Strapped startup declines acquihire, Apple poaches key engineers; NP, says court [pdf]
cases.justia.com
cases.justia.com
Which is why Silicon Valley is in California, and why attempts to create a startup culture elsewhere have mostly failed.
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.
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.
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).
I think the firing people thing is good to point out, but many startups end up not needing to fire individuals: they just go out of business :).
European laws, regulations, and investor culture are all setup in ways that hurt startups.
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.
That being said, Berlin start-ups have a tendency to complain a lot. If they wanted, they could make a lot of things work.
To my knowledge no equivalent setup exists under German tax law.
And in case you assume the shares are going to be worthless, just sell to cover taxes when they vest. No harm to your bottom line. And a potential upside.
But there IS a process. AFAIK there is no such thing in many European jurisdictions, like Germany.
> And in case you assume the shares are going to be worthless, just sell to cover taxes when they vest.
...how? Sell to whom? On what market? I think you’re missing the point. These are pre-IPO shares with explicit sale restrictions that prevent you from selling.
The American approach is simple: no sale, no profit, no tax. If Europe wants their own Silicon Valley, they need to adopt similar startup-friendly tax laws.
Not offering options because you're employees have to pay income tax on all the value rather than capital gains tax on most of the value is ridiculous.
This isn't just risk aversion, it's really that the tiny changce of being a billionaire doesn't really appeal to me more than a solid chance of just building a business and having a healthy work/life balance the whole way.
Nothing to be about "startups" means you have to have things that "scale" or hope for exponential growth or being able to sell the company, or even some new or impressive tech. To me it literally means "a young company bootstrapped with a small amount of cash, hoping to grow".
E.g. wikipedia
"startups refer to new businesses that intend to grow large beyond the solo founder"
I don't mind that definition. But I also wouldn't call my company not a startup if it doesn't want VC funding or doesn't hope to grow more than linearly/organically.
That said, entrepreneurship isn’t the sole path to innovation. Germany has a solid history of non-entrepreneur value finding.
[1] http://www.privatinsolvenz-hilfe.org/en/german-bankruptcy-la...
Most entrepreneurs have leveraged their personal finances at some point. I personally remember running payroll off a personal credit card in a particularly tough quarter. That route is prohibitively risky in most European countries.
> it is much rarer than in the US
That is the point. There is reduced risk taking in Europe. Many entrepreneurs’ successes are preceded by failures of varying magnitude. The American system’s willingness to forgive and forget creates lots of problems, but it also fosters an innovative culture that is comfortable with risk taking.
I'd say this is risky everywhere and regardless of the fact that personal bankruptcy is a thing in the US. Heck, running big debts on credit cards is a pretty unique US thing, because usually the limits are either little and/or the interest rate is prohibitive.
I agree the risk taking is smaller in Europe, but if you need a loan go talk to your bank, putting a debt in a credit card is a stupid idea period even in the US.
These days things are diluted to an extent. May be due to overall effects of globalization and people just moving on due to cultural dead ends.
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.
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?
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.
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.
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.
https://en.wikipedia.org/wiki/List_of_U.S._states_and_territ...
But beyond that, my thought is that although you probably have fewer super rich people in DC, you also have way fewer poor people. So the average is going to be higher than even SV.
Plus, the types of jobs in DC proper (so we’re not talking about the extended Maryland and Virginia suburbs) are almost entirely professional/government. It’s also a very expensive place to live.
[0] https://www.macrotrends.net/countries/DEU/germany/gdp-per-ca...
[1] https://en.wikipedia.org/wiki/List_of_states_and_territories...
For example:
> Horizon 2020 is the biggest EU Research and Innovation programme ever with nearly €80 billion of funding available over 7 years (2014 to 2020) – in addition to the private investment that this money will attract. It promises more breakthroughs, discoveries and world-firsts by taking great ideas from the lab to the market.
Horizon is much bigger than ITER, and like the DoD it covers a wide range of R&D areas with industrial collaboration, and says what its main areas of interest are.
But it has funded lots of small companies doing R&D, which I thought was the subtopic here comparing with DoD funding, which also involves lots of paper and fantastic reports...
Honestly, if they want a solid challenge, here's one: get a unicorn tech company public over the next decade for each major EU nation.
Why would European developers allow themselves to be shafted out of millions of dollars by staying in Europe?
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.
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?
>losing access to every major OS overnight
That wouldn't really be in America's interest would it?
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.
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.
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.
Leverage over another isn't the only way to compete.
If there was no IP, smaller companies would have alternatives such as blatantly copying the larger companies' better product features, while being nimbler to innovate with those ideas, and to blend features from different companies into a new product.
Not every small company would be good at that. But some would. Some smaller companies would have more ability to out-innovate incumbents.
Of course that already happens, but it could happen more freely without IP.
The smaller companies would still have the problem of being noticed, selling their products, and getting investor interest (which I'm told IP helps with), but those problems aren't new.
When BigCo comes calling with their stack of patents demanding a license or profit share, you break out your few key patents and demand one back from them. BigCo has a lot more to lose compared to SmallCo.
SmallCo has little or no profit and little revenue so BigCo gets no money from them for patent infringement. BigCo has a bunch of money. If SmallCo has good patents BigCo will go away or make SmallCo a deal to avoid millions of dollars in damages or license fees BigCo would owe SmallCo for infringement.
IP litigators will take such cases on contingency.
If you don't have good IP you are a commodity.
For every time a large company trolls a smaller one, there are 100 times one company decides not to infringe on some other work.
For example, I work with a hardware company that has patents. We freely send our products to larger competitors. Why? Because they know we have good IP, and were they to copy our approach, it would be a straightforward infringement on us, and it would risk their entire business.
Admittedly, we are luckily that infringement in this case would be fairly clear because that's not always the case.
This way we get the worst of all possible worlds.
Had we been more desperate and not using other peoples money we would have started negotiating with car bombs as our Eastern European engineer suggested.
