I just realize we California has another huge advantage over all the other tech hubs. We ban non-compete contracts statewide. Without non-compete engineers are free to jump from one company to the next, and help share learnings:
The claim that non-compete clauses chill innovation should not catch anyone by surprise. Think of Silicon Valley, the world’s technology center. California law forbids Silicon Valley firms from using non-competes, and employees are largely free to move. Workers’ mobility creates knowledge spillovers across firms and throughout the industry, all of which stimulate greater innovation. It was Bob Noyce, the founder of Intel, who hailed “the mobility of our personnel, which quickly diffuses knowledge of new techniques in design, production, and marketing.”
Then, compare Silicon Valley to Boston’s Route 128 tech district. Another study suggested that Silicon Valley thrived, whereas Route 128 declined, due to the greater employee movement allowed in California. In Massachusetts, enforcement of non-compete clauses restricted such knowledge movements and chilled technological breakthroughs. To be sure, old established tech firms benefit from the enforcement of non-compete agreements. But society loses, as the best talent remains stuck in established firms, unable to job hop to start ups.
If we had non-compete in California, Salesforce would never have started. The evil Larry Ellison would no doubt unleash his lawyers on Marc Benioff and crushed it. While CA bans non-compete WA and most other states don’t. Our startup ecosystem is much stronger as a result.