That noncompete pact may end up hurting recruiting
Is a noncompete agreement keeping you stuck in place? Since late last year, Boston venture capitalist Bijan Sabet has been crusading against the noncompete agreements many employees in Massachusetts are required to sign; they're intended to keep people who depart from immediately jumping to a rival company. Sabet believes such contracts discourage employees from leaving big companies to pursue entrepreneurial dreams, diminishing innovation. This month, Sabet helped organize a panel discussion at Harvard Law School on the impact of noncompetes, and entrepreneur Christopher Herot blogged about it.
The consensus of the panel was that these restrictions are bad for the economy, and whatever small benefit they may have for a company seeking to retain its employees is more than offset by the difficulty that same company will have in recruiting. Prof. Lee Fleming of the Harvard Business School presented some research which showed that non-competes reduce employee mobility by 20 to 30 percent, and Paul Maeder of Highland Capital Partners put forth a model that showed how this could reduce the formation of new companies and the growth and innovation they could have provided. Bijan Sabet of Spark Capital added that his firm discourages companies in its portfolio from demanding non-competes. Rich Miner added that Google, which is headquartered in California, does not require non-competes from its Massachusetts employees.
With all this agreement on the negative effects of non-competes, the mystery is why they persist. The panelists were not optimistic that the Massachusetts Legislature would change the law, since there was not a powerful constituency lobbying for change but there were large employers in the state who like things as they are. More likely, the change would come as newly educated employees weigh job offers in Massachusetts and California and refuse to work at companies that want them to sign. Also, enlightened VCs such as Maeder and Sabet stated they would continue to lobby their colleagues at other firms. herot.typepad.com
BEFORE TWITTER, TONY ROBERTS: Twitter is an increasingly popular online service that lets you publish short dispatches (or tweets) to an audience of followers that receive them instantaneously - sort of like small doses of a blog taken intravenously. Public relations exec Lois Paul describes the different personas of people who use Twitter, including the "personal diarist" and the "self-promoting narcissist." Another is the "Homage to Tony Roberts."
For those of you who aren't Woody Allen fans, Tony played Woody's friend who, before cell phones, had a habit of stopping at every phone booth or office phone to call his answering service to tell them his exact location in case an important call was coming in for him. "I'm at Lexington and 75th right now, heading north." It was a hilarious bit, and the tweets that constantly tell me exactly where the person is - on the runway at JFK, getting ready to walk into a meeting at XX location, working at home at XX, looking out my window at XX - remind me of Roberts. They also remind me that people should reread some of Patricia Cornwell's books on serial killers stalking their victims before they reveal so much info about their patterns and whereabouts. I guess Twitter isn't for the paranoid. loispaul.typepad.com
ENTREPRENEURIAL LAG: On my Innovation Economy blog earlier this month, I posted about the publication of a new report produced by the research firm Mass Insight Corp., which examined the challenges of keeping the state's defense, information technology, and communications industries competitive. Tim Rowe, chief executive of the Cambridge Innovation Center, a shared office space occupied by dozens of small companies and venture capital firms, posted this comment about the report:
If you assume that venture capital dollars invested are a good indicator for the total amount of entrepreneurial activity here, we are falling behind dramatically. I recently pulled the publicly available Pricewaterhouse Coopers MoneyTree figures on venture capital investment in New England vs. Silicon Valley over the past five years. The verdict? Five years ago, in 2003, Silicon Valley was twice the size of New England. Today, Silicon Valley is three times the size of New England. They have been growing steadily, and we are . . . flat. If you look at the next three regions ranked by 2007 VC dollars invested (San Diego, Los Angeles, and Texas), [and] you sum them up and plot them alongside New England and Silicon Valley, that tells another interesting story. The next three regions are on the same curve as Silicon Valley. This suggests we have a real problem here. innoeco.com
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