Non-Competes in a Down Economy

I keep inching and inching into the beat of my colleague, Ray Capece of Venture Files, but I think it’s pretty important and weighty times for web professionals and small business owners alike. Unlike anytime in our history, the uncertainty of the future of our world and country are great.

Everyone is speculating about what the economic downturn bodes. Some Evangelicals I’ve talked to think that the investment of the Federal government into banks represents something akin to the fulfillment of end-time prophecy regarding the mark of the beast.

Others more focused on geo-political analysis believe we are seeing the end of the American Empire.

All of this is speculation and may or may not have merit. We simply don’t know. However, what we do know is that people are losing jobs, including in the web industry. We do know it’s hard for people to sell their homes without walking away still owing a mortgage. We do know that the impending baby boomer retirement wave just got pushed back.

A lot of companies, particularly smaller ones, like to use non-compete clauses to ensure that good help doesn’t go to a competitor when that help leaves. But what does that employee do when they are laid off and still have a non-compete?

While I will give my disclaimer that I am not a lawyer, I will say that anecdotal evidence suggests that non-competes are mostly unenforceable. Most laws are drafted in such a way that non-compete only have grounds when trade secrets are in play but countermanding court rulings suggest that no company can restrict someone from making a living.

Talk to your lawyer if you are unclear. At the end of the day, I suggest staying in a stable job if you can at least for a year or so until we put some distance between now and then. If you absolutely must leave, you probably don’t have to worry about non-competes with the economy the way it is. Take the job you can. Just don’t go sharing the information specific to the company you left with the company you are joining. That would be competitive and would probably be enforceable.

Also, if you can, honor your non-competes because it will speak better to your character. Sometimes it’s not possible. I get that. But all things being equal, if you can honor your non-compete, do so. When I left b5media, I was under a non-compete. In fact, I still am for another month or so. After my announcement, I had a number of blog networks approach me asking me to come work with them and I turned every one of them down because I made an agreement that I very well could stand by. So I did.

Hints at an $800 Apple laptop, Bloggers Report, Stock up 4 points

It was quite interesting to watch the market swing yesterday. Apple (AAPL) took a 20% hit on the market last week when it was expected that consumer spending on “bling” would be reduced. “Bling” stocks like Apple, Starbucks (SBUX) and other companies representing consumers “living the life” mentalities tanked with futures projections.

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And then yesterday came. Duncan Riley had an exclusive reporting the imminent release of an $800 laptop from Apple, the first sub-$1000 machine ever in the line of Apple products. From there, well read blogs like VentureBeat, MacRumors and Gizmodo – to name just a few – ran with the story.

Later in the day, Engadget reported an October 14th event where Apple would announce their new laptop line. Former Engadget editor, Ryan Block, 9 to 5 Mac and Digital Daily – again, to only name a few – ran with the story.

The result was fascinating. The DJIA is currently down over 300 points indicating yet another bloodbath on Wall Street. However, Apple stock is through the roof, up almost 5 points at this moment.

I am in no way suggesting people should go about trying to manipulate the market by creating stories or otherwise fabricating false positive pressure on the market. That is a crime. However, it’s important for blogger to recognize their ability to affect the market for the positive or negative.

And the pressure remains on the top-tier bloggers to use that power wisely and recognize that their words matter. If ever there was a “responsibility” at the feet of these bloggers, it is now.

It's the Economy, Stupid

Wow, so two weeks ago I wanted to write about technology and business. And I still do (and will). However, there comes a time when an adjustment needs to be made, and for me that time is now.

The economy is in the tank with no end in site. Asian markets dropped 9% overnight and the European markets took a battering until the coordinated move of central banks moved to adjust interest rates around 4am this morning.

New York City at Night

Banks are closing left and right and the government is bailing not only the banks out, but also commercial entities. In the last few days, no fewer than three people I know have lost their jobs.

People are scared, and rightly so. This is the darkest hour in recent history, rivaled only by 9/11.

Last night on FriendFeed, my friend and colleague Robert Scoble was fretting about the downward spiral. Scoble, to his credit, was trying to work the fear out of his system. Some people felt he should step up and be a leader and inspire confidence, while others felt his pain and lamented with him.

For my purposes, I’m scared as hell, but I’ve chosen to be confident. This is not a false confidence. This is a confidence based in reality and historical context.

Look, folks. Things are going to get worse before they get better. I like Jason Calacanis’ point in in one of his most recent newsletters entitles (The) Startup Depression:

Depending on your DNA, getting your ass kicked is either complete
torture or deviantly rewarding. Truth be told, I like getting my ass
kicked because it makes me angry, motivated and focused. If I look
back on the couple of moments of success I’ve been lucky enough to
have in my life, they all seem to come after a good ass-kicking.

The darkest hour is”“in fact”“right before the dawn.

I’ll also never claim to be an economist, but I read and listen to smart economists and money-people. I look at evidence they provide and I run it through my bullshit filter and what comes out the other side gets stashed in my collective. I reconcile conflicting data and try to understand those conflicts.

Here’s what I (think) I know.

Human nature is all about patterns. When a pattern changes abruptly, it takes us out of comfort zones and can sometimes induce panic. It happens when you lose a job. It happens when you meet your girlfriends parents for the first time. It happens when you transfer into a new school. And it happened when the market started selling off at 500 points a pop.

In the case of the market, 500 points looks big – and it is – and the ramifications for someone like me or you who are not traders and don’t understand the nuances of the market are psychologically intimidating.

Fear breeds a lack of confidence. A lack of confidence breeds fear.

Because humans are a people of patterns, after a few weeks of major drops on the market, a pattern and a cognitive comfort level sets in. Investors begin to see opportunities instead of challenges. Bargain buyers go thrift shopping and a rebound begins.

In my investment armchair, I see the end in sight. We are not there. We are going to see lots more before it turns up. But, my instinct tells me we are nearing a bottom. That doesn’t mean things turn around overnight.

In fact, I expect a lot more people to lose their jobs. The web sector has been largely immune, but will probably get walloped hard too. I spoke yesterday of staying in a self-employment situation if you can and staying in a stable 9-5 if that’s where you are now.

Which brings me full circle. We need leaders. We need people who are going to step up and instill confidence. Fred Wilson did this yesterday and I want to see more from a fiscally minded individual like him (he’s a VC). Scoble is still trying to process it all, and that’s expected, but I hope he will come to grips and start inspiring people at some point.

All of the proverbial A-listers need to step up their games right now and be leaders. In the days to come, I’m likely to write a series of posts on leadership. In the months to come, I’ll also take a much bigger look at the economy in the web space and outside. In World War II, homemaking women went to work in the factories to support the men in battle. It’s our responsibility to take the positions we have and do good in the economy and for our space.

So, though I’ll continue to write about the web, business, technology etc – I’m also going to be talking economics. I don’t know everything, but what I learn I hope to pass back. We will get through this because we have to.