Monday, January 25, 2010

Thoughts on Winner-Take-All Businesses

Startup Boy pointed out in a recent post that consumer internet is increasingly becoming winner-take-all businesses and that every bit of advantage over competitor means you own the market.

Though his blog makes a case for why you need to be in Silicon Valley, that got me think about the non-compete agreement prevalent in MA. With the non-compete in place, employees can oly jump over ship to unrelated industry and are forced to forego the relevant experience built over time. This seems to be a big inefficiency in loss of productivity especially in the startup community.

What if Google, Facebook, Twitter, and Yahoo are all headquartered in MA? One of the most attractive talents may have worked at Yahoo in the late 90s, Google in early 00s, Facebook after that, and Twitter now. If they were in MA, non-compete clause would've required them to work on something else that they cannot capitalize on previous experience.

Whenever I talk to my buddies in the Valley, they are saying, "We need another Google", "We need another Facebook", etc. while folks elsewhere waste too much time thinking about "how can I keep my guys from working for a competitor?" There's no winner-take-all in this situation.

So the real question is.... could we have built uber-successful consumer internet businesses in lieu of non-compete?
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