Employed with a side of startup
blog.asmartbear.com
blog.asmartbear.com
The process is normally pretty safe and, out of the hundreds of cases, I don't know of one that resulted in a lawsuit.
On the other hand, since I also do litigation, I have witnessed a variety of these situations that have resulted in lawsuits and have occasionally defended them.
What is the difference between the safe and the unsafe ones? The standard safe zone is well-known in the Valley: do the side activity strictly on your own time and without using company resources.
Where people trip up:
1. Doing side activity that is related to the employer's current or anticipated business.
2. Failing to comply not so much with the terms of an employment agreement but rather with "company policies" that large employers will periodically require their employees to sign - policies that can require the employee to report all side activity and to sign a form affirmatively attesting either that there is none or explaining what it is. (If you lie on this, you get in trouble).
3. Crossing the line in violating fiduciary obligations that an employee has to ensure that all activity for which the employee is compensated is done strictly for the benefit of the employer.
The really critical area tends to be the last point. I don't know how many times over the years that I have seen founders get tempted to want to: (i) steer current customers of their employer in the direction of their side venture; (ii) sign up key customer or supplier contacts of their employer as "advisors" for their side venture; (iii) talk to co-employees about joining their side venture; and (iv) the worst temptation of all (but thankfully rarely done) use an inside contact at their employer's business (or use their own position) to steer project work toward the side venture.
The simple rule is to play it straight. Avoid conflicts. Make sure any IP you generate in your side venture has no material connection with your employer's business. And then follow the standard rules (own time, own resources). If you do these things, you will normally not incur any significant risk from moonlighting. (Of course, check with a good lawyer in your local area on details for your particular situation).
On 3, does this mean you can be successfully sued for hiring a co-worker? What if it's 2 years later?
On a side note, it's pretty damned fascist that relationships can be treated as corporate property. That only passes because the corporations now own the legal system.
They're apparently hard to enforce. That's totally irrelevant to you; just taking you to court is enough to kill your startup.
Nonsolicit is actually one of the clauses I think isn't unfair. It's one thing to leave a company, quite another to cause an exodus.
I've heard some people espouse the idea that there might be some ethical misconduct in courting [soon-to-be] ex-co-workers. I don't see any basis for that belief. Again, the most you can do is make an offer; if your company's staff is all going to jump ship when someone comes to them with vague and shakey musings about founding a startup together, that should really tell you something about the company you work for. There's nothing wrong with making a proposition, imo.
I have worked with people who have signed oppressive contracts. I find it deeply sad that some people have done that. Neither of my co-workers from my last job would be available if I wanted to proposition them, as they are both engaged in multi-year contracts which state departure before Month Year is punishable by big, big financial penalties. Only for the employee, of course; the employer can terminate them at its leisure without any responsibility according to these documents.
You're not "causing an exodus" if 5 people independently decide to join your presumably riskier venture. If they're treated well, that's not going to happen until you have serious traction.
That may or may not be true, depending on the employee agreement. Many of the ones that I've seen give the corporation ownership rights to any software developed by the employee, even at home and on their own time.
Check this before you start.
My current company (Condé Nast) has a shockingly fair IP agreement compared to other large corps.
Everything in life takes balls. Decide what's important for you, and go for it, fuck everything else. You've gotta have the attitude that your business is #1, and the corporation just doesn't really matter that much. Again, I can't post that many details, but pretty much reverse most points from this post and you'll have a good idea of what to do.
But - telling your employer in advance that you're working on your own project? Really? What's the advantage in it? What you do in your off time is 100% yours [unless you signed something that says it's not], and letting your employer know about it will not bring you any additional benefits. On the other hand, the disadvantages are huge - everybody will start mistrusting you, knowing that you're looking for a way out, you'll never get promoted, etc.
And that's just one point.. Not doing business phone calls in the day hours? C'mon, how realistic is that? How is anybody going to take you seriously if you don't pick up your phone during the day? Instead, you should FIND time during the day for important business-related phone calls. When I was employed, I always ate lunch at my desk in about ten minutes. At lunch hour, I found a nice quiet place in a plaza 2 minutes from the office, brought a notebook to take notes, and made 2-5 business calls.
