Monthly Archive:March, 2010

On Growth

About 7 weeks ago, I sowed the seeds of entirely too many tomatoes.

Some sprouted much earlier than the predicted germination time, and I found myself caring for spindly, tall, weak-stemmed seedlings.

Others died due to my lack of properly allocating resources to water them while I was on vacation.

Today, after hours of potting up over the last couple of weeks, I am left with 362 tomato seedlings in various stages of maturity:


Tonight, we moved them to the garage to keep them out of the coming storm for the next few days.

If I am lucky, I will end up with at least one healthy plant of each of the varieties that we can plant for ourselves in our garden, and a couple hundred for gifts to friends and acquaintances and distribution to strangers to market Tech Law Garden.

Yet again, gardening shows me that it is an excellent metaphor for technology startups. You have to invest a ton in hopes of future rewards. Even if you think you know what you are doing, there is great attrition. There are unexpected obstacles. And, when things are good, the growth is much faster than you expected, which can be an obstacle to success in and of itself.

Please shoot me an email or give me a call if you’d like a tomato seedling or three.

Non-Competition Agreements

California’s strong public policy against non-competition agreements is one of the reasons why Silicon Valley exists.

In most states, at the time of hiring or during employment, employers can require employees to sign an agreement not to compete with the employer’s business after termination of employment, so long as the agreement is *reasonable.* Each state has a different interpretation of what is *reasonable* but in general, in those states, the agreement must be limited in three ways:

1. The scope of the business that is considered competing,
2. The territory where the employee is not allowed to compete, and
3. The length of time during which the employee may not compete.

In California, however, Business and Professions Code 16600 expressly prohibits employers from requiring employees not to compete with them after their employment has ended, in any way (regardless of how employment may have ended):

Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.

This policy in support of “freedom of movement” of employees is very strong in California. In 1872, just seven years after the abolition of slavery and indentured servitude via the 13th Amendment, the legislature parted with the English common law “rule of reasonableness” standard for non-competition agreements and enacted Civil Codes 1673-75, the precursors to today’s Business and Professions Code 16600-16602.

The courts have applied these statutes and the public policy over the years to show that unless you fall into one of the narrow statutory exceptions (set forth in 16601-16602.5) where a non-competition agreement is acceptable, the contract is void, and, in fact, may be the basis of tort claims against the employer who required you to sign it.

This means that in California, an employee could leave Google and immediately start a software start-up in Mountain View, whereas in Boston, that same Google employee may be subject to a contract that would mean she couldn’t start a software company in the same location for a year, or possibly even longer.

This provision does not give employees permission to utilize their former employer’s trade secrets in their new businesses, of course, but it does give them the freedom to apply their generally applicable skills in a new venture that may be competitive with their former employer.

We can thank the California legislators of 1872 and the judges who have applied this law and the policy in support of each individual’s right to work in his or her chosen profession for helping to create an environment where so many new technology companies can be started and thrive.


The rains have brought prolific propagation in the garden.


The problem being, of course, that many of the big plants that took over in the absence of our discipline are weeds, or overly mature plants with nothing to offer but removal of nutrients from the soil. Sure, many of them are flowering pollinators (yay local bees!), but, if we are honest, they are weeds all the same.

This weekend, we spent much time culling. It was unpleasant and a task we put off for entirely too long, which made it even more difficult than it should have been. But now, after getting rid of the things that had been growing without a plan, we have room to put in the summer plants and enjoy bountiful harvests.

This post, of course, is a metaphor for my start-up companies. I’ll avoid the overly precise analysis, because experience has taught me that this is one of those lessons, whether in the garden, or a seedling company, that must be learned first hand.

Here’s to culling when you need to, new beginnings, and the celebrations of spring!

Open Source Legal Docs?

Ted Wang, with the support of Andreessen Horowitz, recently posted some open source legal document forms for companies seeking seed funding.

It’s an interesting concept, and in the abstract, one that I’ve been thinking about for quite some time.

I think, in general, the open source software movement has changed the game.  Not by devaluing the skills of the individual developers, but by decentralizing the control of the software they write from the few corporations to the many of the masses.

This change has resulted in amazing progress in some areas, and, of course, ridiculous amounts of navel gazing in others.  But, at a high level, what it’s really done is to move the value associated with the software from the centralized control of powerful corporations to the decentralized control of the skilled individuals who contribute the copyrighted works.

And, in doing so, it’s shown that In many contexts, the value of open source software is not in the copyright to the code of a particular project, but rather in the goodwill of the community that is supporting, maintaining, and potentially following the direction of the steward of the code of that project.

By analogy, it’s not like posting documents that are freely available in the legal start-up space is a new move.  The National Venture Capital Association has made its standard forms available for many years.

But, the difference with Series Seed is the stated goal.  The open legal document movement, if it is to succeed where it applies to start up companies, is in desperate need of a dedicated community, and most likely, a community-trusted steward who will take this project on and protect it, preside over disputes, and act as a neutral third party when folks with an interest in the project have different goals.

It should be interesting to see if the Series Seed project moves in this direction and is able to play this role in the seed funding community.