Seems to me that certain industries like software are able to have so much startups and innovation because the legal system is just less effective at capturing and crippling them, despite heroic efforts.
MS keeps it's monopoly via market power, generally not IP protections (though partly).
MS is large enough vis-a-vis fragmented hardware vendors and distribution networks that it can do play all sorts of hardball. It has deeply entrenched sales channels in to the corporate world. Most significantly, it's a platform which means huge switching costs - and - it can use that platform as leverage into other spaces i.e. desktop software.
Take a moment to contemplate out how Coke and Pepsi (ostensibly commodities) can dominate their channels in a supposedly free market - it's a little bit similar.
Google's monopoly in search can be leveraged into all sorts of other areas.
IP laws are beneficial for 'either side' and of course they are abused willy nilly, but by and large, they are beneficial to a lot of small companies.
Weirdly, even Open Source is helped by IP laws - by 'turning them upside down' using 'copyleft', they wrestle the IP laws into their favour, as the means to 'protect' Open Source, if you will.
We are so wrapped up in software - consider physical things. Often, they have very long development cycles, very expensive. Also - huge operating capital requirements and capex as well. (Why do you think there are so few YC hardware companies?). Also - distribution networks are locked up and very different from software where it's almost direct.
It would be almost impossible to make a hardware company without IP protections, because those with market power would instantly commoditize the competition.
Many other businesses are a little bit similar: as soon as it's not 'pure software' then you realize how fragile new companies are.
For 'very new domains' (i.e. 'blue oceans') it's one thing, but most markets are not that.
Once you put your 'anything but software' hat on for a bit, and see how those companies sit in the value chain, IP looks a little different. That understanding can map to software.
If anything, we need better, more nuanced IP laws, not to get rid of them.
You're comparing beverage companies with a market share of 30-40 percent (or less depending how you narrowly you define competitors) to Microsoft with a market share ranging from 70-90 percent. Note microsoft was able to come from behind and succeed mostly before the days of software patents.
Open source is perversely helped by IP laws because it's the only way to create an alternative that can survive. Like bitcoin being anonymous, versus e-gold which was shut down by the govt. Great except we have to wait for hobbyists and others with free time to waste before competing ideas can get implemented.
As for hardware being worse than software without IP protection, well it sure is worse than software with IP protection. So I guess it'll stay consistent. Maybe the lesson is the nature of hardware is to be commoditized, so you need to put your value in the bundled software.
Which is why we're all typing this on DEC machines running OS/2 on AOL internet with 3Com modems.
We have been running almost entirely Windows and Mac for over 20 years (at least in consumer land).
We have been running mostly Intel and nVidia for over 20 years.
We have been running mostly Chrome and maybe 2 others for 10 years.
We have 1 comprehensive social network (FB/Insta) for over 10 years.
We have 3/4 major internet providers and 4 wireless carriers - forever.
We have essentially 1 Search Engine.
We have 2 smartphone platforms for over 12 years.
... when there are 'new markets to be exploited' or a fundamental shift in a market (ie feature phones to smartphones) - new entrants have a chance, but outside of that, they don't as incumbents win relatively easily unless they get lazy.
Each of the major players above has been able to leverage their market power into domination.
IP is one of the few vectors of power for smaller companies (often the only vector) that stop these behemoths from wiping them out. Sadly, depending on the scenario, there are often few material IP protections to be had.
At the time people thought Microsoft was so dominant that most of the innovations of the past 20 years could not have happened, because Microsoft was a behemoth that would simply take over any competitors. But they lost on search, phones, browsers, etc.
I don't really see how it's different this time around. There is currently no company as dominant over the entire industry as Microsoft was in 2000, or as dominant as IBM was in 1980.
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.
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.
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.
In what sense?
It's not just an amicable separation of bureaucracies.
If you're in the UK (as I am), the kinds of headlines coming up regularly make it really clear the UK government is trying to not be part of Europe in all sorts of bizarre ways.
For example the most recent big deal was the UK has formally decided to break international law by reneging on the UK-EU withdrawal treaty it signed up to less than a year ago.
That's a very unusual thing for the UK to do, and it has people up in arms because it means the UK will now not be taken as seriously when it makes future international commitments (including trade deals), and when it is finger-pointing to other nation-states breaking their international commitments in future.
It's keener than ever to trash human rights and civil rights enshrined into EU law and show that it wants to take them away from people in the UK, which is a curious turnaround because at one time the UK was a leading champion, drafting the legislation and putting them into place.
It is all very tribal and symbolic, and doesn't appear to be rooted in any kind of advantages for the UK or people and businesses within the UK. Costs to businesses are going up (new tariffs on import and export). Trade deals are defaulting to worse terms (there's no good trade deal with the EU). Cooperation on major scientific projects is breaking down. Financial institutions are starting to move headquarters out of London. UK citizens living abroad are losing rights (a UK passport is much less useful than it used to be), and the cost of travel for UK citzens is going up (need more visas, need to pay for medical treatment, can't retire in the EU any more, if you already did you may have to move back and be poor).
What it does appear to be rooted in is the UK Brexit leaders being able to see "we did it, as you can see we are visibly not part of Europe any more".
Of course, I'm sure those who support the European Union are generally also very much in favour of it being treated as synonymous with Europe. But it sounds like nothing short of absurd rhetoric to me.
There's a long history of using "Europe" in news or political writing to refer to the continent (excluding the UK), and also to the various political and administrative entities such as the European Union, EEC, EC, ECHR, ECJ, etc. Also referring to "Europeans" as people in those countries.
Much as, say, "China" is use to refer to the political entity that is the Chinese government rather than the geopgraphy, and "America" is used to refer to the USA government, not the continent.
The way language is used, with "Europe" in the UK usually taken to mean "that landmass on the other side of the English Channel to the East of the UK, not us", might be a reason why a lot of people in the UK have such cognitive dissonance over it that most don't recognise they had "EU Citizenship", including some great citizenship rights, which they will now lose at the end of this year.
