startup declines acquihire, Apple poaches key engineers; NP, says court [pdf]

• Animats 6y ago
  "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.
  • TheOtherHobbes 6y ago
    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?
  • emteycz 6y ago
    I don't understand why there is no Silicon Valley in Europe then
    • redis_mlc 6y ago
      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.
    • boulos 6y ago
      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 https://notoptional.eu/en/policymakers
      • tin7in 6y ago
        > 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).
    • deleted 6y ago
      [deleted]
    • bitL 6y ago
      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.
      • garmaine 6y ago
        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.
        • jashmatthews 6y ago
          > 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.
          • garmaine 6y ago
            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.
            • hef19898 6y ago
              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.
    • tomp 6y ago
      AFAIK non-competes are enforceable in Europe, unless they're unreasonable.
    • ChefboyOG 6y ago
      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.
      • zdragnar 6y ago
        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.
      • oliverx0 6y ago
        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.
        • davidgay 6y ago
          > 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?
          • oliverx0 6y ago
            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.
    • rdlecler1 6y ago
      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.
    • cameldrv 6y ago
      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).
    • ry454 6y ago
      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.
      • geomark 6y ago
        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.
      • pm90 6y ago
        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.
        • barry-cotter 6y ago
          > 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.
    • 0xy 6y ago
      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?
      • mywacaday 6y ago
        London is still in th EU, maybe not for much longer but still there.
        • libraryofbabel 6y ago
          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.
      • 9HZZRfNlpR 6y ago
        In London it's only fintech, rest of the IT salaries are a joke compared to SV.
    • jokethrowaway 6y ago
      Lots of money, private and public (DoD)
    • rvba 6y ago
      IMHO it is much more connected to lack of capital.
    • niihau_island 6y ago
      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?
      • boc 6y ago
        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.
        • tonyedgecombe 6y ago
          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.
          • boc 6y ago
            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.
            • tonyedgecombe 6y ago
              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?
  • jariel 6y ago
    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.
    • redis_mlc 6y ago
      You're confusing, perhaps deliberately, employee mobility rights in California with company IP. Thus your post makes no sense, in the English language at least.
    • centimeter 6y ago
      > 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.
      • jariel 6y ago
        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.
  • donor20 6y ago
    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.
    • mattmanser 6y ago
      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.
      • reader_mode 6y ago
        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.
  • bonestamp2 6y ago
    > 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: https://www.cnet.com/news/apple-google-others-settle-anti-poaching-lawsuit-for-415-million/ https://www.cnet.com/news/apple-google-others-settle-anti-po... 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.
    • fierarul 6y ago
      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.
    • hn_throwaway_99 6y ago
      > 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.
    • Thorrez 6y ago
      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.
      • 6y ago
  • Waterluvian 6y ago
    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.
    • brianwawok 6y ago
      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?
      • golergka 6y ago
        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.
        • runako 6y ago
          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-developer-pcms https://stackoverflow.com/jobs/417604/mid-senior-level-net-d... Or telecom in Atlanta: https://stackoverflow.com/jobs/392595/senior-software-engineer-t-mobile-usa 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.
  • ma2rten 6y ago
    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.
    • jrott 6y ago
      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.
      • nradov 6y ago
        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.
      • kps 6y ago
        > The founders would have all been stuck at Fairchild. The founders of Fairchild would all have been stuck at Shockley.
    • vmception 6y ago
      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.
  • dev_tty01 6y ago
    >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.
    • hardwaresofton 6y ago
      Don't forget a lot of government investment.
      • dantheman 6y ago
        There has been lots of government investment in many areas - the question is why was SV different.
    • twblalock 6y ago
      > 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.
    • hn_throwaway_99 6y ago
      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.
    • lambdasquirrel 6y ago
      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.
  • ChuckMcM 6y ago
    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.
    • twblalock 6y ago
      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.
    • lowdose 6y ago
      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.
