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Here Are Some of the Boston Tech Cos. Supporting the Campaign Against Noncompete Reform

Jul 21, 2016 | BostonInno

By Dylan Martin

“Mark Gallagher, executive vice president of public policy and communications for the council, told us in an email, “There are a variety of views among our individual members. The Council’s position reflects a balancing of those viewpoints.””

Two days before the Massachusetts Senate approved a bill last week that would nearly eliminate most noncompetes, a coalition that included the Massachusetts High Technology Council made it clear it wasn’t happy with the legislation.

“We continue to believe that there is little evidence that the use of noncompete agreements harms Massachusetts’ position as a globally recognized leader in innovation,” the coalition wrote in a letter to the Senate on July 12. “… Employers believe selective use of noncompetes protects the significant investments that allow their companies to be global leaders in their industries and to create jobs in the commonwealth.” Full text of the letter is here.

The coalition, which also included the Greater Boston Chamber of Commerce and Associated Industries of Massachusetts, was urging the Senate to consider weaker measures in reforming the state’s noncompete law, which essentially meant supporting the House of Representatives’ version of the bill. While the Senate bill would likely deal a severe blow to noncompetes, the House bill would preserve much of the status quo that’s been hurting our state’s innovation economy.

Given the Massachusetts High Technology Council’s stance on noncompetes, we were surprised to see that some of its members include what we and others consider important champions of the state’s innovation economy. Such members include DraftKings, CarGurus, iRobot, TripAdvisor, Babson College, Northeastern University, Kayak and Care.com. Another noteworthy member on the list is Gesmer Updegrove, a law firm that is very active in the startup community. Goodwin Procter and Ropes and Gray, firms that also have significant tech law practices, are also on the membership list.

Representatives for DraftKings, iRobot and CarGurus declined to comment on the coalition’s letter opposing the Senate’s noncompete bill. Representatives for Babson, Gesmer, Northeastern, Care.com and Kayak didn’t respond to a request for comment by the time of this article’s publication. Kevin Carter, a spokesman for TripAdvisor, declined to comment on the letter, but added: “This legislation is being driven by the association and not proactively by TripAdvisor.”

Mark Gallagher, executive vice president of public policy and communications for the council, told us in an email, “There are a variety of views among our individual members. The Council’s position reflects a balancing of those viewpoints.”

The Massachusetts Technology Leadership Council has not taken a specific stance on current noncompete reform going through the State house, with its leader Tom Hopcroft saying that his group is “helping educate lawmakers on the issue” but there lacks a consensus “among the various groups who represent different slices of our 500+ company members.”

“The noncompete issue is polarizing. Our members at all levels are passionate on both sides,” Hopcroft said in an email, though he added: “We do feel it’s important for Massachusetts to update its policy in order to provide for business certainty and accommodate talent mobility.”

We have good reason for railing against noncompetes. In general, they limit an individual’s mobility, but more specifically they limit a tech ecosystem’s ability to start and grow new companies. And they are largely nonexistent and extremely difficult to enforce in California, where some of the highest profile tech companies are being launched and grown.

A great local example of how noncompetes can impact innovation is when Kayak co-founder Paul English had to wait 18 months after leaving The Priceline Group to start working on his new travel startup Lola because of a noncompete.

“Someone in California could be 18 months ahead of me, and that’s enormous,” English recently told The Boston Globe. “A lot of times when a new market is created, there’s a first-mover advantage. And in Massachusetts we don’t get that first-mover advantage because, many times, our entrepreneurs are delayed.”

As the Massachusetts High Technology Council and other business groups rightfully points out in its letter to the Senate, Massachusetts and/or Boston are repeatedly at the top of national innovation and startup rankings, including in Bloomberg, which placed Massachusetts and California in a tie for the most innovative states earlier this year.

If MHTC is concerned about the state’s “brain drain,” as reported in a recent Boston Business Journal story, it should start wondering if people are leaving Massachusetts for California because in California they won’t have to sign a noncompete.

Leaders of Massachusetts’ Innovation Economy

Leaders of Massachusetts’ innovation economy have much to accomplish in the next few years.

The Council distinguishes itself by specializing in complex, multi-year public policy strategies in support of conditions that protect and enhance a strong Massachusetts economy.

Learn more, contact Bernie Prusaczyk.

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