Because for many, "EU Citizen" conjures up images from other countries to the East, immigrants by definition it they are in the UK. Yet in reality all UK citizens have been EU citizens for decades.
Ireland is also in Europe and the EU yet people don't think of Ireland when thinking about "Europe", and sometimes not even when thinking of the EU, although the last few years of politics have raised the profile of the EU Irish border issues.
If you're thinking it's absurd rhetoric, fair enough, but you would be mistaken to think it's just language of those who support the EU, within the UK. It has a long history.
>Much as, say, "China" is use to refer to the political entity that is the Chinese government rather than the geopgraphy,
That's not at all a fair comparison. China is country, not a continent, and thus is pretty much defined as being the area under control of the PRC (and other Chinese regimes). Europe, being a continent, remains (in all relevant senses) constant in size, regardless of what happens to the European Union.
>and "America" is used to refer to the USA government, not the continent.
That's absurd rhetoric, too. I don't refer to the USA as America (well, sometimes I do, but I try not to). Besides, it would be strange to talk about California leaving America. One would say California left the USA.
Yep - I mean once the company is >500 employees and has mixed ownership (funds etc.) it's mainly just between her and management that got overturned and they know better than to keep pressing on it.
In which office? A or B
Again, UK, but you can't just move an employee around willy-nilly. This could be construed as constructive dismissal.
You might know the employee can't relocate, and are trying to force them to quit so you don't have to pay redundancy pay.
First year or so, you're in a probationary period. Unemployment benefits will kick in, but you and the company are still feeling each other out.
After that, you get certain protections, whereby firing you becomes a more lengthy (3-6 month) process with specific regulatory milestones.
Speaking from a management perspective, if I have had an employee that has been solidly meeting the bar for a year, I am better off to work with them to remedy performance problems afterwards, then I am to fire-and-replace.
Training costs are a thing, and there's also a real benefit to not having your workforce continuously worried about being fired on-the-spot.
It is fair for newcomers to "earn their stripes" as it were, to show that they can productively participate in and contribute to the organization, but people that have cleared that hurdle do deserve some protection from bad actors in their management chain.
As always, I like to hear from others where they think this doesn't work. :)
Why would labor protections be needed if the rational move would be to work with the employee to improve their performance?
> Why would labor protections be needed if the rational move would be to work with the employee to improve their performance?
Because management isn't necessarily rational?
Dilbert's pointy-haired boss resonates with a lot of office workers for a reason.
We've all had, or at least heard about, that boss who was utterly incompetent, who masked that incompetence in self-important blustering, and who were physically unable to listen to the rank-and-file.
Regulation is and should be there to deal with the abusers, and not with the companies that do, in fact, look out for the long-term welfare of both their employees and their customers.
In the US you can pivot your startup if something isn't working, roll off 20% of your staff and you don't have to talk to a govt tribunal or go through appeals.
You can make your own management calls on who you want to work with - you don't have to justify things or provide the verbal -> written -> tribunal -> appeal cycles process.
And founders are notoriously bad managers - while they should perhaps spend the time to do PIP's and training plans and being better managers, most of them are very focused on outcomes - so startups can be a very self managed area.
You can do this in the UK too, without a tribunal or appeals.
What you've described is covered by "redundancy", and it's completely fine legally to make people redundant, in large numbers or small numbers.
They let me go just before 2 years of employment, when a redundancy payout would have started. I don't think there would have been a longer notice period after 2 years, just a payout.
It was legitimate redundancy because they let go of a number of people at the same time. So it wasn't personally targeted, though of course there was an element of deciding who to let go of.
Yes I do because it was so close to the 2 years, and that did leave me feeling slightly cynical.
But I wouldn't call it "protection", because the only benefit would have been a small cash payout, worth a lot to me, but small relative to the company's ongoing salary bill for people staying behind, so easily affordable to them.
That led to financial hardship for a little while, but I recovered, set up as self-employed, and to be honest I was glad of the new freedoms to work on my own projects from then on.
"Collective redundancies can be void by an administrative court, if the latter recognises shortfalls in the employment protection plan or if an administrative authority did not validate or approve the employment protection plan at all. In case the administrative authority validated or approved the employment protection plan without stating sufficient reasons, its decision might be invalidated by the court."
In the UK (which is MUCH more liberal and I wasn't considering the UK part of the EU) there are still plenty of steps.
For the UK "Non-compete clauses and restrictive covenants are highly enforceable in the UK in order to protect the business the employee is leaving."
https://www.ms-solicitors.co.uk/employee/faqs-employees-guid...
Redundencies can be overturned if the selection criteria for them is "unfair" or discriminates.
"You can select employees based on their length of service (‘last in, first out’) but only if you can justify it. It could be indirect discrimination if it affects one group of people more than another".
Because often some type of group is affected more than others if you lay off new hires you get into a quagmire pretty quickly.
Limited NC for v senior people for short periods possibly - and by v senior I mean board level.
If you don't sign the agreement I suspect a lot of the time you'll just have to do gardening leave for the rest of your contract. Also don't forget if you were a director you still have a fiducary duty to the company once you've left.
What I'm slightly unclear about is how practical this is for sales folks where this is an expectation they will steal prospects or existing clients. I suspect you might only bother with lawyers if it looks like they are poaching from your existing clients.
In the UK non-competes in my view for engineering staff are basically unenforcable, IP theft is much more likely to succeed (and I've been involved in a direct copyright theft case).
24/7 IP ownership is enforcable but my experience is that most places don't care if you're not going to be a direct competitor. I always feel it's worth getting that in writing though, my current contract limits this to areas of the companies business. Our corporate lawyer limited this when we had to sign a new contract post a takeover (it was a bit broad and could have covered things like photographs of your kids). Also I have in the past asked if I'm contributing to open source as part of my work as like things to be clear.
IP rights is probably the one area I check in a new contract and usually it's fairly easy to get agreement for some minor changes.