My point is, while you should definitely not do anything illegal, if your #1 goal is to quit your job and make your business your primary source of income, you should find creative ways to reach that goal, and stop at NOTHING before you do that.
It's not a gray area; there is precedent and you will lose.
Once in my life (first job out of school) I was in a job where I'd been relegated to menial grunt work that wouldn't teach me anything or advance my career, so I've been in the career sand trap. What I did: I taught myself Python and a few APIs I needed for the side project (which was actually a research project, not a startup) during slow periods. I did a bit of research into AI algorithms (on Wikipedia) as well. But I never wrote code for the project at work.
If you must steal ("liberate") time, be very careful not to write any code that you'll need when at work. I'd say 3 rules apply.
1. Generally, a company can own what you do, not what you learn. If you're going to steal time, use it to do research and exploratory code (that is thrown away) but keep your product code 100% on your own resources. I'm not saying this strategy is right, nor that it's a fool-proof legal defense, but it beats the alternative (of writing side code at work) which is generally considered both wrong and illegal. As far as I know, there's no legal distinction between reading AI articles on work time and the million other kinds of goofing off that 90% of corporate denizens spend most of their days on.
2. Companies want you to work 9-5 because those are your best hours. If you're serious about a side project, then the first thing to do is to figure out if you're a morning or a night person (which is mostly genetic). If morning, start waking up at 4 and use 4-8 for the project. If night, your side project should be done in the evenings. You can only give the side 33% of your work time, but you can give it 80% of your energy by aligning your most energetic hours with your side project time. If you're not serious enough about a side project to make these adjustments, you're not cut out for it.
3. If you get a creative "spark" at work and must get an idea down, have a legal pad and pen that you own (i.e. not with the company's name on it). Write down your design and implement it later. Poets may lose it if they don't get it down at once, but you're a programmer, not a poet. So get your ideas and maybe some pseudocode on paper, but no code goes into any machine until you're home and it's your machine.
Actually he'd even part funding a current pet project of mine :)
It's at the point where I dont even have a contract any more because of the limitations it actually put on our relationship (note: not generally recommended - before everyone sprays tea/coffee on the keyboard)
You just have to find out if your employer is going to be a douche or not - and if not then be open about what your up to.
This is even true in North America although you don't need to spend as much time getting to know someone as you have a little more safety.
For many years Microsoft required employees with side projects to submit and get approved moonlighting request. The problem was that it was not easy to get approved for start-up-like projects: neither management nor legal didn't want to take responsibility and were pushing requests back and forth for months.
Finally, in the beginning of 2006, some brilliant legal head solved the issue once and for all: they removed approving process entirely and released set of guidelines you have to use _yourserf_ to determine if there is conflict of interest. So in one simple move they not only reduced amount of work legal department has to do, but also reduced possibility that employees would choose to create start up by pushing everyone in gray area and keeping door open for later litigation threat.
BTW, if you have day job you want to incorporate early so you can do proper assignment of invention related to your start up (in addition to incorporating for liability reasons).
3. You can't afford to hire three developers to add features and bugs.
I've seen studies too on things like "Developer Productivity" or other such crud where they didn't even measure stuff like "new functionality added" but ONLY "how many bugs were injected."
The simple solution that PG has recommended in the past is to rewrite all the code. Does that protect you from the above?
If nothing else, it's an excuse to learn a new language.
"If they decide to sue, they get to look through your email records (it's called "discovery"). Then they have 100 emails you sent during work hours. You lose."
Weird. I submitted this article but my submission has now disappeared and it's now on front page under bhousel? Probably just a coincidence?
I've noticed that when I click on links from a feed reader, it adds a bunch of params to the end of the URL. I always strip off the extra stuff and submit only the base URL.
allenbrunson: That's definitely it. I didn't know it behaved that way. I'm a little disappointed that it wasn't something more sinister... muhahaha muhahaha!! Oh well. Good info. Thanks!
<quote> Under the law of the United States, civil discovery is wide-ranging and can involve any material which is relevant to the case... </quote>