I recently had lunch with one of my friends and we got to talking about money and how it can change and even corrupt people. She told me a fascinating story about her cousin Trent, who grew up rather poor and had to work part time jobs throughout school to help his family. Despite his underprivileged upbringing, he loved school, studied really hard, participated in all sorts of student organizations and managed to get into UC Berkeley on a full scholarship.
Even though his college education was paid for, Trent still chose to work while he was in school because he didn’t like feeling idle and wanted to be able to start his own company after graduation. He took lots of business classes, often met with his professors for advice and guidance, and spent all his free time researching and planning for his future. After finishing college was able to take the money he’d saved up and start his own marketing and design company.
He kept his costs low and used his networking skills and alumni contacts to win a few big clients. Over time his business really took off. People liked his work and his positive, can-do attitude. He enjoyed being able to help his clients and prided himself in his customer service. As his business and profits grew, Trent wasn’t able to continue doing everything on his own so he hired a few employees to help with the growing demand.
Everything was going great until one of the employees, Eric, liked Trent’s business model and designs so much that he decided to quit and start his own competing company, copying pretty much everything Trent’s business was doing (note – names have been changed for privacy). Eric was making a decent salary working for Trent, but that wasn’t enough for him. Instead of talking to Trent about getting a promotion or building a partnership together, Eric left and took a lot of intellectual property knowledge and client information with him.
The Lure Of Money
Trent was really disappointed that Eric left like that, but chose not to take any legal action nor try to stop Eric from being successful as a competitor. Trent chose to continue focusing on his own clients and doing what he loves. If I was in Trent’s shoes I’d probably have done the same thing and just moved on, unless my business took such a huge hit from Eric stealing away business that I couldn’t operate anymore. Perhaps if Trent had paid Eric a higher salary he wouldn’t have left like he did, but it probably would have just delayed Eric’s departure not eradicated it.
I think it’s selfish the way Eric left, because he took the opportunity to make more money on his own by copying all of Trent’s ideas, but it was quite a profitable move for him. My friend did tell me that Eric ended up making triple his previous salary by starting a competing business, and lured away many of Trent’s clients. Ouch. I’d be furious if I was Trent. I mean it’s nice that Eric was able to make so much more money, but the way he went about it was pretty foul. If it wasn’t for Trent, Eric wouldn’t have had the knowledge and the contacts to be successful.
Competition is inevitable in any business though and people copy and steal ideas and information all the time in order to make a profit for themselves. Especially as fluid as data and info is online these days, it’s becoming quite hard preventing others from pillaging and stealing your own ideas, content, products, contacts, and designs.
Be Careful And Protect Yourself
Why do you think money corrupts people and leads them to steal from others? I don’t think it’s solely based on poverty versus wealth anymore, I think laziness and greed play a big part too. Perhaps some of you think what Eric did was smart and completely within his rights.
Imagine for a moment you had the opportunity to triple your current salary right now. Would you undermine someone in order to do so? And do you think your answer be different if you made significantly more or less than you do right now?
Personally I don’t think I could sleep at night if pulled a move like Eric’s. But money makes people do crazy things. It can make our heads spin, over inflate our egos, and consume us with stinginess, and an endless appetite for material things. After all, greed and ignorance are two of the main reasons why lottery winners and professional athletes often go broke. They just don’t know how to handle their sudden influx of income and assume that it will never run out.
The lesson learned here is that if you have anything valuable, there will always be someone who wants to copy or take it away from you for his or her own benefit. For example, if you have a brilliant idea for a new invention, don’t go blabbing about it on Facebook as soon as it pops into your head, keep it to yourself until you’ve acted on it and protected your intellectual property and prototypes.
Untemplaters, what are your thoughts on Eric’s actions? How would you have responded if you were Trent? Why does money corrupt people in your opinion?
Financial God says
I personally wouldn’t feel good doing what Eric did, but I don’t see leaving to start a competing business as necessarily a bad idea. Krantcents had a good point that you cannot steal customers — you don’t own the customers to begin with.
Things get better through incremental steps. You see it in competition between Apple, Samsung, HTC, etc… do you think that Apple should have the right to squash Samsung and HTC because their products are similar and they are also “stealing” customers?
On a personal level though, I do see it as a gray zone. Eric doesn’t owe anything beyond the work due for collecting a salary and whatever agreements he has made. It still does seem like a bit of betrayal, but it’s hard to say without really knowing what went down.