Your right about trade secrets though.
Modulo EBITDA per employee.
Of course, those regulations should step in gradually -- sharp cliffs are pretty much always antipatterns when it comes to regulation, law, and government services.
Yes, I know in France that companies try and get around this by splitting into lots of smaller firms, but that's an issue for the regulators and the specific legal framework.
Nobody ever said these things are easy.
Like the other comment mentioned, this is a very France-centric description - in the Netherlands, for example, you can't block workers from leaving their company in this way.
"This clause prevents them from working for your competitor or from starting a similar enterprise after resigning. A non-solicitation clause forbids your employee to contact your clients after resigning."
https://business.gov.nl/regulation/non-compete-clause/
In the US, lots of folks have famously started up their own ideas if they are frustrated with a big corp. In California that can't be blocked.
Is there something I don't know about NL law (very possible!).
All of that is obviously non-enforcable nonsense.
With respect to the non-compete clause, it says in my contract that they can keep me from going to a competitor for a year, but they'll pay me for that year. I wonder if they'd ever enforce this.
Not sure if it already happened, but they're moving towards having the (previous) company pay for the non-compete period. Meaning: if you hire someone on a non-compete and the person cannot find work in another field (or lower salary) the previous company has to make the employee "whole".
Non-competes are also meant to not be applied to everyone. Only certain employees should have these. This as having every employee on a non-compete is too restrictive for the employees.
All of this is/was mentioned on various Dutch sites. It's a bit weird it's not explained on this English one.
It's much easier to instate a 'relationship'-clause in Dutch employment contracts, where you forbid ex-employees from contacting customers/suppliers at their new employer in a professional fashion. Those are much easier to enforce.
Indian civil servant finally fired after epic 24-year absence
Its really like the stuff of the dreams/nightmares based on what you get.
Entry level wages are perhaps $190K (right out of college / entry level) at google and others. There is definitely a job for you at $60K
Although it must be said that the FAANG & co employees are insulated from the effects of it and maybe unaware of the drama unfolding right now.
The French landscape is a bit more subtle that what you mention here.
The first thing to understand is that everything in your contract is not always 100% legally applicable, and companies play with this idea. The local laws often dictate the overall rationale that a non compete can address, and companies play with that interpretation in the contracts (more on this with examples later) . In practice though, if there was an occasion to defend it in a tribunal, the company's interpretation would definitely be discarded. 90% of the non compete clauses that I had to negociate, either to get out of it myself, or as an employer to hire a talent, revolve around this idea: the clause is legal, but its not possible to enforce really, because the interpretation would be trashed in a tribunal. This is especially true in France where tribunals (prud'hommes) are free, and very favorable to employees. This is also true for other countries though, I had cases in Hong Kong where the landscape is quite similar.
Now, it is true that France allows for unusually long non compete clauses compared to other countries. More than 12 month would likely be trashed by a tribunal though.
As for the compensation of the clause, I feel like France is actually quite good. If there is a non-compete, then it is mandatory that there is a compensation, and in practice you can expect the tribunal to require at least 40% of the salary.
Note that the employee definitely has a great negociation capability here, because the company has to choose whether to apply the non compete up to 2 weeks after the departure of the employee.
That means, if you plan on doing something unrelated to your previous job, you can bluff a bit for the clause to be applied, and enjoy a nice bonus of 40% of your old salary on top of your new job.
If you plan to work for a competitor, here are some examples of what to look for in your non compete clause:
The French non compete has to be limited in space, time, and focus.
Limited in space means than it cannot be worldwide, there has to be a list of regions where you are prevented to work, and this list cannot be too long. I had an example with a clause that listed 10 major financial places (US, UK, Germany, etc) and actually the end result was that more than 5 countries and the clause starts to be pretty much unenforceable.
For the time constraint, the general assumption is that 12M is the upper possible limit (18M for non poaching).
And for the focus, that basically mean that in case of litigation, the company would have to prove that: 1. You have market edge knowledge from the company that would result in an immediate and material advantage to the competitors (this one is very hard to prove for the company, and a lot of negociations revolve around debunking this argument) 2. You are going to work on the exact same subject in your new company, it cannot be just based on your field, it has to be very specific to your role in both companies.
My point - in California this isn't even a question. There is no need to negotiate. It's a matter of both policy and law that you can get another job.
In Europe there is a lot more careful thinking, a great thing actually I think in areas of social safety net, public / govt function etc.
Startups with 2-3 folks are just not well equipped for the EU intricacies - look at GPDR, all the employment laws and keep on extrapolating.
I have NO idea how Tesla managed to get their factory going in germany so quickly - I'm serious - there is almost NO way france would issue permits as quickly as germany apparently did. So I def don't understand it all!
And that is a good thing.
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-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.
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.
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.
Anti-poaching agreements are non-competes, just between firms rather than a firm and their employees.
> Anti-poaching agreements mean one company won't cold contact employees at another
No, that's not all they mean. The most trivial anti-poaching agreement might restrain itself that way, but anti-poaching agreements can and regularly have included agreements not to employ workers from the other firm, not merely to avoid certain active recruitment/solicitation steps.
I don't see anything about non-poaching agreements in a cursory look at Wikipedia's article non Non-competes[1].
> No, that's not all they mean. The most trivial anti-poaching agreement might restrain itself that way, but anti-poaching agreements can and regularly have included agreements not to employ workers from the other firm, not merely to avoid certain active recruitment/solicitation steps.
Yes, you're right. Thanks for the clarification. I guess what I should have said is the specific anti-poaching agreement that bonestamp2 mentioned was only about active recruitment. But still even with this broader definition of anti-poaching, they're not as bad as non-competes. A non-compete would prevent the founding of Intel (by former Fairchild Semiconductor employees), but a broad anti-poaching agreement would not prevent the founding of Intel.
Ontario’s tech sector is growing a lot but hopefully the salary issues will improve.
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-d...
Or telecom in Atlanta: 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.