    • travisjungroth 6y ago
      Your comment reminds me of this tweet: https://mobile.twitter.com/zackkanter/status/1304938616519417856 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.
  • burtonator 6y ago
    > 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: https://www.cnet.com/news/apple-google-others-settle-anti-poaching-lawsuit-for-415-million/ https://www.cnet.com/news/apple-google-others-settle-anti-po...
    • shadowgovt 6y ago
      Long after neither of them were startups anymore, yes.
  • sandGorgon 6y ago
    Indian labor laws across the whole country operate like this. Non-competes are useless..
    • kamaal 6y ago
      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.
      • sandGorgon 6y ago
        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
        • kamaal 6y ago
          >>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.
  • chmod600 6y ago
    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".
    • filmgirlcw 6y ago
      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.
  • eecc 6y ago
    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. ;)
  • deleted 6y ago
    [deleted]
  • anonymousDan 6y ago
    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?
  • fnord123 6y ago
    >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.
  • regulation_d 6y ago
    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/NYULawReview-74-3-Gilson.pdf https://www.nyulawreview.org/wp-content/uploads/2018/08/NYUL... [2]: https://law.emory.edu/elj/content/volume-63/issue-3/articles/how-law-made-silicon-valley.html https://law.emory.edu/elj/content/volume-63/issue-3/articles...
  • deepnotderp 6y ago
    I'd recommend reading Regional Advantage, the dominance of Silicon Valley/Bay Area is a lot more nuanced than just noncompetes, good universities, etc.
  • jiveturkey 6y ago
    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.
• tallgiraffe 6y ago
  Sounds like a few engineers found out that Apple was looking into their company and knowing Apple was interested they took a new gig, meanwhile the CEO got upset and decided to fire the last remaining defecting engineer, who out of goodness of heart actually declined Apple, but gratefully took the offer once he got fired. Although it probably hurts to have your team poached, it sounds like potentially it wasn't a great working environment to begin with as the team was happy to jump ship at the first notice.
  • batmaniam 6y ago
    We should rid of the term 'poaching'. There's no such thing. We're not animals, we are free to accept a better offer it comes along. The CEO should have counter offered with something more substantial, but he couldn't so the engineers went to greener pastures.
    • blhack 6y ago
      >but he couldn't so the engineers went to greener pastures. She.
      • deleted 6y ago
        [deleted]
      • m12k 6y ago
        They. (I'm assuming you did your research and the CTO is in fact female, but it's better to teach people to use a gender neutral term when they don't know the gender of the person in question, and it is irrelevant to the discussion like it is here)
    • bernawil 6y ago
      We're not animals so the engineers went to greener pastures ...for grazing?
    • yarg 6y ago
      We are animals. Why the fuck people insist on claiming otherwise is beyond me.
• seieste 6y ago
  D.C., could you explain what part of this judgment you disagree with? Employees should have the right to switch companies and leaving a company shouldn’t bar employment in your field. Hooked is relying on misrepresentation and vague notions of trade secretes — If there were actual concrete IP theft (or even something like customer lists or proprietary technology) wouldn’t their lawsuit have focused on that?
  • macintux 6y ago
    Reading through it, there were some trade secret complaints: an engineer who re-created his project for Apple in a very short period of time, company documents that were kept and referenced by their former employees. (I'm in no way taking Hooked's side here, but there were a few things that I can see them being validly upset about.)
  • dctoedt 6y ago
    > D.C., could you explain what part of this judgment you disagree with? Employees should have the right to switch companies and leaving a company shouldn’t bar employment in your field. Where'd you get the idea I disagree with it? I had to word the post to fit within the HN character limit.
    • resu_nimda 6y ago
      I also inferred that sentiment from the title. "Strapped" paints the startup as a struggling underdog, "poaches" paints Apple as a big bully, "NP" paints the court as indifferent to the plight of the little guy. "Court approves Apple's hiring of startup's engineers after failed acquihire" is the most neutral phrasing I can come up with. "Startup CEO tries to sell engineers to Apple" would be a bit flippant and biased the other way, but seems to capture the most intriguing bit.
