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Comment by btgeekboy | Hacker News Reader

As much as I am not a fan of non-competes, having read the complaint, it appears that this is the exact reason non-competes exist. This isn't about an Amazon SDE that worked on the amazon.com retail site moving over to work on Gmail; the guy was responsible for working with AWS partners, and now works in the exact same position for a direct competitor, in a position where external contacts and relationships are key. Google even recognized this with their own agreement not to use that information for a period of 6 months.

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The problem with this line of reasoning is that you are effectively blocking someone from participating in their chosen profession if they don't continue to work for the same company for whatever reason. Just because his connections were valuable doesn't change the fact that he was also valuable - Amazon shouldn't have the right to keep him from using his experience in his profession.

Agreed that he shouldn't be kept from using his experience, or knowledge - but the question is, should he be allowed to transition all of the customers that he acquired (or perhaps even inherited) while at Amazon over to Google?

And if Google has any ethics (which it does, and presumably he does too) he won't transition any of those customers. The list of customers would be considered proprietary information. But his experience in dealing with customers, in general, is presumably how he stays employed.

If they want that? Yes. Why not? Does Amazon have some kind of "we got them as customer once, now we own them" privilege?

Non-competes always sounded to me like an incentive for companies to behave bad. "Well, Bill cannot work somewhere else as long as we compete, so we don't have to treat him well. And the customers he brought in won't be going anywhere else for the time being, so we don't have to treat them well either. Perfect."

Exactly. Customers are not company property, but companies sure as hell want to treat them like they are. It's anti-competitive behavior.

If it's anything like e.g. financial planners (and I'm not sure that it is, but I have some familiarity with similar situations in that field), when he moves to a new firm he isn't allowed to inform any of his former clients, and the old firm won't tell them where he went, but any clients who figure it out and can procure his new contact info are welcome to transfer their custom to the new firm.

If you have clients that are willing to switch firms to stay with a particular person, is that person not just as much part of the product as the financial instruments hes selling? If my doctor switches practices, but he knows my medical history, is the doctor not as much part of the service as the medicine itself? Would it be appropriate for a practice to keep that doctor from working as a doctor somewhere else because of competition?

You have to balance that with the fact that the doctor has the right to stay employed. If contents of the doctor's brain (including the medical history of his patients) are so critical that the practice would lose customers if the doctor left, then instead of pursuing legal action against the doctor if he leaves, the practice should ensure he is compensated enough that he has little incentive to leave.

Well in fact financial planning is in large part a snow-job. (The parts that aren't "invest in index funds", that is.) So the greatest actual skill is customer relations, which is an inherently personal thing. It's not clear that IaaS is equivalent, but maybe that's what Amazon are implying with this lawsuit.

If your product is so comparable that customers will move to a competitor because their salesman moved, does the public have any interest in having the government act as protection-money collector?

Excellently put.

He could have joined a SaaS company and sold a non-competing service. For instance, New Relic.

Same industry, same basic clientele, 0 competition from Amazon, 0 grounds to hit him with the noncompete.

It's still wrong. If Google's offering is better than Amazon's for some customers, why can't the sales guy who used to work for Amazon tell the customers they should get Google's offering? Customer wins.

Am I missing something?

The person buying the cloud offerings is not the only customer. Amazon is also a customer, and in their compensation agreement with the vendor (the ex-employee), the ex-employee agreed (presumably) not to work for someone else for some period of time.

Whether or not that should be legal is a different matter. Sometimes if all employers are doing it, it can result in an unfair and unhealthy environment for employees, however, sometimes if all employees can switch jobs willy nilly and take clients with them (especially those with strong relationships with clients), then it can become an unhealthy environment for employers.

"...then it can become an unhealthy environment for employers."

It's called competition.

Competition isn't magic fairy dust that makes everything better.

e.g. "Progress comes from monopoly, not competition" — Peter Thiel

That said, lack of non-compete enforcement is often credited as one of the contributing factors to California's excellent startup environment.

> Competition isn't magic fairy dust that makes everything better.

Certainly seems to be Amazon's pitch that it is in fact fairy dust when they're driving their competition out of business.

Stagnation comes from monopoly.

Yes, but consider this: you have a government-protected monopoly on your home when you own it. Imagine if anyone could compete for your home simply by occupying it. That would be economically ruinous.

Intellectual property is also a government-protected monopoly, created for the advancement of society.

Basically I'm saying that monopoly can be good or bad depending on the specifics. So competition can be very destructive in some cases.

"...capitalism's most dangerous enemies are capitalists." -- RJS

If you don't want your clients to switch just because one of your employees switches, don't design your systems to be so reliant on the actions of an individual employee, and don't make your offerings so weak compared to the competition that your clients are willing to switch.

Win by providing better products. Anything else shouldn't be encouraged by the legal system.