The situation in the US does impact salaries all over the world though. A lot of software engineers over seas work for companies that are either US based, or who primarily do business in the US.
Why should a software developer get paid hundreds of thousands of dollars a year, while those who weren't lucky enough to be born with the required intelligence (despite what coding bootcamps say, not everyone is cut out to write code) are doomed to work a low-wage job for their entire life? It's the height of privilege. And if you subscribe to the theory that intelligence is a product of a child's developmental environment (nature over nature), it serves to increase social stratification and decrease class mobility.
Builders and electricians are just as much key employees as software developers. In Australia, a skilled electrician can earn the same salary as a software developer, and that's the way it should be. My job is easy, I sit at a desk all day. I don't have to wake up at 5 AM every day and spend 8 hours a day (more like 6 in Australia, thanks to the unions) running cables in a construction site.
I'd love to see most software developers try their hands at a trade, it's backbreaking work.
You wouldn’t understand American standards because you don’t understand the difference in work intensity and performance. There’s a reason all of the good workers still head to California.
>In Australia, a skilled electrician can earn the same salary as a software developer
What about the unskilled electrician? Are they paid the same as the skilled one?
Investment bankers and programmers earn more than your typical American because the supply of bankers and top-level programmers is much tighter. Goldman Sachs and KKR hire from Wharton or HBS, and Google hires grads from CMU or Stanford. Whether they should or shouldn’t restrict their hiring practices is another matter, but their insistence on hiring only the “elite” causes salaries in those fields to skyrocket.
Welders and electricians make more money than say a landscaper because you need more training, certifications, exams, and experience to do the job, greatly reducing the pool of available labor.
If you want programmers to get paid less, make it easier to become a programmer and get Google to hire more broadly.
That’s perhaps why bootcamps and code camps are looked down upon by existing programmers — not just the belief in the superiority of a traditional 4 year computer science education (whether founded or not), but also a realization that if these things catch on they might be paying us all less in the future.
And bootcamps are not going to help you with that.
No, this is incorrect -- Google has a list of “favored” academic institutions. It’s not used to filter out candidates, so they’ll still hire people from other backgrounds, but studying at a top university is considered to be a positive signal.
(Possibly this has changed recently, but it was true through at least 2012 or so.)
There are very few professions with profit/cost ratio this high. Writers and media creator come to mind. Definitely not electricians or builders.
(Of course not every software engineer is like this. But there are plenty of $60K software jobs in US too, nit everyone gets six digits)
* authors * artists * judges * motivational speakers
The difference is that I think leverage is more diffuse for software engineers, and it doesn't require fame.
The issue here is that the work of a skilled electrician doesn't scale, unlike a software engineer. The classic example is process automation.
I would argue software, and engineering in general, is one of the few disciplines where that's possible.
There's non-compete in most places that makes it hard for employees to switch jobs. Since there's none in California, the strategy to retain employees is to tie their income to equity in the company. That creates a moat around hiring engineers from a competitor (you'll have to match the equity if you want to hire!). There's also labor laws that makes it hard to fire someone; these incentivize the business owner to pay less so that a bad hire has less of an effect. There's also, in a lot of EU countries, so much taxes that it's helpful early one to hire specialized accountants just to claim all the possible subsidies for the business. It can be worth it for businesses with 5 employees. Adding that extra salary will leave less for the early employees.
There's also the fact that some companies simply don't see the value of software, at all. They have a software division but don't treat it as the core of their business. In their mind, it's simply a tool for the business (despite the whole business depending on it sometimes!). So they treat software as a cost center and that drives engineers to tech-focused companies that are clustered in the US. Prime example of that is banking, where no matter how much revenue is directly tied to software, it's still considered a cost center.
Finally, in some market there's simply a talent gap. Ontario, and Canada, strikes me as one since I've met a few Canadians who jumped the border to Silicon Valley but never actually met a Silicon Valley engineer moving up north.
Right to work means they can’t make you join the union.
Oh hey and there’s the name right there!
> Oh hey and there’s the name right there!
I wish non-competes being unenforceable had a pithy associated phrase, but it doesn't.
There are nuances to non-competes that sometimes get glossed over, such as non-solicitation of customers and co-workers. I believe those types of clauses are enforceable in CA.
Oddly enough, the union neutering that is encoded as "right to work" is usually cited as a factor that makes a state more "business friendly", and so are enforceable non-competes.
It does potentially allude to making the state/province more competitive with other regions, which is a plus for neutering the "business-friendly" framing.
I doubt that that is the main reason. Also, in this case it worked against the startup.
The founders of Fairchild would all have been stuck at Shockley.
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.
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.
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.
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.
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.
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.
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.
> 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?
https://upload.wikimedia.org/wikipedia/commons/7/72/Mediterr...
...or more likely, the weather is not a critical issue.
My intuition says that Silicon Valley wouldn't be possible in a beach town nor in a place that's too cold or too hot, simply because of how much the weather would distract you from work. The great thing about the weather in the Valley is that it's pleasantly bland (or blandly pleasant?).
But I think it's very likely that the weather doesn't matter at all if you don't already have some equivalent of the Stanford-Berkeley nexus and California labor law and a lot of very rich people willing to make high-risk investments.
As to “Is there even a point to trying?” No. No in two ways, in decreasing confidence.
Places that don’t have all the parts definitely shouldn’t try to copy Silicon Valley. If you can’t do things the way that they did them then... don’t try to do things the way that they did them. I don’t know how to express that without being circular.
Should any city try to become the next Silicon Whatever* at all? No, probably not. That’s simply because I don’t think there’s a city government in the world capable of doing it. Maybe there would be some benefit in the attempt, but I’m guessing it would be outweighed by the cost. It’s just not the kind of things governments actually do.
*btw all those names make feel a bit ill. Does no city’s Chamber of Commerce see the irony of branding themselves as an innovation hub by copying another city’s nickname?
Editing in more.
> #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.
