Banning non-compete agreements is a hot button issue — that much was clear in Twitter land on Tuesday morning.
As business groups and labor councils gather in Olympia to testify in favor of and against a bill that would eliminate non-compete agreements in Washington, a local venture capitalist and the leader of the Washington Technology Industry Association debated the issue on Twitter.
The bills would bring Washington state more in line with California law, preventing companies from keeping departing employees from taking similar jobs at competing companies for specified periods of time after they leave. It’s a controversial issue in the technology industry and in Washington state, where companies like Microsoft and Amazon have repeatedly used non-compete clauses in employment agreements to keep former executives and engineers from working for rivals.
Chris DeVore, managing director at Techstars Seattle and general partner at Founders Co-op, has long believed that non-competes inhibit innovation and force entrepreneurs to move elsewhere. He jumped on Twitter today to again prove his point.
Imagine that, lobbyists for tech incumbents think #WA should limit labor mobility; shame on them! https://t.co/NFZylohhI8 cc @CEOsherpa
— Chris DeVore (@crashdev) February 2, 2016
By all means, let's send our best tech founders to the Bay Area by limiting their career options in #WA, brilliant! https://t.co/NFZylohhI8
— Chris DeVore (@crashdev) February 2, 2016
Michael Schutzler, president of the Washington Technology Industry Association, thinks that there is a legitimate concern about the effects of engineers leaving companies with specialized knowledge and then competing head-to-head with their former employers. He responded to Devore:
@crashdev @geekwire Chris – a mountain of evidence that says you're wrong. Stanford bill is solution seeking a problem.
— Michael Schutzler (@CEOsherpa) February 2, 2016
The two battled back and forth from there. Here’s what happened:
@ceosherpa @geekwire I’ll put my evidence against your corporate backers’ any day, how’s this for a start: https://t.co/xCJHWYsgeu
— Chris DeVore (@crashdev) February 2, 2016
We will have to agree to disagree. Evidence says ICT not hampered by current laws. https://t.co/Ko5iyVpV4v
— Michael Schutzler (@CEOsherpa) February 2, 2016
@ceosherpa Please cite actual “evidence”, not claims of such #noncompete #WA
— Chris DeVore (@crashdev) February 2, 2016
@crashdev @geekwire I have 30+ years experience on this. You don't. ICT is not Jimmy Johns.
— Michael Schutzler (@CEOsherpa) February 2, 2016
@ceosherpa @geekwire Ooh. Yours is bigger, huh? Pretty happy to go toe-to-toe on what makes entrepreneurial ecosystems function
— Chris DeVore (@crashdev) February 2, 2016
You're the one claiming there is a problem in WA. Where's the beef? https://t.co/9iDLeR5YJj
— Michael Schutzler (@CEOsherpa) February 2, 2016
That study is (a) old and (b) about Boston and (c) the inverse of your proof. Where is WA evidence? https://t.co/lemHr2Ci18
— Michael Schutzler (@CEOsherpa) February 2, 2016
3000 companies formed; 25K employees change employers; $500b market val created. Where's the problem? https://t.co/8xs8iV3Egz
— Michael Schutzler (@CEOsherpa) February 2, 2016
@ceosherpa Of course, “more study is needed” is the incumbent’s favorite dodge; why is #CA the most innovative state in the US? More study!
— Chris DeVore (@crashdev) February 2, 2016
CA is a horrible benchmark. Mercenary culture and colluding companies seeking shelter from the storm. Lovely idea. https://t.co/QGgl5pQAZs
— Michael Schutzler (@CEOsherpa) February 2, 2016
Which companies did you serve as CEO? How much capital did you raise? How many engineers did you hire? https://t.co/HkHtp4kzZ4
— Michael Schutzler (@CEOsherpa) February 2, 2016
@ceosherpa Ooh, that’s a big one you’ve got there! How many entrepreneurs have you helped when your name wasn’t on the door or cap table?
