Monday, December 31, 2007

Sunday's Globe column: How non-competes make states less competitive

Yesterday's Globe column attempts to explain how non-competes can make states less competitive by limiting the cross-pollinating effects of people moving from one company to another, or forming new start-ups.

Here's some video of HBS researcher Matt Marx explaining how non-competes work -- and how they worked on him (Matt began his career as a speech recognition engineer in Boston, before moving out to Silicon Valley and then back):

Bijan Sabet, the VC at Spark Capital who has been leading the charge to change the law (or at least the culture) surrounding non-competes in Massachusetts, takes me to task for not talking to big company execs about how much they love non-competes. My colleague Carolyn Johnson already did that quite ably in this piece.

Very simply, big companies like to use non-competes as flypaper, so they don't have to worry about their best employees zipping away when a better opportunity presents itself. (At Future Forward back in November, Art Coviello of RSA/EMC and Paul Sagan of Akamai said as much... Sagan even suggested that a good solution to the problem would be to have California *start* enforcing non-competes.)

Two interesting data points about local companies...

- EMC Corp. had 8900 employees in Massachusetts, and 4900 in California (these numbers include VMware) at the end of Q3 2007. The California numbers were growing *much* faster -- California had added 1400 people since Q3 2006, and Massachusetts only 270.

- Biogen Idec has 1750 employees in Cambridge, Massachusetts, and 400 in San Diego, California.

Why (let me ask rhetorically) do these companies even bother having operations in California if it is so hard to retain top talent without non-compete agreements?

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Anonymous bijan sabet said...

I didn't intend to take you to task. That wasn't my intent at all. Sorry you felt that way

I just want someone to ask emc why they have a double standard for their west coast employees and I want someone to ask emc why west coast companies do so well without them.

Unfortunately carolyn didn't do that.

December 31, 2007 12:28 PM  

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