I don’t know. I think sometimes people know. At least try. Like maybe my description of Silicon Valley is totally wrong. But at least it’s logical and you can choose to follow it or not.
And if you’re going to follow someone as a guru (like the tweet I linked to) then follow their belief on what’s central. And if you don’t agree then don’t follow them! Because you wouldn’t be following them anyway. You’d be following some hybrid half version of them that you created yourself.
I think things get all fucked up when people half follow systems. It’s fine if you take a tiny cohesive piece, like folding your shirts differently cause you saw Marie Kondo do it that way. And it’s fine if you go all in on Tidying Up. But when you rip through every item you own and end up with a giant pile of non-joy in your apartment that you never actually get rid of, you’re fucked. (If anyone is getting Agile flashbacks, I’m inspiring the right vibes).
Well, the weather probably is a comparatively small factor, but nonreplicable geographic factors are actually a major factor in the success of most economic hubs, including the Bay Area (aesthetically great weather is one, but a great natural port area, and proximity to abundant agriculture, are also factors.)
Yeah, you can't copy some of those things. Geography matters, it always has.
Way too hot, hazardous weather, impossible to get around (crazy traffic congestions, no useful public transporation, bicycling being suicidal), have to go to Home Depot to get real Coca Cola.
Overall quite "meh".
it's united states overall, so it doesn't really matter.
>> crazy traffic congestion
It matters. I once pulled out of the Sutter-Stockton garage and sat in traffic for a full hour without getting to the end of the block.
Now it's SV despite all that.
Don't think it's particularly startup-friendly though.
He spends a good part of the book complaining about french research, which does not care about products impact and thus is very theoretical, but also about the heavy hand of the government in dictating where innovation happens.
He also talks about Sophia-Antipolis. It started with a boom, and a lot of tax credits to incentivize corporations. But after the subvention dried up, many companies left. It seems to me that most of the companies left do not have innovation in their DNA.
no silicon valley equivalent in sight tho
so I strongly suspect the whole thread so far it's projection and wishful thinking.
I think governmental and banking stability has hurt Italy in this regard but I am certainly not an expert.
[1] https://www.pwc.com/gx/en/technology/pdf/how-governments-fos...
the push from local industries to large conglomerates to global multinationals was sustained by a strong economy and easy access to large banking institution that could finance their operations at reasonable risk for themselves.
the small local banks in Italy could never sustain such a growth, and production remained local, with few notable exception.
sure politicking, corruption and mafia had a part in it, as they will reduce competitiveness of a company compared to others having none of such issues (i.e. the state deciding where to build factories based on unemployment and not efficiency) but a large enough company can absorb that in the bottom line and continue operating.
Medium companies are, however, completely suffocated from this.
the Italian startup stagnation is more confounding, but my personal belief is that it's likely a result of the absurd taxation the middle class gets. It's basically impossible to build up any saving to start entrepreneurship around here, as everything in welfare comes from the middle class. And existing entrepreneurs have little incentive in branching off to new unexplored areas. Without the fuel and ferment from solo founders making it, there's no culture and no substrate to fall into if a business fails. Everyone is just grabbing at their own chair, hoping not to be knocked into poverty by the next round of financial crises.
“Well then, sue me” is as middle-finger as it gets when quarreling with underhanded competitors or non compliant parties.
Getting justice - whatever that is, in Italy laws constantly change to favor whatever is the current favorite in power - is an such an excruciatingly long process that most will just give up and take the loss.
That said, this "my personal belief is that it's likely a result of the absurd taxation the middle class gets. It's basically impossible to build up any saving to start entrepreneurship around here" reminded me that many of the people who start new companies in the Bay Area have often accumulated a bit of wealth from the equity sale of the previous company they worked for.
For example, estimates vary on how many millionaires Facebook created when it went public and its stock value grew, on the low side it is a one to two thousand. Of those, over 200 according to Crunchbase have founded or co-founded new companies on their own. I'm more familiar with Sun Micro since I joined the day after they went public and was in the first 2000 employees. Of the 1999 that came before me, over half started new companies. At least 8 that I know of became general partners in VC firms that went on to fund hundreds a companies. There are also outliers like Eric Schmidt who got both the Sun boost, the Novell boost, and then the Google boost after that.
The point being that spreading out the success of a company widely is likely a big component as well.
Even the Enlightenment saw itself as largely backwards-loooking, again inspired by antiquity, this time in more philosophical terms. It's only since the industrial revolution that the framing has started to be more about "innovation towards the future" than "reclamation of past glory".
Also, we tend to take things we’re familiar with for granted, and overlook them when comparing different societies. So of course, ancient civilisations were terrible for other reasons, but still...
Medieval artists knew things far away are smaller, they did not knew all paralel lines have to go to one one point. But 3-point perspective is just another formal choice, simplification.
On top of other issues there's the fact that once SV is established somewhere, it turns into a magnet for all the new startups.
it is readily apparent that the success pillar from silicon valley were not these three.
From what I can tell, Italian universities churn out some really great programmers, which mostly end up moving to other countries where it's easier for companies to actually run. Kind of a shame -- in addition to climate, Italy has food and history going for it as well.
So it's not just the current conditions, need to look at history as well.
alumni average results and achievements will vary a lot, because of open access, and population size and economic stagnation would screw other metrics like employment rate, wages etc. other metrics like staff size are pointless as well, unless maybe proportioned by participation over population size, and then one would need to carefully define what each university catchment region it.
Im sure there are lots of other reasons too, any 1-1 comparison would be unfair given the differences in culture and overall direction of the societies.
I think the last point is the most important one. It also took a lot of government/military/intelligence funding to get the ball rolling, and a time where the government/military/intelligence wanted to fund specifically that, something you cannot simply copy. The weather, local culture etc were available before, but SV didn't become a major player before all the stars aligned just right.
My description of why Silicon Valley happened was also based on it being in the US. I don’t think Silicon Valley happens without the rest of the US (obviously this would be so different it’s hard to compare).
