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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 crea

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.
- thaumasiotes 6y ago
  > 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?
  - stickfigure 6y ago
    There are lots of places with a Mediterranean climate.
cortesoft 6y ago
> "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.
- fennecfoxen 6y ago
  "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).
  - cortesoft 6y ago
    High quality software developers are not abundant.
    - fennecfoxen 6y ago
      And becoming good at writing software is an investment in your human capital.
nerfhammer 6y ago
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
C1sc0cat 6y ago
"our town" FFS that attitude is why the USA needs one set of employment laws
pmontra 6y ago
> 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.
- ChuckMcM 6y ago
  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.
hef19898 6y ago
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.
- CPLX 6y ago
  > 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.
  - hef19898 6y ago
    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.
    - Reimersholme 6y ago
      "Das Internet ist für uns alle Neuland" as Merkel put it in 2013. In general, Germany is very conservative and unwilling to change, but in recent years I think the digitalisation has started to take off and get some more strategic support from the government (at least 25 years too late, but anyhow). On the bright side, Berlin being so cheap for a long time and having such a great cultural life has enabled it to become one of the better start-up scenes in Europe, and I do think it will continue to grow in importance. Besides the 'native' start-ups, Amazon is expanding heavily, Tesla is opening up a factory and Google seem to slowly be increasing their presence, etc...
lifeisstillgood 6y ago
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. )
aptwebapps 6y ago
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.
cgb223 6y ago
> 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?
- nl 6y ago
  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.
- Meph504 6y ago
  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.
  - ryandrake 6y ago
    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."
    - dctoedt 6y ago
andi999 6y ago
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)
polskibus 6y ago
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.
piokoch 6y ago
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.
- atraac 6y ago
  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).
  - ghaff 6y ago
    >simply forbidding you to poach clients Which my understanding is you can absolutely do in California as well.
- qppo 6y ago
  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.
pc86 6y ago
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.
mceldeen 6y ago
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.
- rocqua 6y ago
  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.

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.

thaumasiotes 6y ago
> 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?
- stickfigure 6y ago
  There are lots of places with a Mediterranean climate.

cortesoft 6y ago

> "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.

fennecfoxen 6y ago
"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).
- cortesoft 6y ago
  High quality software developers are not abundant.
  - fennecfoxen 6y ago
    And becoming good at writing software is an investment in your human capital.

nerfhammer 6y ago

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

C1sc0cat 6y ago

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

pmontra 6y ago

> 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.

ChuckMcM 6y ago
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.

hef19898 6y ago

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.

CPLX 6y ago
> 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.
- hef19898 6y ago
  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.
  - Reimersholme 6y ago
    "Das Internet ist für uns alle Neuland" as Merkel put it in 2013. In general, Germany is very conservative and unwilling to change, but in recent years I think the digitalisation has started to take off and get some more strategic support from the government (at least 25 years too late, but anyhow). On the bright side, Berlin being so cheap for a long time and having such a great cultural life has enabled it to become one of the better start-up scenes in Europe, and I do think it will continue to grow in importance. Besides the 'native' start-ups, Amazon is expanding heavily, Tesla is opening up a factory and Google seem to slowly be increasing their presence, etc...

lifeisstillgood 6y ago

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. )

aptwebapps 6y ago

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.

cgb223 6y ago

> 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?

nl 6y ago
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.
Meph504 6y ago
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.
- ryandrake 6y ago
  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."
  - dctoedt 6y ago

andi999 6y ago

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)

polskibus 6y ago

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.

piokoch 6y ago

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.

atraac 6y ago
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).
- ghaff 6y ago
  >simply forbidding you to poach clients Which my understanding is you can absolutely do in California as well.
qppo 6y ago
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.

pc86 6y ago

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.

mceldeen 6y ago

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.

rocqua 6y ago
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.