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This is one of the few sad side effects of CA's noncompete laws: it's very hard to run a business like Voleon where there's genuinely valuable IP. It's why we

This is one of the few sad side effects of CA's noncompete laws: it's very hard to run a business like Voleon where there's genuinely valuable IP. It's why we have like 2 quant hedge funds here, despite all the available engineering talent

alright2565 3y ago
That's not it at all. The problem is that Voleon is being dishonest around their non-compete agreements. A Voleon spokesman: > Those who sign it will receive a paid garden leave. Voleon ex-employees: > Voleon ex-employees who spoke to Insider said their noncompete agreements did not provide paid leave. Ex-employees and other sources close to the firm said the unpaid noncompetes have been applied broadly — including to people who say they had little exposure to the firm's secret sauce. According to a Voleon ex-employee, which also matches my understanding of this industry: > They will defend that noncompete by saying more and more firms have two years. The trick is: And yes, they pay you something when they make you sit out of your career.
- auntienomen 3y ago
  You've missed my point. I'm not commenting on Voleon's non competes. I'm commenting on the fact that CA's noncompete laws make it challenging to run a business like Voleon.
  - norir 3y ago
    I personally don't really believe this kind of business is good for society so to me this is a more feature than a bug. Obsessive guarding of IP secrets seems to be correlated with paranoid and selfish antisocial behavior, which is essentially how the financial industry appears from the outside in spite of their lofty rhetoric about their contributions to society.
    - auntienomen 3y ago
      The largest stream of charitable donations in California come from the most IP-paranoid hedge fund I know of. If you have negative opinions of the finance industry in general, I can't do much but remind you that it's a large and varied industry and that your opinions are priors you should expose to relevant data.
      - tijtij 3y ago
        Maybe the reason that the most IP-paranoid hedge fund makes the largest charitable donations in California is to proactively secure favorable publicity in case they become embroiled in a scandal that could impact their financial standing. Moreover, it raises the question of who truly benefits from these charitable contributions. For example, Ikea is owned by a charity for tax optimization purposes. The mission of the charity is to promote interior design and architecture. Essentially, strategic investments that will ultimately benefit Ikea itself in the long run.
        auntienomen 3y ago
        Interestingly, it's the opposite. They made the donations anonymously and were outed by a charity reporter. Likewise, the charities were things like the Sierra Club, various disease research foundations, and the ACLU.
  - surfacing_vol 3y ago
    I see your point, though respectfully disagree. Voleon gets some real advantages from being "the only game in town" by being the only remotely large quant fund right next door to Berkeley, and Jon McAuliffe has his pick of good students from Berkeley. I don't think Voleon should be able to reap all of those advantages but not play by California's rules. I wonder how this article is going down in the Berkeley stat department...
    - auntienomen 3y ago
      Voleon is competing with the local unicorn population. Unless their returns are amazing, you can get comparable lifetime returns at higher sharpe as a big tech employee.
ysavir 3y ago
If the IP is that valuable, why can't they pay those that are familiar with it enough to keep them at the company and happy? And if that's not enough, maybe building an entire business model based around a reproducible IP isn't a great idea. In any way you look at it, a business using non-compete clauses is trying to have the employees bear the weight of questionable business practices.
TulliusCicero 3y ago
Non competes wouldn't be a big deal, if companies were required to use them fairly and sensibly: by matching a competitor's compensation for the duration of however long they want someone to not work for a competitor. Companies want to have their cake and eat it too: no, you can't work for someone else, and no, we're not gonna compensate you for that.
deleted 3y ago
[deleted]
gmarx 3y ago
I disagree. This would be handled by trade secrets. California doesn't stop you from requiring ex-employees to continue to guard trade secrets they learned or created under your employ
- surfacing_vol 3y ago
  Right. And trade secret protections are enforceable forever, not just for the 1-2 years that a non-compete might cover. And they almost certainly would not get thrown out even if (large) parts of an employment agreement did; in fact, often quant firms will make IP agreements separate from employment agreements.

alright2565 3y ago

That's not it at all. The problem is that Voleon is being dishonest around their non-compete agreements. A Voleon spokesman: > Those who sign it will receive a paid garden leave. Voleon ex-employees: > Voleon ex-employees who spoke to Insider said their noncompete agreements did not provide paid leave. Ex-employees and other sources close to the firm said the unpaid noncompetes have been applied broadly — including to people who say they had little exposure to the firm's secret sauce. According to a Voleon ex-employee, which also matches my understanding of this industry: > They will defend that noncompete by saying more and more firms have two years. The trick is: And yes, they pay you something when they make you sit out of your career.

auntienomen 3y ago
You've missed my point. I'm not commenting on Voleon's non competes. I'm commenting on the fact that CA's noncompete laws make it challenging to run a business like Voleon.
- norir 3y ago
  I personally don't really believe this kind of business is good for society so to me this is a more feature than a bug. Obsessive guarding of IP secrets seems to be correlated with paranoid and selfish antisocial behavior, which is essentially how the financial industry appears from the outside in spite of their lofty rhetoric about their contributions to society.
  - auntienomen 3y ago
    The largest stream of charitable donations in California come from the most IP-paranoid hedge fund I know of. If you have negative opinions of the finance industry in general, I can't do much but remind you that it's a large and varied industry and that your opinions are priors you should expose to relevant data.
    - tijtij 3y ago
      Maybe the reason that the most IP-paranoid hedge fund makes the largest charitable donations in California is to proactively secure favorable publicity in case they become embroiled in a scandal that could impact their financial standing. Moreover, it raises the question of who truly benefits from these charitable contributions. For example, Ikea is owned by a charity for tax optimization purposes. The mission of the charity is to promote interior design and architecture. Essentially, strategic investments that will ultimately benefit Ikea itself in the long run.
      - auntienomen 3y ago
        Interestingly, it's the opposite. They made the donations anonymously and were outed by a charity reporter. Likewise, the charities were things like the Sierra Club, various disease research foundations, and the ACLU.
- surfacing_vol 3y ago
  I see your point, though respectfully disagree. Voleon gets some real advantages from being "the only game in town" by being the only remotely large quant fund right next door to Berkeley, and Jon McAuliffe has his pick of good students from Berkeley. I don't think Voleon should be able to reap all of those advantages but not play by California's rules. I wonder how this article is going down in the Berkeley stat department...
  - auntienomen 3y ago
    Voleon is competing with the local unicorn population. Unless their returns are amazing, you can get comparable lifetime returns at higher sharpe as a big tech employee.

ysavir 3y ago

If the IP is that valuable, why can't they pay those that are familiar with it enough to keep them at the company and happy? And if that's not enough, maybe building an entire business model based around a reproducible IP isn't a great idea. In any way you look at it, a business using non-compete clauses is trying to have the employees bear the weight of questionable business practices.

TulliusCicero 3y ago

Non competes wouldn't be a big deal, if companies were required to use them fairly and sensibly: by matching a competitor's compensation for the duration of however long they want someone to not work for a competitor. Companies want to have their cake and eat it too: no, you can't work for someone else, and no, we're not gonna compensate you for that.

deleted 3y ago

[deleted]

gmarx 3y ago

I disagree. This would be handled by trade secrets. California doesn't stop you from requiring ex-employees to continue to guard trade secrets they learned or created under your employ

surfacing_vol 3y ago
Right. And trade secret protections are enforceable forever, not just for the 1-2 years that a non-compete might cover. And they almost certainly would not get thrown out even if (large) parts of an employment agreement did; in fact, often quant firms will make IP agreements separate from employment agreements.