I guess my point is that I was saying why the apple grew on this particular branch, and you’re asking why this other tree didn’t grow any apples at all.
"The employee non-compete clause shall hold for the greater of:
1- 6 months
2- 12 months
3- 18 months
4- 10 years
5- Until son of the son shall climb Mt Doom and steal the emerald eye from the statue of Xxyctl."
A court then crosses out the single lines that it finds offensive.
What is known to be unenforceable is restrictions on use of general professional skills. The particular IP of the non-compete must be identifiable and recorded (on an ongoing basis as part of a process), rather than vague knowledge of business secrets.
He changed industries.
Spot on. EDIT: On further thought, there's a wrinkle, which is that NOT being super-conservative can be good marketing for a lawyer. In a 95% confidence situation, consider the lawyer who tells the client, "here are the pitfalls, but IMHO they're an acceptable business risk [one of my favorite formulations], so if you want to do it, then go for it!" That lawyer is likely to have a happy client who, if asked for a recommendation by a third party, might refer the third party to the lawyer.
(Of course, this presupposes that the lawyer has enough experience to be able to confidently weigh the business risks — and that a 5% disaster doesn't befall the client.)
Ultimately though, there is an important thing that GP’s friend missed out on. Lawyers do not tell you what to do, rather instead they advise you of risk on what your options are. It’s your responsibility to decide how much risk you are willing to bear.
Example: Many years ago, on the afternoon of the last day of the quarter (when lots of business gets closed for financial-reporting purposes), a software-company client's VP of sales — with whom I'd worked for years — called me and described a situation, saying "the customer wants to change our contract to say X." I asked a couple of questions and then said "there's always the possibility of Bad Situation B coming up, but it's unlikely, and it'd be manageable if it did — go ahead." The VP said "Thank you — bye!" and slammed down the phone. (That VP went on to CEO positions at two other companies and uses me to this day.)
I agree with it completely. But I've been doing this long enough that I'm not embarrassed about telling clients what I think and what I'd do if I were in their shoes, and my clients aren't the sort to just passively do what I tell them.
(It also helps that I've been a solo public-company general counsel — meaning that for a number of years I worked very closely with sales people and became acutely aware of the importance of getting deals done, as opposed to just identifying and flanging up risks.)
If everything else goes south, the client sues the lawyer — and the best defense is “here’s where I said that might happen.”
What a poisonous attitude.
That is not cognitive dissonance. They flew in trying to learn how other town achieved goal. Once they know, they are still allowed to dislike the method or part of it.
But also, I don't the the non competes are the key part, because many parts of the world have weak non competes too.
1. It's not like CA doesn't have NDAs, trade secrets, anti-poaching, IP restrictions, etc.
2. It's not like everyplace else in the world (or even in the US) you're an indentured servant who is never allowed to move to another company (occasional man bites dog headlines about a fast food worker notwithstanding)
>The recipe for success of Silicon Valley...
Massachusetts certainly can't do anything about winter although by "great weather," depending upon your preferences most of the world is pretty much screwed relative to the Bay area.
But great schools relative to the Boston area? They're probably as good overall.
And, while California has particularly weak enforcement of non-competes, Massachusetts recently weakened non-competes and, in any case, there's a pretty long history of people moving among tech companies in the area. And many companies in the Northeast don't have non-competes.
[1] usually this means a mix of #patents filed, number of phds/100,000 and r&d expenditure/gdp. Not sure how you would rather measure the success of silicon valley to set it apart.
...and promptly relocate to Silicon Valley.
How is that not cargo-culting?
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.
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.
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.
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.
- 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.
- 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. )
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.
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?
> 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.
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.
(Self-cite: A flow diagram with statutory citations at https://www.oncontracts.com/docs/Who-owns-an-employee-invent... )
But if say your an amateur musician your day job employer has no lien over your compositions.
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.
Which my understanding is you can absolutely do in California as well.
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.
They seem like a decent middle ground between all parties interests.
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-po...
Non-competes are useless..
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.
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
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.
the onus is on the company to go to court and do this. And this gets rejected. because indian courts have rejected non-competes as a matter of policy.
I would suggest you recheck the ground reality. And yes i do run a company in India.
That is in theory. In reality people in power have more than sufficient means to intimidate you and bring you trouble.
>>the onus is on the company to go to court and do this. And this gets rejected. because indian courts have rejected non-competes as a matter of policy.
That is if you decide to stay put despite all this for years and fight it out. Also note I myself pointed out most companies won't bother with this. Because they often have bigger fish to fry.
>>I would suggest you recheck the ground reality.
Would give you the same advice. In fact just try walking into the city civil court in Bangalore and see for yourself how it works there. Many times the advocate has to plan the exact statements to speak, write them down on paper and quickly spit them out in front of the Judge, because there is no time. The Judge himself is generally swamped and has to listen to dozens of cooked property litigation cases everyday. Your case will go sandwiched some where in between, and it will keep accumulating dates and legal fees until you give up. Long before that your will power will run out.
If you are an individual wanting to fight a company that's taking you to court for non-compete stuff the company lawyer will show up do the routine. You have to take leave from your job and deal with all these court hassles. Might as well for your own sanity give up.
Look man I get it, you are trying to sell India in a predominantly US forum. But seriously, none of what you are saying works. In fact not even remotely close.
whether you want to take it or not is upto you. India is far far more employee friendly than Europe and most parts of US.
The point of what you are talking about from a legal system is inapplicable to labor laws. I can throw the same Black-Lives-Matters issues in US courts to you and ask you to go and check New York courts for the same.
In the same vein, I can throw Anthony Levandowski case and make the claim that California is unfriendly to employees. Neither of them is true and neither is the fact that India is at all unfriendly to employees.
Quite the opposite we have a rich ecosystem of employees founding startups - Flipkart, Ola, Unacademy, Paytm are the new founding "mafias" of India. There is exactly zero cases of employees have lawsuits by their employers.