— Chris DeVore (@crashdev) February 2, 2016
22 companies with my own money. Another 100+ as advisor and mentor. https://t.co/0ryC4uJnSV
— Michael Schutzler (@CEOsherpa) February 2, 2016
@ceosherpa Fantastic + news to me! I’ll make sure you’re on the list for the next TS investor day, we need more active angels in the PNW ;)
— Chris DeVore (@crashdev) February 2, 2016
You are myopic. Apparently on non-competes and active angels. I'm at with 9mile labs. Good luck at TS. https://t.co/eczGv07byu
— Michael Schutzler (@CEOsherpa) February 2, 2016
@ceosherpa Thanks for the name-calling, that definitely elevates the debate. Glad to know 9Mile has such a strong supporter in you.
— Chris DeVore (@crashdev) February 2, 2016
We reached out to both parties for follow-up comment. Here’s what Schutzler had to say:
“I’ve surveyed more than 100 companies on this topic since DeVore started making noise about it this summer — most of the companies are small, some larger, and yes I’ve heard out Microsoft and Amazon as well,” he said. “There is nearly perfect alignment on the need to protect IP with non-competes and WA state has reasonable and rational rules.”
Update: Giri Sreenivas, a Seattle entrepreneur who founded a mobile security startup called Mobilisafe that was bankrolled by Madrona Venture Group and Trilogy and later acquired by Rapid7 in 2012, shared some insights on Twitter:
Noncompetes need to die in WA. We would have a cleaner departure from TMO if this was fixed back then. https://t.co/TKuoHVmKPL
— Giri Sreenivas (@giri_sreenivas) February 2, 2016
I wasn't going to get involved in this whole discussion about non-competes until I read the back and forth b/t @crashdev and @CEOsherpa /1
— Giri Sreenivas (@giri_sreenivas) February 2, 2016
But I'm sick of seeing stupid shit like this all the time in WA. Non-competes affected our formation of Mobilisafe, affecting recruiting /2
— Giri Sreenivas (@giri_sreenivas) February 2, 2016
We had to get exec sign off on our company at T-Mobile AND DT, along with ushering T-Venture into our round. The threat was real /3
— Giri Sreenivas (@giri_sreenivas) February 2, 2016
We were not executives, we weren't even directly competing with anything TMO was building. BUT the discussions focused on enforceability /4
— Giri Sreenivas (@giri_sreenivas) February 2, 2016
Go read the bill: https://t.co/RNSzeKTxA9 and remember that there is bi-partisan support for it. This is not a liberal/conservative issue /5
— Giri Sreenivas (@giri_sreenivas) February 2, 2016
Citing companies formed, market cap created, etc. as evidence that innovation is not hurt by enforceability of non-competes is bad logic /6
— Giri Sreenivas (@giri_sreenivas) February 2, 2016
worse yet – attacking the other side based on prior accomplishments detracts from the merits of the argument and insults founders in WA /7
— Giri Sreenivas (@giri_sreenivas) February 2, 2016
It would be better to discuss the specific components of the bill and what should be changed to address concerns on both sides /8
— Giri Sreenivas (@giri_sreenivas) February 2, 2016
But a fundamental flaw is believing that big companies and startups somehow benefit from forcing people to be and feel trapped /9
— Giri Sreenivas (@giri_sreenivas) February 2, 2016
The last thing I'll add to this is on the exit side. We had a solid exit and still had to subject ourselves to a non-compete /10
— Giri Sreenivas (@giri_sreenivas) February 2, 2016
Just imagine you develop a passion, get expert level at something and then agree that you will take a forced vacation from that passion /11
— Giri Sreenivas (@giri_sreenivas) February 2, 2016
The idea that IP/knowledge is developed solely during employment & should limit subsequent endeavors is out of tech with reality /12
— Giri Sreenivas (@giri_sreenivas) February 2, 2016
that's all for now -TL;DR – kill noncompetes = more startups, founders, happy employees, jobs, better economy.
— Giri Sreenivas (@giri_sreenivas) February 2, 2016
