zlacker

> All of these contracts are time limited, FWIW. E.g. non-solicitation doesn't mean you can never work your your colleagues again. It protects against someone leaving and then immediately poaching all employees within 12 months. After 12 months you're welcome to poach as much as you'd like.

For me that doesn't change anything. You should be allowed to tell your customer to come with you to a new business, the next day.

Companies know perfectly well that most of that value of the relationship is gone if you have to wait a year, so they pretend that time limiting is somehow reasonable.

The free market actually needs to be free.

>>lordna+(OP)
Say you join a startup. They get some early traction and they have 5 customers paying $5m/yr for a technology platform. Let’s say it took $20m in R&D and marketing to get the product built and to land those 5 multi-million dollar accounts.

Without a non-compete and without a strong IP clause, a handful of employees could very easily steal the IP and steal the client list, start a new company, offer the same product for half the price, and convince the 5 clients to come over to the new “half price” company. Putting the original company out of business. The new company employees are excited because they stuck it to the man by burying their prior employer. Fast forward 2 years, and the same stunt is pulled against the new company, and the cycle continues.

What happened was the stealing of IP and customers that cost $20m to acquire, but because you stole it you didnt have to pay that $20m in R&D and can offer the price for half off to get clients (whose contact and details have been stolen from the prior employer) to follow you to the next company.

Assuming you think this scenario is ethically wrong (maybe you don’t?), can you explain the type of contract the original company should have with their employees to disincentivize this scenario? If everything is left unchecked, there’s huge incentive and easy pathway to screw over employers for short-term gain.

Hell, if we take it to the extreme and get rid of NDAs, what’s stopping a random call center employee from selling a company’s client roster to the highest bidder?

Free market, yes. Unquestionably free market with no regulation, not going to work.

>>cj+76
> Without a non-compete and without a strong IP clause, a handful of employees could very easily steal the IP and steal the client list, start a new company, offer the same product for half the price, and convince the 5 clients to come over to the new “half price” company.

How would it be “the same product” without taking actual IP like source code or trade secrets for manufacturing? No company where the value is solely in a particular concept is going to last very long because a competitor can do the same thing. If you’ve discovered some novel physical process, chemical compound, or created a useful gene sequence, it’s unlikely that you could remember everything but what you want are patents.

>>cj+76
> Free market, yes. Unquestionably free market with no regulation, not going to work.

I agree with what you’re saying, but non-competes are an example of free market not a counterexample. The employer is willing to give you x amount of compensation in return for your labor and for an agreement not to compete for some period of time when employment ends.

>>cj+76
If the company is making something of actual value, it will be hard to replicate. Just as you can't recreate that McDonald's taste just because you worked there, most businesses have some sort of intrinsic IP that you can't steal. There will always be some risk that a team could leave and fail to recreate the thing elsewhere. In my line of business this happens all the time (quant trading). People think they know why their strat works and when they transplant it, it mysteriously doesn't work.

The solution to this is to compensate people so that they don't take the chance and leave. "I'm already making X here, why would I want to risk that?". This naturally distributes wealth a bit more evenly between the workers and the owners.

You also need to think about your scenario. If the employees are able to make the same thing at half the price to the customer, that is a HUGE gain for the customer. If another breakout crew does the same, that's half the gain again. The customer wins, but it can't go on forever, at some point it's not worth the breakout risk.

>>cj+76
Your argument works with IP alone and without client lists. You very much want to put a company's client list in the same bag as IP but it just doesn't belong. Protecting one (arguably) allows people to invest in developing something that is easy to copy when it already exists. Protecting the other is just anti-competitive practice and should be banned.

>>Assuming you think this scenario is ethically wrong (maybe you don’t?), can you explain the type of contract the original company should have with their employees to disincentivize this scenario? If everything is left unchecked, there’s huge incentive and easy pathway to screw over employers for short-term gain

"You can't use our IP if you leave, feel free to go to the clients and offer them your own product".