• MattGaiser 6y ago
  The idea that a company felt entitled to sell its engineers is preposterous.
  • Lammy 6y ago
    "human resources"
  • DebtDeflation 6y ago
    Yep. Sounds like a very small startup that didn't give much equity to the few employees it had, and the CEO/founder had an overinflated sense of the company's value.
• hbosch 6y ago
  Two things, really: if you turn down an acquisition that you feel your employees supported, you don’t get to do the “surprised pikachu face” when you turn it down and they go work there anyway. Secondly, it’s presented as if these engineers exfiltrated special knowledge with them... isn’t it fair to also give them the benefit of the doubt in that the same employees may have crucially developed the software themselves before leaving? In either case I can’t see how this simply doesn’t point at mismanagement by Hooked. From any angle, they created an environment that made these guys think “my time will be better spent at Apple”.
  • some1else 6y ago
    > Representatives from each company met to explore a possible acquisition but Apple ultimately passed.
    • xenihn 6y ago
      The pass wasn't after the initial attempt, though. You make it sound like Apple initiated the process, the CEO accepted, and then Apple reneged, with nothing in between. Very misleading for anyone who doesn't read the article and just takes your comment at face value.
  • notahacker 6y ago
    > From any angle, they created an environment that made these guys think “my time will be better spent at Apple”. tbf I don't think many startups running out of cash and exit opportunities would expect to keep their engineers if Apple approached them to offer a pay rise, regardless of how wonderful the environment was. But the idea to raise capital by 'selling' engineers to Apple instead of agreeing to the aquihire (and perhaps negotiating for the IP Apple didn't want to be spun out) looks naive. Surely this is one where the investors and advisors ought to have stepped in? The CEO apparently firing a CTO for interviewing for a job isn't a great look for management either...
    • malux85 6y ago
      I agree 100% - the use of the word “selling” here makes me very uncomfortable - they are employees and they are not company property that is owned. The “finders fee” response from Apple was the best they could expect. And yeah then I read about firing the CTO and the lawsuit and I started to get a picture of what this company was like. I hope they lose, and good luck to the employees at Apple
• djur 6y ago
  > The CEO settled on a new plan: Hooked would “sell” three engineers to Apple... Hooked’s CEO pitched the idea to Apple, providing background information about the engineers and sending their resumes. Apple responded that it might consider paying a “finder’s fee”... Even if was inclined to take Hooked's side on this, it was a huge mistake to send information about those engineers without an existing agreement. (Also: I wonder if the CEO intended to split that "finder's fee" with the employees she was trying to "sell".)
  • d0100 6y ago
    As a small partner in a very small company that has been "poached" by huge players, I came to this post fuming. But after reading that, my sympathies vanished...
  • jojobas 6y ago
    Is it that hard to find out who the engineers are? Or is it somehow illegal to target other business's engineers for employment?
    • renewiltord 6y ago
      It was not hard to find out who the engineers were. It is not illegal to target other business's engineers. Hence Apple's actions. As an interesting aside, it is illegal to agree not to employ each others' engineers, AFAIK (IANAL).
      • cortesoft 6y ago
        > As an interesting aside, it is illegal to agree not to employ each others' engineers, AFAIK (IANAL). Yeah... Apple got in trouble for that, actually.
• newbie578 6y ago
  I have to admit, while I cannot stand Apple and I am constantly opposed to them and I consider them personally a net negative in today's world, in this particular situation it seems they are not the "rotten" party, or would it be better to say that they are the "lesser evil". Reading through the document I am honestly shocked at the behaviour of the CEO, I mean come on how entitled do you have to be to try and think you have a right to sell employees of your choosing to Apple for a handsome fee, like they are your cattle..
  • raziel2701 6y ago
    Yeah it expands the whole concept of wage slavery.
