Wow, just wow. I'm reading that same book, but haven't gotten to that part yet. All I can say is... we (Fogbeam Labs) would never, ever, ever do something like this. When the day comes that we have money to hire employees, we are going with a strict policy of "We will poach anyone, anytime, from anywhere. If you want to keep your employees, treat them well enough that they won't want to leave".
Your startup sounds like the kind that won't have trouble attracting people, myself included.
I think he's guilty of trying to overly engineer management here and don't agree but he does have a logic around a really narrow use case.
All you are saying is that you are free from reprisal in that situation, OK, great, but that doesn't improve your compensation situation.
There is a really profound, fundamental mismatch in power between employers and employees: an employee depends upon the employer for the means of basic existence, while the employer does not have the same dependence on any given single employee.
That disparity in power means that there must be very strong legal and social constraints on employers to make the labor market reasonably fair and equitable. Since essentially the only means the employee has at their disposal to better their situation is leaving or seeking better offers elsewhere, this fundamental right must be strongly protected.
Employers can't have it both ways: laws that allow them to fire for any reason or no reason, set any level of compensation they choose (including cutting pay at any time for any reason) all in the name of the free labor market, but at the same time making secret backroom deals to limit compensation or employee attrition. It's either a free labor market or it isn't.
Laws against hiring and pricing agreements are interventions in the market. Laws against hiring agreements are not consistent with a free market.
There's nothing wrong with people (employers) making agreements with other people (employers) regarding the things they own (their money).
Price fixing and hiring agreements do not involve force, fraud, or misrepresentation- yet the regulation or prohibition thereof directly violates the property rights of the market participants.
I've read the Wikipedia entry you've linked to in its entirety, so I kindly ask that you will read this one: https://mises.org/daily/4397
The percentage of people who agree with what I've asserted here has no bearing on the validity of my arguments. And attacking my argument for being libertarian is argumentum ad hominem. Shooting the messenger does not address the message.
No. Saying that the framework you're basing an argument on is flawed isn't dismissing the argument because of a personal flaw of the person asserting something. It's saying that the core axioms/assumptions are flawed.
Maybe you over-identify with that ideology and are taking criticisms of the ideology personally since it feels personal, but it's not at all about you, it's about the ideas you're espousing.
And you've espoused none. You may disagree with said axioms but you haven't pointed out what those are or why you disagree with them.
"You're wrong" isn't an argument. "You're wrong because what you're saying sounds like libertarianism" isn't an argument either.
Hiring agreements are where an employer uses the power of their position (and those they are colluding with) to control their employees. I would argue this is just another form of 'force'. You don't need to physically harm someone to control them.
To put it another way: If person A is forcefully preventing me from voluntarily serving person B, that makes me person A's involuntary slave.
If you ever own a business, you deserve for it to fail.
But to answer your question directly: Yes, if nobody wants to hire you... nobody wants to hire you. I don't see why Google should be forced to hire you anymore than you should be forced to work at Google.
Poaching is the active targeting of employees of other companies, which when done in the umbrella of an investors holdings is bad form (don't bite the hand that feeds you). When done to another company is generally a bad idea if you expect to have to have amicable dealings with them (license patents, buy parts, etc). However, if they're a direct rival and there's no foreseeable reason to be on good terms with them, there is no reason to not poach their employees other than the reason you know you're not acquiring a loyal employee, but one loyal to the money.
A 'do not hire' list is an attempt to blacklist anyone who essentially leaves whatever the umbrella is of its reach, which is an attempt to place a monetary cost on anyone trying to leave the corporate fold. It would be like a bartender breaking the legs of anyone trying to leave. Anyone else who was planning on leaving isn't going to, but they're certainly not going to be buying drinks and that's really going to drive down profits when the bar is at capacity and no one is drinking. There's a reason companies are employing "quitting" incentives, and that's for the very reason that happy employees are productive employees and the notion of one bad apple spoils the bushel.
How could I possibly take any action that damages this relationship?
I think this should be obvious, but burning a factory down is fundamentally different from hiring agreements, in that it is destruction of someone elses property. A hiring agreement does not involve the destruction or restriction of property, but laws against such agreements do.
> To collude to deny others the right of free association and free employment is just as wrong.
Hiring agreements do not deny anyone the right of free association or free employment. Employment is a free exchange between the employee and the employer. Not coming to an agreement (not offering you a job) in no way is a restriction of your right to make an agreement in the first place. If I don't want to work with you, that doesn't restrict your right to form an agreement with me or with someone else.
