[price]

<quote>His belief essentially was that the industry advances when people switch companies and (legal or not) take their institutional knowledge with them.</quote>

This is why it's so important that in California the law protects employees leaving companies to work for other companies -- this is legal there. You can't take code, data, hardware designs, or other concrete intellectual property -- that's forbidden by the agreements every tech company requires employees to sign. But if you couldn't take institutional knowledge with you, you couldn't work at a new company at all. (How could an ex-Googler unlearn how web-scale systems are built of many disposable pieces?) And if an agreement purports to restrict you from switching jobs, then California law repudiates that restriction.

Unfortunately some other states have no such law, and cheerfully enforce non-competes against engineers trying to switch companies. And guess what? The industry doesn't move as fast in Massachusetts as in California.

[kevinpet]

If I could point to one thing other states could do to improve their economy, it would be adopt the exact language of California's anti-non-compete and the "you own your own ideas, unless developed as part of your work" law.

Not that this is going to single handedly grow a silicon valley in Montana overnight, but it has so little downside. The reason for the exact language is because if they use the exact language consciously, they effectively import the case law surrounding those laws.

[hga]

Actually, I know of no other state that has such a law (although the Michigan legislature accidentally zapped their's for a fairly long period and research has been done on this).

I've never lived/worked in California/SV, but based on what I've read about it (e.g. Shockley -> Fairchild -> many companies is the golden example) etc. and how I've experienced on the East Coast (Boston and D.C. areas) a number of failures to even get started-up due to non-completes, I'm convinced that this one and only unique to California feature is the #1 secret behind Silicon Valley's long term success, its crushing of Route 128, etc.

[_delirium]

Georgia was one until two weeks ago, at least de facto. The language wasn't quite as clear as California's, but it was essentially impossible to enforce non-competes. A bunch of big companies managed to get an initiative on the Nov. 3 ballot to overturn that, though, and it passed, partly due to misleading language that's currently being litigated. The ballot question read, Shall the Constitution of Georgia be amended so as to make Georgia more economically competitive by authorizing legislation to uphold reasonable competitive agreements?, which is a bit, uh, indirect about the fact that its main impact will be to legalize noncompetes in GA.

It caused a bit of ruckus within libertarian-leaning circles in Georgia, with some people lining up on the pro side, arguing freedom of contract, and other people lining up on the anti side, arguing right-to-work. It was probably the only major issue where progressive groups and tea-party groups actually had the same position (against), but they were both greatly outspent by the Georgia Chamber of Commerce and business-Republican groups.

[hga]

Are you sure about that? I didn't study the issue at all, just read one or two items, but what I understood was that it closed a severability "loophole" that sounded like a very thin reed to depend on.

The very possibility of a lawsuit, even if you eventually won due to the strictness imposed on enforcement, is quite enough to quash a lot of startups. Sure, you can win, after N months and M thousand dollars spent not paying full attention to your startup (assuming you don't get TROed in the beginning). I'm also told that being the subject of a lawsuit is incredibility draining.

In California as I understand it your opponent won't even get to first base.

So, let me put it this way: in all the discussions of California's no non-compete regime, if Georgia was so good why did no ever say anything about it, as compared to e.g. Michigan? People have been pushing Atlanta as a potentially good startup area, why not advertise this advantage?

[_delirium]

Ah yeah, for startups I can buy that. Since Georgia's isn't/wasn't nearly as clear-cut as California's, it's much harder to get the lawsuit summarily thrown out, so it's a big drain for startups. The "de-facto impossible to enforce" part is more that as case law developed and somewhat expanded the "loophole", it became difficult for an employer to actually win a suit for violating a noncompete clause. But they could certainly drag it on for a while.

[hga]

Ah, yes.

And I can't believe that I forgot to mention how crippling this is when you try to raise capital, especially at the angel level. People want to invest in businesses, not lawsuit defenses, and these are high risk and hopefully high gain ventures. They don't want run an even higher risk that if you're indeed successful, your former employer will go after you with a rusty knife.

It's that risk to the high gain that's the real killer, e.g. look at all the people who've come out of the woodwork going after Facebook, some of them clearly weasels (and some not). They would have never bothered if Facebook was a "modest" success instead of a deci-billion dollar blowout, the next Google in terms of being the next big business high tech company.