    • lopmotr 6y ago
      No it doesn't at all. Those employees were always free to apply to Apple independently. This finder's fee sounds like the commission a recruitment agency would charge for literally finding workers. That's a perfectly reasonable way to charge for that service.
      • djur 6y ago
        OK, let's set aside the fact that the CEO was the engineers' current supervisor and regard her just as a recruiter. If a recruiter contacted an engineer and says "Apple is looking for engineers with your skills", and then contacted Apple and said "I know a great engineer who's interested in working with you, here's their resume", and Apple proceeded to hire the engineer without paying a finder's fee, would the recruiter have cause for a lawsuit against either party?
• draw_down 6y ago
  Man, I hate it when a mean old big company comes along and offers me more money to do my job than what I currently make.
• rossdavidh 6y ago
  Once the employees know that their CEO is "shopping" the company, it seems like the CEO should have known they would be looking towards the exits (unless, of course, they had lots of equity which would turn into $$ once the acquisition happened, which case they would likely stay put). It was not only kind of sleazy to try to, essentially, sell your employees to another company as if they are your property, but also not very business-savvy. If she had simply taken Apple's "acqui-hire" offer, she would have made money, burnished her reputation as a founder who successfully "flipped" to Apple, and probably gotten VC money to try again. Now, I think she may have acquired a reputation as someone who ends up treating her employees like her personal property? Maybe she's an awesome boss normally, but if this is all you knew about her, I think I would not be interested in working at her next gig, whatever it is.
  • mthoms 6y ago
    It was Apple that ultimately backed out of the "acqui-hire", not the target company's CEO. Edit: Nope, I was wrong here. I think the rest of this comment is still relevant though. And for all we know, it may have been her investors that encouraged (demanded?) her to go the route of "selling" the employees[0]. It appears the company would be winding down and they stood to benefit by recouping some of their investment. I can't see how she would benefit. But... who knows. [0] Just typing the phrase "selling the employees" makes me feel icky.
    • runT1ME 6y ago
      Not what it says, direct quote: "Hooked’s CEO declined, saying there were other acquisition possibilities she would like to see play out."
      • mthoms 6y ago
        Right you are. I stand corrected on that point. I think the rest of the comment is still valid.
    • tptacek 6y ago
      I'm not sure it really matters? A consequence of getting into deep talks with corpdev is that they'll be alerted to employees they want to hire. And there's no way to look good suing someone for offering your employees a better job.
• glangdale 6y ago
  It's a bit like the old (apocryphal, all the famous people who supposedly said this almost certainly didn't) joke: "GROUCHO (to woman seated next to him at an elegant dinner party): Would you sleep with me for ten million dollars? WOMAN (giggles and responds): Oh, Groucho, of course I would. GROUCHO; How about doing it for fifteen dollars? WOMAN (indignant): Why, what do you think I am? GROUCHO: That’s already been established. Now we’re just haggling about the price." The CEO of Hooked has presumably learned a valuable lesson about treating engineers like cattle. I've never heard of this kind of "partial acquihire" and it seems outlandish that she expected things to go her way in court.
  • mthoms 6y ago
    I've always heard that quote attributed to Churchill so I Googled it. Interesting read. https://quoteinvestigator.com/2012/03/07/haggling/ https://quoteinvestigator.com/2012/03/07/haggling/
• hugodutka 6y ago
  What does “NP” stand for in the title? My google search turned up nothing.
  • geofft 6y ago
    I'm guessing "no problem".
    • dctoedt 6y ago
      > I'm guessing "no problem". Correct. (Poster here.)
      • hugodutka 6y ago
        Thank you!
• netcan 6y ago
  This whole thing feels ick to read. "Hooked would “sell” three engineers to Apple (including a longtime employee who served as Chief Technical Officer) and continue operating the less technical aspect of its business, relating to advertising."
