On Thursday, Massachusetts Governor Deval Patrick proposed an economic development bill that calls for the elimination of non-competes, as well as proposes new spending for a global Entrepreneur in Residence program to let foreign students stay in Mass. to work in startups. The conversation is undoubtedly a controversial one for Massachusetts' businesses. The buzz swirling around the non-compete portion of the bill is largely thought to be a split between the old and the new: the larger, more established companies for non-compete enforcement, and the younger, leaner startups for non-compete elimination.
It’s tricky because no singular company wants to be the first to make the move. “It’s hard for a company to be the first to not enforce non-competes, because all of their peers do it, and they don’t want to be at a disadvantage,” MassTLC President Tom Hopcroft told BostInno, noting that he sees the appeal in both arguments.
Tim Rowe, the founder and CEO of the Cambridge Innovation Center, stated that while he currently uses non-competes at the CIC, he’s ready and willing to make the switch when – and if – their wiped out on a larger level. Noted Rowe to BostInno via email:
Massachusetts' current non-compete laws are great for company owners, and terrible for Massachusetts as whole. I use them in my company because we can't unilaterally disarm, but I'm ready to when everyone else does. True story: my hairdresser can't leave and move to another shop because of a non-compete. This is crazy. In any other arena, we'd call this "restraint of trade." The net effect of our antiquated laws is to force our rockstar employees to leave the state. Twitter was founded by an ex-Google employee. Massachusetts needs stories like that to be able to happen here.
Despite the state’s current approval of non-competes, startups within Boston are taking it upon themselves to drop non-competes from their own company policies.
Since its founding in 2010, brand-to-retail marketing platform Promoboxx has never entertained the idea of forcing employees to sign off on a non-compete, according to CEO Ben Carcio. “Call me naive, but if I can't retain good, smart people, why should I restrict them from applying their trade to another company within our ecosystem,” Carcio told BostInno via email. In terms of the bill itself, the entrepreneur added, “if this makes Massachusetts a better place to attract outside talent, I'm all for it."
Textbook replacement company Boundless has also long been against non-competes. The startup’s Co-founder and CEO Ariel Diaz explained he has never made the team sign off on non-competes. He shared:
We believe they’re unhealthy for a vibrant startup ecosystem, and voted with our own employment agreements. As long as employees don’t take valuable company IP to a competitor, they should be allowed to move their careers forward. Stock options vesting is already a very effective way to both motivate people to stay, and also to have a fair pre-established outcome if someone leaves: you stop vesting.
Jason Jacobs, founder and CEO of fitness app RunKeeper, also published a blog post Thursday morning announcing that the startup is doing away with non-competes. Jacobs wrote that when they started the company, they included a non-compete provision simply because it was a standard term at the time. Explained Jacobs in the post, “It never really sat well with me that we had this provision in there, and today, I am pleased to announce that we are taking it out.” Rather, the company wants to attract and retain top talent through a shared mission, values and passion for solving their problem. Continued the CEO:
We are building a company that is committed to attracting and retaining great people as we grow. We intend to do so by working to solve important problems, surrounding ourselves with incredible people that share the same mission and core values, and fostering an environment where these people can thrive both personally and professionally over a long period of time. We do not intend to attract and retain great people through silly policies that restrict where they can and can’t work, if they choose to leave us.
Governor Patrick’s economic development bill has the potential to usher huge changes into Boston and Massachusetts’ technology and business sectors. Promoboxx, Boundless and RunKeeper are just three of the startups that have already taken the first steps toward the fight against non-competes by banning them within their own businesses. But will other, bigger firms follow?
Let us know what you think in the comments section below.
You can find and contact your local legislators about the economic development bill here.
Image via IdeaMensch