> The CEOs of major corporations that dominate an industry can have a disproportionate impact on an industry
I don't see how that's relevant to the fact that laws against hiring agreements are laws against free association.
Has no bearing on whether it's right or wrong.
Why isn't it? Those agreements don't restrict or infringe on the freedom of others to form different agreements, or avoid forming them.
> What about colluding on prices?
Same exact situation. Price agreements don't restrict the freedom of other parties to set prices contrary to that agreement.
> Aren't these all the same infringement?
Without getting into specifics... Yes.
> The truth is sometimes society has to take away the rights of the few for the sake of the many.
I truly commend you for your honesty about what these laws are.
> The fact is rules like this almost certainly make our economy more productive as a whole.
I don't see where that's been demonstrated here. They certainly aren't productive for the firms who are punished for, or prevented from, forming such agreements. I would argue that the fact that firms do form such agreements when free to do so, means that they are productive for the economy as a whole by definition.
By allowing those firms to make more money. They are the economy too. The economy does not exist for one persons or class of persons benefit.
> This was done to keep salaries low, so a handful of people could make more money.
People cooperated to reduce their expenses without restricting the right of anyone else to cooperate. Just because people make money doesn't make it wrong. Conversely, a handful of people (the defendants) colluded to make more money by keeping salaries high, except they did it by restricting the rights of everyone else.
It seems more reasonable that each human in a group will try to maximize their own economic outcomes as well as to assist the other humans that they personally care about in maximizing their economic outcomes. In the modern world, it's often expected that humans are able to extrapolate that the people that they don't know are similarly worthwhile human beings. So while it's generally considered acceptable to try to maximize things for themselves, doing so while knowingly making other humans worse off is seen as morally detestable.
It's important to remember that humans generally care much less about abstract ideals than they do about themselves, the people they care about, and their social standing. The "economy" as it exists in reality does in fact exist for the benefit of one class of persons: those persons who are willing to tolerate it and have the power to change it. When this real-life economy is no longer tolerated, it is changed, in ways like antitrust legislation, class action lawsuits against companies that participate in wage collusion schemes, and the French Revolution.
Also, please remember you can't look at a statement in a vacuum. "Why isn't it? Those agreements don't restrict or infringe on the freedom of others to form different agreements, or avoid forming them." Perhaps not technically, but realistically they absolutely do. If we had a million worlds with a trillion firms and easy travel between them then such actions would automatically correct, but we don't and thus people do not realistically have the option to turn them down. The whole point of capitalism is to reward and penalize decisions. It kind of breaks down (predictably) when one side has enough power to prevent the downside of a bad decision. Remember, free speech doesn't mean you can run into a theater and yell fire.
Do not hire is different than do not poach.
The wisdom I subscribe to is, if you have common investors, it's bad form to actively poach from portfolio companies.
For companies that are later stage, it's bad form to poach key employee's from portfolio companies.
Do Not Hire agreements between companies, however, seem unreasonable, except when there is clear cause for conflict of interest.
In a [post] on his blog Horowitz describes a scenario in which a person currently employed at a company that is "important" to you comes in for an interview. The recommended course of action is to 1: block the hire, 2: inform said company about it. There are two things i just can't agree with at all:
* The part about informing the current employer: about 50% of the time it will end with ruining the next few weeks or months of his/her life. I.e. getting them fired, with ruined prospects of getting the job they took the risk for. Note that at e.g. apple the standard procedure when they find out that an employee is looking for a job is to escort them out of the building right then and there.
* Note it's not about "poaching", he explains thoroughly that it applies to people who ask for an interview on their own accord too.
If you don't want to read the whole thing, at least read this gem:
It is important to note that just about all of these kinds of policies violate the Right to Work laws in California. Specifically, if you block a hire based on this kind of policy and the employee loses their job and cannot find work, your company is liable for his wages. As a result, the business relationship with the other company must be extremely important for you to employ any kind of “hands off” policy.
said blog [post]: http://www.bhorowitz.com/is_it_ok_to_hire_people_from_your_f...
Do you have a source on this? I couldn't find anything with a quick Google search.
Note that logic: the problem is not with the company ben is advising. The issue is at the third part company. If that company decides to "go nuclear" and sever all ties because you poached/goaded or otherwise got involved in their "interal politics" (note: this is not a per-se issue of math/economics/money), bad things might happen to your firm.
CEOs of startups have a fiduciary duty to avoid "bad things", and even that choice is a catch-22 (ie, two bad things...) you pick the worst-bad one. And that is what he is saying.