• geofft 6y ago
  Kind of tangential, but why is there a concurring opinion here? It seems like it doesn't argue things particularly differently from the majority opinion, and it reaches all the same conclusions for (as far as I can tell) all the same reasons. I assume that my non-lawyer eyes are missing something, so I'm curious what it is.
  • filmgirlcw 6y ago
    It came to the same conclusion but had a different rationale or might have disagreed with some aspects of the majority opinion. Or perhaps the judge wanted to add something that wasn’t included.
• anm89 6y ago
  Good ruling. The employee isn't property of the startup.
• catchmeifyoucan 6y ago
  > Hooked would “sell” three engineers to Apple (including a longtime employee who served as Chief Technical Officer) and continue operating the less technical aspect of its business, relating to advertising. At the end, Apple hired them directly. The employees were literally put up to sale. Apple didn’t just wake up one morning and hire the hottest new techies, they were up for grabs, and this was clearly an at-will agreement. If the employees were working directly on stuff that competed with Hook, the noncompete seems to make sense. However, that’s a case against the employees, and not necessarily Apple. Not sure if this is really poaching.
  • cortesoft 6y ago
    In California, non-competes are illegal.... the only way a non-compete is legal in California is if the company keeps paying the employee (e.g. as part of a severance, the company can agree to pay $10000 a month for you to not compete)
• gok 6y ago
  It remains utterly busted that we use "poach" to mean "pay market salary to"
• chrononaut 6y ago
  Somewhat related, predatory pricing violates antitrust laws in order to prevent monopolies from forming in markets. Can one consider "excessively generous compensation" to employees a form of market manipulation? Much like predatory pricing prohibits other players in the market from operating competitively, generous compensation to potential employees would prohibit those organizations from operating competitively if they don't have the revenue stream to support those salaries, and thus making it more difficult to retain talent. In other words, FAANG exists by name for a reason. Those organizations provide higher compensation (or above "market") than the general set of other companies in their space.
• awinter-py 6y ago
  > His employment at Hooked ended soon after in what is best described as a mutual decision: he tendered his resignation when the CEO notified him he was fired classic
• not2b 6y ago
  The startup should have taken the aquihire, because if their key engineers were interested in working for Apple their position was very weak: either take the money or Apple hires the engineers anyway. They aren't indentured servants.
• zuhayeer 6y ago
  "Hooked would 'sell' three engineers to Apple (including a longtime employee who served as Chief Technical Officer) and continue operating the less technical aspect of its business" No wonder they left. If they were up for sale anyway, its no surprise that they cut all loyalties loose – that's exactly what the company did. And career liquidity plays heavily in the favor of engineers right now.
• jonas21 6y ago
  Can you spot the difference? ---------- Hooked points to evidence showing its former employees (in particular its CTO) retained Hooked technical information, accessed it while in Apple’s employ, and gave misleading statements about how much of it they had retained. But showing that the employees had the information is not sufficient to establish Apple improperly acquired or used it... Hooked relies on circumstantial evidence that in its view generates an inference of trade secret use sufficient to create a triable issue of fact as to that element: its former employees were assigned to tasks at Apple similar to the work they did at Hooked and within weeks one of them produced a detailed plan for a recommendations system much like Hooked’s version. Further, an expert opined that the source code for Apple’s recommendations system was similar to the source code for Hooked’s. 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. [pp. 6-7 of the court document linked above] ---------- Waymo points to evidence showing its former employees (in particular its lead engineer) retained Waymo technical information, accessed it while in Uber’s employ, and gave misleading statements about how much of it they had retained. But showing that the employees had the information is not sufficient to establish Uber improperly acquired or used it... Waymo relies on circumstantial evidence that in its view generates an inference of trade secret use sufficient to create a triable issue of fact as to that element: its former employees were assigned to tasks at Uber similar to the work they did at Waymo and within months one of them produced a detailed plan for a LIDAR system much like Waymo’s version. Further, an expert opined that the schematic for Uber’s LIDAR system was similar to the schematic for Waymo’s. That evidence does suggest the engineers drew on knowledge and skills they gained from Waymo to develop a product for their new employer – but California’s policy favoring free mobility for employees specifically allows that. [Anthony Levandowski's recurring dreams] ----------
