Workers around the country are increasingly being asked to sign noncompete agreements devised to keep them from leaving their job for a rival company. It’s a trend that has extended down the economic ladder to people like hairdressers and dirt-shovelers who are unlikely to possess trade secrets.
But Californians don’t have to worry about it. California law prohibits noncompetes, and this ban is often cited as key to the development of Silicon Valley. To learn more about how this law helped create the modern technology industry, we talked to AnnaLee Saxenian, dean of the U.C. Berkeley School of Information and author of “Regional Advantage: Culture and Competition in Silicon Valley and Route 128.”
Q. How important was California’s ban to the development of the Valley?
A. If there had been aggressive enforcement of noncompetes, Silicon Valley would probably not be what it is today. But the dynamism goes beyond the legal context. From the very early days there was a sense in the Bay Area that people were in it together and trying to build something different, and they built a culture where it was O.K. to share information more openly and it was O.K. to leave to start something new.
Q. What famous company might we not have?
A. In 1956, eight top engineers left the Shockley Semiconductor Lab in Palo Alto to start the Fairchild Semiconductor Corporation. While they were labeled at the time as the “traitorous eight,” virtually all left within the subsequent decades to start yet another generation of ventures.
By the time that Fairchild’s Robert Noyce, Andy Grove and Gordon Moore left to start the Intel Corp in 1968 there were more than a dozen other “Fairchildren” in the region. A 1986 genealogy included 126 semiconductor companies that could be traced directly to Fairchild.
In the early days engineers would say, “I work for Silicon Valley.” And the idea was that they were advancing technology for a region, not any single company’s technology. We often think in the U.S. that people or companies create success, but what Silicon Valley shows us is that often it’s communities of people across a region.
Q. There was a recent case in which Google, Apple and others were accused of “an overarching conspiracy” to lower wages for engineers by agreeing not to poach each other’s workers. What does that tell you about how California companies feel about the ban on noncompetes?
A. Essentially they’re becoming the older, more inward-looking companies that early versions of themselves rejected. Maybe it’s natural, but it’s a real departure from the earlier culture of the Valley, which recognized that people will come and go but ultimately we’ll all be better off.
Far more valuable than buzzy ambitions like “becoming a more innovative community” would be investigating specific historical moments that defined your community as it exists today. Then determine whether it makes sense to advance/conserve that historical differentiator for your community, or try something new. And not necessarily on a city council level, but rather on a personal level. If you do something great, others will be attracted to it.