Indian (and the US) legal system and their myriad problems are true - with all its racist vs religious biases - but that has nothing to do with California employment practice or the Indian ones
They don't have land sharks raiding and occupying lands illegally, or people faking documents to sell the same lands to 10 people, like its common in Bangalore. The system as a whole doesn't have as much fraud, dishonesty and cheating as much as India. When you have this your courts don't get flooded with pointless cases, which shouldn't even exist at the first place. This allows the courts to focus on real issues, and helps fast track clearance of cases and quick delivery of judgement. You won't have this in India until the society as a whole reforms and moves towards developing universal qualities of merit, fairness and justice. Im not talking of enforcing them, but these values existing and being respected in our society as a part of our culture.
>>India is far far more employee friendly than Europe and most parts of US.
Not even remotely close.
>>There is exactly zero cases of employees have lawsuits by their employers.
Hard fact! That's for a simple reason, these employees don't matter :-). Most hop jobs every 1 - 1.5 years. Until you land a big cheque from the VCs. Then you rewrite your systems anyway.
By the time you settle your case over a decade they might have hopped like 7 companies. The original case is largely meaningless.
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".
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.
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. ;)
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.
Wouldn't it?
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/NYUL...
[2]: https://law.emory.edu/elj/content/volume-63/issue-3/articles...
SV is in California because William Schockley moved to California. It's that simple.
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”.
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...
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
Well, this is an appeal court decision, so they have already lost, appealed, and got a confirmation that they lost.
She.
(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)
We're not animals
so the engineers went to greener pastures
Well, it first seemed low to me as well.
But 0.01% of one million is ten thousand, which doesn't sound that bad. One million also seems low for a successful company. The same offer would give you ten billion at apple.
Disclaimer: I am not good at math and I don't understand stocks, equity etc. So maybe I am completely wrong.
1,000,000 USD * (0.01 / 100) = 100 USD, not 10,000 USD. The company would have to be worth 100M USD for 0.01% to be worth 10,000 USD.
> Disclaimer: I am not good at math [...]
Indeed ;-) But don't worry, many a great engineer has made worse mistakes when it comes to shifting the decimal point.
Fortunately my job does not require math skills, so at least I am no danger to society :D
- flexible schedules
- autonomy + impact
- interesting work
- culture (respect, appreciation... etc)
It's not hard for me to imagine an environment where I'd love to work despite giving up a lot of salary. Hell, I'm not unique—just look at how many incredibly skilled people choose research careers over far more lucrative industry jobs.
And yet, I don't see many startups that seem serious about this. If you want to compete for great engineers, choose some of the things I outlined, actually commit to maintaining them and figure out how to demonstrate this (show, not just tell).
It could be something as simple as a 4 day workweek. Or even 4x 10 hour days. Instead startups are a place where people are expected to put in 60 hour weeks!
If my salary is $200k, it's clear what that means, and I can be pretty confident that there won't be weird social games to get me to actually accept less this pay period. (There's an argument that income tax is an example of this, but that doesn't vary in unpredictable ways between positions.)
Yet most engineers were hired with the goal of making it "scalable" when most of the work was frontend anyway.
Feel free to do that if you think it is the right thing to do.
In fact, there are probably only two things that startups can offer that big companies cannot:
(1) A product that when successful it will change everything, think Google/Facebook/SpaceX material. This is good because it puts employees in a position to "change the word," while also potentially getting paid in the long run.
(2) Flexibility and room for the mind to work. No useless meeting, no endless discussions to cover one's ass, no set hours or obscure HR policies. Just hard work and a ridiculously challenging mission.
Outside of that, why would you work at a startup?
But when you're talking about a whole team, it's a little different. Original employer A went to a lot of expensive effort to find a very particular set of qualified engineers that could work together at the same time -- where the sum is much more than the parts.
If employer B hires the team already put together perfectly qualified for a similar task roughly all at once... they're not just taking advantage of employees' freedom (which is fine) but literally essentially "stealing" the massive work employer A did to assemble the team piece by piece.
I'm not saying it should be illegal, because I don't see how you'd write any effective law against it. But when you take a whole team at once, I think the word "poaching" is apt.
The "land use rights" part. The analogy works because on some level the company is "your land."
In that scenario, in order to entice them you might offer bonuses and salary that are disproportionate to the value those employees would contribute to your company, but the loss of those employees would cripple the competitor (loss of institutional knowledge, schedule delays and cost of finding replacements, morale, etc).
The company can counter-offer but that costs them money they wouldn't otherwise have to spend, to protect their "investment" -- the sum of the parts as you mentioned. Ideally a company would be resilient against the loss of employees (e.g. getting hit by a bus) but smaller companies like startups don't often have that luxury, which makes them more vulnerable to poaching and other shenanigans instigated by large companies.
It has been accepted for decades by the scientific community, and the general population at large, that humans are, in fact, animals. But language takes time to react to changes changes. And that’s why “we are not animals” is still being used, even though the meaning today is “we should not be treated like we treat other animals”.
Hopefully all of this is clear.
I can't imagine why you'd ever feel bad for a company that fails to retain its staff. Employees finding better jobs in other companies is one of the best market outcomes you could want.
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.
"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.
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.
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.
In that context, I don't think the comment I replied to (quoted below) is entirely fair.
>Now, I think she may have acquired a reputation as someone who ends up treating her employees like her personal property
Why don't we name and shame the investors involved here? They're just as culpable IMHO.
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".)
But after reading that, my sympathies vanished...
Or is it somehow illegal to target other business's engineers for employment?
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.
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?
(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.)
Where'd you get the idea I disagree with it? I had to word the post to fit within the HN character limit.
"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.
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-...
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.
"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."
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.
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.
----------
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]
----------
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.
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.
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...
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.
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.
I assume that my non-lawyer eyes are missing something, so I'm curious what it is.
Correct. (Poster here.)
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.
classic
"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.
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..