In other words, he's talking about something that is a real-world problem. If you want to vent out about the issue, it really sits with the third part company. They are typically the one with all the power in the situation.
Example:
Startup A had 80% of its business tied to a single company, BigCo B. Like it or not, the CEO of startup A needs to avoid a situation where the CEO of BigCo B comes to the conclusion that he won't do business with A becaus of Politics (note: not economics).
Whether or not poaching is politically sensitive (or offensive) and/or warrants this type of "nuclear" response, is a function of many thing. But none of that is BH's responsibility in the larger world.
This dynamics is something that has played out for millenia from kings and queens and royal courts to how the predisent and Y combinator select their staff and senior leadership.
At a certain level of the game, its all about trust. And polticial power is essentially a combination of trust and goodwill. And its easy to disolve and can reak havok on any company of any size when systemically undermined. So you need to pay attention to it.
In other words, this is a much bigger issue. The tack of trying to shoot or lynch the messenger is sort of misplaced. Because the startup is the employer and may have a power asymmetry with a potential hire; but that startup is in itself subject to potential power assymetries at much higher levels.
(This goes for pissing off BOD members, VCs, and Key clients alike...maybe it suck/isn't fair...etc... but the reality is you need to pick your battes as a small company. And picking fights with the consituents you need to help you build your biz is ~dysfunctional and needs to be understood as such.)
Note that he has not described it as a morally ambiguous but sometimes unavoidable choice (like you did) but as the most righteous and noble option. That he's openly admitting he knows that it's illegal. Pay attention the sugar-sweet language of his parable and how its tone gets more colorful whenever the story takes a darker turn (from pov of the employee).
I mean, this entire thing is something out of a dilbert strip. I'm serious. This is something you'd expect Dilbert's CEO to write. The self deceit, the contrast between the language of "hurt feelings" vs the unstated reality of a person getting fired as a consequence and the stupidity of it all are mocked in hundred different Dilbert strips. Remember when this wage fixing story surfaced and the surprised comments that they were stupid enough to put it in email? If Mr Horowitz ever gets in similar trouble the paragraph i quoted above will make these troubles a lot worse.
But the situation of apple and google colluding (ie, this linked article) IMHO is a ~different situation here than the subject of the BH piece.
1> Google and AAPL as of the time of the lawsuit were not small players (fighting for their lives). They were 'fat cats' essentially at the top of the food chain.
2> Their motivations seem inherently economic/greedy, and fundamentally anti-competitive. They were not even vaguely 'customer centric' or otherwise constructive (except at the most tenditious levels).
3> The defendents were self aware their actions were unethica/illegal, and in the context of (1) and (2), were actively taking steps to hide/bury/conspire/collude regarding the illegal activity.
So this type of context is not the same. Calling out the BH essay seems to add a layer of useful sophistication to the discussion here. Half the utility, tho, is understanding the difference.
Workers should be free to seek to improve their lives without old white men making back-room deals against them. In this regard the tech industry is no more progressive than any other, and that's incredibly disappointing. We're supposed to be such an intelligent bunch.
I believe you misunderstood my point based on the following comment:
> Workers should be free to seek to improve their lives without old white men making back-room deals against them
I support the "Do Not Poach" rule. "Do Not Poach" does not prevent workers from seeking employment. It means, me as an employer, will not actively solicit employees of other companies if we have shared investors (given the size and complexity of the investments).
"Do Not Hire" on the otherhand, seems to be what you are taking umbrage with, and I concur. Employees should (generally speaking) be allowed to seek employment opportunities without back-room deals preventing that.
a) If you get sent a resume in response to an open req and you reject them based solely on the current employer of the applicant being a "friendly company" ("do not hire" list), that is illegal and wrong.
b) If you realize the applicant is from a "friendly company" and so you make a subtle threat along the lines of: "We are going to call your current employer to get a reference check before we decide to extend any offer, are you sure that's ok with you?" (also recommended in Horowitz's book), it's also wrong and unfair. I'm not a lawyer so I don't know if that is overtly illegal however.
It is possibly even lawful to do that with the intent of avoiding poaching and ill will.
What's definitely not lawful is to conspire with the companies on that list to determine its makeup.
It literally recommends that companies maintain a "do not hire" (aka "do not poach") list of other organizations from which HR is forbidden from recruiting. It also recommends calling the CEO of the other company on the down-low to ask permission before extending an offer.
It really disgusted me when I read it. Such smart people doing such dumb things, and encouraging would-be CEOs to do the same.