September 18, 2008

Entrepreneur’s Perspective on Non-Competes

Entrepreneur’s Perspective on Non-Competes (Note: I just found this post in the “drafts” folder and realize I never put it up! It was written months ago, although I just updated it a bit.) Bijan Sabet kicked off the discussion about non-competes by asserting that they are a barrier to innovation and that they are unenforceable in California anyway, so why bother? Fred continued the discussion and made some good assertions about the value of non-competes, summarizing his points as: Non-competes are very much in the interests of our portfolio companies. But the non-competes need to be tightly defined and the term of the non-compete needs to be paid for by the portfolio company if the employee was forced out of the company. The non-competes should certainly apply to all senior management team members and all key employees (like star engineers and such). It takes a lot of work to build a company. You should not risk all that knowledge and talent being able to walk out the door and set up shop across the street. Brad and Jason/Ask the VC are generally on board with Fred’s view. We’ve had non-competes since the beginning at Return Path.  I am generally in […]