My name is Sean Dalton, and I’m a General Partner at Highland Capital Partners, a venture capital firm founded in Boston in 1987. I have been an active participant in Boston’s entrepreneurial and venture capital community since 1996 and I have invested in over a dozen Massachusetts-based companies. Despite what I am about to say, I can assure you that I want nothing more than to see Massachusetts regain its position as a national leader in innovation and job creation.
So I’ll be blunt and to the point. If an entrepreneur asked me whether he or she should start a company in Massachusetts or California, I would recommend California. We could be talking about a high potential entrepreneur graduating from one of the state’s leading universities, a star engineer at one of our leading technology companies, or one of my own children. My answer would be the same: Massachusetts’ antiquated non-compete laws tip the balance to California.
This is despite the fact that:
- California workers cost more (and therefore pay more taxes).
- Competition for talent is far fiercer, meaning only the best companies will successfully recruit and retain the best employees.
Given these deterrents, you might rightly ask why I wouldn’t recommend that an entrepreneur “stay in MA.” Why? Because California is a truly free market, a market open for competition. The noncompete stands in the way of me saying the same about our Commonwealth. That’s it; all the other ingredients are there in spades.
What are the fundamental reasons why noncompetes are bad for innovation & growth?
- After an entrepreneur achieves success, he or she might take a week off, but will get right back to work creating a company that is even bigger and more successful, a company with an even greater impact. We see this happening out there every week, if not every day.
- What happens here? In Massachusetts, an entrepreneur who wants to go even bigger, leveraging all of the experiences and relationships he or she has gained through good old-fashioned hard work, is forced to sit on the sidelines for 1-2 years before starting again. In the world of entrepreneurship and competitive environments, that is a lifetime.
This noncompete issue prevents our state from attracting and retaining the best talent. This law punishes the very groups we consider our greatest resources: our university students and the entrepreneurs who work in our best companies.
Now, do not be mad. Do not be depressed. Our state’s entrepreneurial engine is poised for a return to the glory days of the Route 128 Miracle. We have the universities. We have the talent. We have foundation to accelerate innovation and job growth in Massachusetts. We must only strike down these antiquated noncompete laws and rev Massachusetts’ innovation and growth engine!
Highland Capital Partners
C.A. Webb, NEVCA