...anything else wasn't encouraged by the legal system. The 2 parties (Amazon and employee) entered into a voluntary and disclosed contractual agreement.

Also, sometimes it's not feasible/possible to design a system where clients aren't so reliant on individual employees. For example, in the legal and finance professions, certain key people have so much knowledge regarding certain deals / events, that you can't just swap them out. It is a major investment on the part of a company to train and get someone up to speed on a piece of business, and one way to mitigate the risk of them leaving is to have them sign a voluntary agreement to not compete for x amount of time.

Obviously, this can be abused in situations where employers have the upper hand. But in many high powered positions where highly qualified people have a lot of leverage against their employer, it could help reduce costs a lot (for the end consumer also, since the risk of someone leaving and taking the business would just raise the prices you have to charge to mitigate that risk, as opposed to a non compete).

so was the employee paid for this and no just having the job doesn't count

In places like (e.g.) the financial sector, they have compensation for the duration of the non-compete. Many tech sector employers have no such concession. They basically want you to just 'not work' in the tech sector for the duration of the non-compete, which is completely not fair to the worker.

High level corporate sales is basically buying a suave guy who has a rolodex of people who can make purchasing decisions.

It is a huge problem if that guy can then turn around and use the contacts he gained through Amazon to compete with Amazon. He is basically turning Amazon's network of contacts into his own and then selling that access to a competitor. It is basically the sales/bizdev equivalent of taking Amazon code and handing it over to Google for a price. Amazon shouldn't have to pay money to negate that risk.

Technically, even in California, if he did something like that it would hold under any reasonable non-solicitation agreement I believe. It is the exact reason these agreements exist.

I'm not 100% sure that is what happened but it sounds like it.

> "High level corporate sales is basically buying a suave guy who has a rolodex of people who can make purchasing decisions."

If you're buying a guy with a rolodex, do you really own his rolodex or are you renting the use of it?

If said rolodex was created on Amazon's watch, with Amazon resources, you can make a pretty decent claim to ownership, but if those contacts pre-dated Amazon, then (not legally speaking, morally) can Amazon really lay ownership on it?

I could be wrong but based on the article...

> If you're buying a guy with a rolodex, do you really own his rolodex or are you renting the use of it?

Both. His job is to convert contacts into customers. If contacts become customers, his obligation is not to re-sell the same customers to the next company.

> If said rolodex was created on Amazon's watch, with Amazon resources, you can make a pretty decent claim to ownership, but if those contacts pre-dated Amazon, then (not legally speaking, morally) can Amazon really lay ownership on it?

Key bit from the article was: “Szabadi was involved in developing, implementing and managing Amazon Web Services’ strategy for many of its partners, and was the first point of contact for most partners who were considering working with Amazon.”

I'd say, morally, its quite reasonable to say "No, you can't solicit business from our customers for X months." Amazon is just playing it cautious and being negotiated down to that position.

It is a huge problem if that guy can then turn around and use the contacts he gained through Amazon to compete with Amazon.

What makes Amazon different than the past few centuries of commerce?

...nothing.

http://en.wikipedia.org/wiki/Non-compete_clause#History

That is why non competes are centuries old.

So unpack it a little more: why would non-competes ever have been weakened?

It is like anything else in terms of legalities. Sometimes people get overzealous and go too far.

Turn it around. How would you feel if you solicited business from Customer X, hired another consultant to perform 50% of the work, then they turned around and stole Customer X from you because of the contacts/access they gained from when you hired them?

I was under the impression that non-competes were legally implemented not to stop employees moving, but to stop an owner from selling a business with goodwill, and then starting up a competitor across the road and reducing the goodwill be retaining their old customers. I have no evidence, but had assumed that the modern non-compete enforced on employees by employers came out of a precedent based on this law and has slowly gained acceptance. Happy to be educated if somebody knows more.

I don't know the history but if that were the case then the non-compete should be between the owner and buyer, not employer and employee. It makes no sense to go after the employees to prevent former owner competition.

Nope, provisions for that are in M&A agreements and part of the reason why acquiring companies takes so much money and [lawyer]time. And it's in no way a "precedent based on this law" - what do you mean by "this law"? All of these provisions are in private contracts, not in legislation.

The classic use of non-competes is for salespeople or high-level service people (lawyers, consultants, etc) not taking their customers with them when leaving.

Those are one of the few types of non-competes that are enforceable in California. Otherwise, the majority of non-competes in America, by raw count, are not about owners selling the company.

Corporations can treat employees as cogs, but expect them to not be a similar fitting cog in another organization if they decide to leave of their own will? Yet, they can be fired at any time? Seems one sided.

Amazon should compete using the quality of their product, not on the quality of their rolodex.

Not generally how it works.

Ask any startup founder who had a better product and failed against the bigger competition.

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