  • filmgirlcw 6y ago
    Well, two things. First, this was summary judgment in favor of Apple, not the CTO. Summary judgment was not granted in the case against him, although since it has been 6 years and Hooked is defunct, I’m going to assume that was settled in some way. Regardless, this case was about Hooked’s claims against Apple, not the CTO. Second, from reading some more of the filings, there appears to be legitimate disputes about whether or what kind of material information the CTO had on his personal laptop. Apple cooperated and did a forensics data retrieval of the CTOs laptop (and spent $92,000 to do so from a vendor and then charged the plaintiff for that, which the appellate court admitted was probably too high but was also out of scope for them to judge) and then the lawyers stopped sifting through that data when it came across some communications that were protected by attorney-client privilege. Apple wouldn’t globally waive privilege in the case, but said it would do it on a document by document basis, but the lawyer’s for Hooked claimed it didn’t want access to anything privileged. The appellate court ruled that there was no proof or argument that had the lower court ruled another way regarding some of the access to those privileged materials (that the plaintiff said it didn’t want anyway), that the decision would have been any different. That’s pretty different from the Waymo situation, where the evidence suggested that significant effort was taken to backup proprietary data surreptitiously. The other thing is that as far as I can gather, the laptop of the CTO was always his personal laptop. It didn’t belong to the company and there wasn’t any MDM solution or other provisions to protect/separate his personal data from the business data. Now, obviously this is incredibly common in startups, but it does make the burden or proving that proprietary data was “stolen,” let alone taken and used at Apple, much higher. Levandowski’s high pay at Google might also change things because there might have been much more explicit provisions in his employment contract. I just don’t know. There’s also the whole thing about how he lied to his lawyers, wouldn’t cooperate, and that Uber fired him.
• w0mbat 6y ago
  The drama with UK-based Imagination Technologies was better. Apple used Imagination's PowerVR GPUs in iPhones for years, then in 2017 Apple announced they would ditch them and make their own GPUs. Apple was in talks to buy the company, but as in this case, decided to grab the engineers instead (this involved Apple opening an office nearby in St Albans, England to attract them). Then followed 3 years of legal fighting over breach of contract, patents, you name it. Finally this year, the companies declared peace, signed new agreement where Apple would continue to pay Imagination big bucks every year in royalties. Looks like Imagination had a good case as well as some other new graphics technology Apple needed. https://www.theverge.com/2020/1/2/21046476/apple-imagination-technologies-graphics-processor-chipmaker-licensing https://www.theverge.com/2020/1/2/21046476/apple-imagination...
• donor20 6y ago
  Lost in the comments a bit is that Apple actually offered Hooked 4.5 MILLION to hire these folks in the acqui-hire, and the companied DECLINED saying they had other prospects (which turned out to be false - they were running out of money). The CTO begged for them to go through with the aqui-hire. If the employees don't have faith in your big plans, and you turn down 4.5 million to make the transition smooth, is it really illegal for the employees to go work for someone else? Hooked had these folks as at will employees and could fire them with 1 hr notice, and then is pissed they ended up going to work for Apple. Come ON! If you wanted them long term sign them to a long term contract.
  • mtnGoat 6y ago
    I imagine most devs would do the same in the same position too... Stay on possibly sinking ship, or move to a very well paying FANG. Choice isn't hard.
  • dalbasal 6y ago
    Ultimately, even acquihires (this one is real explicit) often seem pretty creepy... like a meat market. Here, there wasn't even a pretence of selling assets that aren't a person. "The CEO settled on a new plan: Hooked would “sell” three engineers to Apple." and later "Apple responded that it might consider paying a 'finder’s fee'" Hooked then sues Apple for stealing what he thought they should be buying. I'm glad the law stood with the employees. But, there's obviously a norm whereby employees are viewed as an asset... in the literal sense.
• DenisM 6y ago
  A man in charge of small acquisitions at a large company told me once that’s the first thing he looks at - would that be cheaper to steal few key engineers, and will anything stand in the way? A small number of patents would usually dissuade him, iirc because fighting over the patents is more work than doing a proper small acquisition.
  • pnw_hazor 6y ago
    Yep small companies often under estimate the value of a couple of good patents. Spending a few million to stand up a product w/o having a few patents that might cost $50,000 each to protect the company leaves them wide open for all kinds of bad.
• paxys 6y ago
  > The CEO settled on a newplan: Hooked would “sell” three engineers to Apple [...] and continue operating the less technical aspect of its business, relating to advertising This part is hilarious. These engineers aren't your property buddy. There is nothing for you to "sell". They can choose to work for Apple on their own, which is exactly what Apple let them do.
• TheMagicHorsey 6y ago
  I love how some CEOs think that their engineers are like cobbs of corn that they can sell in the market. Motherfuckers ... these are human beings. They aren't your "produce". If you don't make a valuable business, you aren't owed money when your employees leave for better jobs. Fuckin Silicon Valley "business" types make me sick. I had a 1 on 1 with a business school type who said, "anyone can code, but it takes a special person to come up with a new idea." I smiled over the zoom call, but in my head I was thinking ... good luck finding engineers.
• filmgirlcw 6y ago
  All I can think reading that judgment is that I would never in a million years want to work for or with the CEO of Hooked on anything. As others have noted, California’s strong labor laws, especially around non-competes, are part of why there is such a concentration of talent there as opposed to other states, let along other countries. Talent wants the freedom to move around. Part of the reason why the no-poach agreements between Apple and Adobe and others was so disgusting was because that was collusion by multi-billion dollar companies to prevent employee mobility. And the companies were sanctioned heavily for this as a result. Because in other states, something as egregious as a company trying to sell off its employees (after rejecting an acquihire agreement), and then suing one of the employees who decided to jump off the sinking ship and join a company that actually wanted to compensate him and where he might actually have a future, might be successful. Take the recent Amazon situation here in Seattle [1] where the company attempted to enforce a non-compete on an employee it wasn’t going to promote and whose hiring-manager assured that the non-compete was “boiler plate” and that the company would not exercise. When the employee’s boss (that same hiring manager), left for a job at Oracle, and wasn’t sued, he took that as a sign he could seek outside employment. The employee took a job at Google, took steps to make sure he wouldn’t be infringing on any sensitive information, and HR congratulated him. Then Amazon sued him and got an injunction on letting him work on PowerPoints at his new job. This was ultimately settled but the fact that Amazon did this — and did this not to an engineer but a marketing professional — should worry any Amazon employee in the state of Washington. (The more senior employee who took a job at Oracle was based in California). Washington State’s non-compete laws are good for low-level employees, but the salary cap of $100,000 makes it worthless for virtually any person employed by a tech company (or a place like Boeing), though the existence of those kinds of non-competes varies from company to company. [1]: https://www.geekwire.com/2020/amazon-settles-lawsuit-former-aws-marketing-vp-joined-google-cloud/ https://www.geekwire.com/2020/amazon-settles-lawsuit-former-...
• gsibble 6y ago
  You know what honestly, good for those engineers. They got their payday. The selfish founders who probably wanted more than Apple wanted to pay didn't get theirs. Good. Lots of times startups are based around a few key employees. They are usually paid the same shit as everyone else yet the prop up the whole company. They got probably 300% raises while everyone else got fucked. Good for them.
• mensetmanusman 6y ago
  The anti poaching laws are key to SV’s success, but we have to admit that it means companies like Apple will always be able to get what they want with the amount of cash they have :)