Stories like this make me wince a bit, as I feel for Trent in this case. Perhaps Eric has some karma issues awaiting him somewhere down the line, and hopefully Trent learned some valuable lessons in this experience too.
I’m a big believer in karma too and I find the universe tends to work things out. Things may not happen right away, but they do in their own time.
Things get copied all the time. Eric is just doing what is best for him. If he moved to another city and do this, Trent wouldn’t even know. I guess the dirty move was to take the client base. Other than that, I think starting your own business instead of working for someone else is a good move.
Yeah the fact that he picked off Trent’s client base bothers me. What you said about Eric starting his own biz in a different area and Trent having no idea is very believable and I hadn’t thought about that. It’d probably would have been much less of a dig even if Trent did find out later on since they wouldn’t be competing directly with the same client pool.
There are surely some legal quandaries in that situation, but I can’t say I blame Eric for wanting to be a success on his own. However, becoming a success (to me) means building and creating something, not stealing something from someone else.
I agree with your view on success because I wouldn’t feel good about myself if I was making money based off of ideas and work that weren’t mine to begin with. I’d much rather try to work out a partnership of some sort and contribute my own concepts and designs.
Andy Hough says
It looks like he should have had the employee sign a non-compete agreement.
Yeah I’m sure Trent is regretting not having done that now. The right paperwork can really make a difference preventing the unexpected and protecting yourself if something does happen.
101 Centavos says
Safeguarding IP is key to survival of a business. I don’t know the industry that these two were in, as “marketing and design” sounds like a sector where IP (or ideas) would be hard to trademark, patent or copyright. As MC said, non-disclosure agreements and non-compete clauses is one way that a company can protects itself.
Customers are free to choose whomever can provide the best service. There are details and nuances here that can’t be known to the casual observer. Maybe Trent was unreasonable to negotiate with. Maybe he wasn’t a detail guy. Maybe he hired his immediate (and incompetent) family do follow up with customer service.
IP is definitely a difficult one to protect in cases like this. Trent probably never saw Eric’s move coming and now he’ll never forget it. People are unpredictable.
Financial Samurai says
Tough one. It’s what happens in a free market.
I encounter this kind of stuff all the time and there’s really nothing one can do but have a grow up conversation.
It’s really disappointing when this stuff happens. I really really try and demphasize money when it comes to building relationships. It gets in the way! I’d love for us to just write and collaborate online at the very least.
Money will corrupt, and Intoxicate those who have the least the most IMO. It’s just those with more money have the greater ability to ignite fireworks.
Yeah, money really can get in the way of relationships. I don’t talk about my finances to my friends and family for that reason.
I would exercise my legal rights! Competition is inevitable, but I do not have to assist the competition.
We gotta protect what we want to keep as our own!
You know, I don’t think it’s the case that “money corrupts people and leads them to steal from others”. I think what happens is that more money makes you more of who you really are. So if you’re a thief, and you have the opportunity to steal even more, well, you’re going to go ahead. If you’re an honest person, you won’t.
Interesting take as I haven’t heard someone say “more money makes you more of who you really are” before. I guess money does give us the opportunity to do more of the things we want to do with our lives, but not everything costs money. I think people who steal repeatedly tend to do so for the sense of entitlement and the rush regardless of how much they have.
Exactly. It’s not the money, it’s the person’s lack of character.
Greed is a powerful motivator. If Eric is young and not that well off already, it’s easy to see how he would rip-off Trent’s idea and take it for his own. I would never cut out Trent like that, and instead, offer a revenue share agreement of some sort.
Money corrupts those who make less. If you go from making $3,000/month to $10,000 a month, you go blind with greed and cut people out.
Yeah it’s too bad Eric didn’t try going to Trent first to work out a partnership of some sort. If he had done that and Trent turned him down flat then Eric wouldn’t come across as greedy if he quit to start his own business. I’m a strong advocate for talking things through especially with one’s mentors if you’re unhappy with your current situation. I’m sure Trent would have been happy to work out a deal to keep Eric on board.
If it was a legal issue that split the two I would be more inclined to support Trent over Eric (but what’s the point of IP if you don’t defend it?). Otherwise I’d say that if Eric was providing equivalent service, let the customers decide. If Eric found a way to cut costs and charge less to the customers, I’d say all the more power to him, even though it might seem like he made it worse for Trent.
The truth is, if it wasn’t Eric, it would be someone else (well, setting aside the IP issues) coming in to fill the cheaper service niche. It just happened to be Eric.
Businesses are always getting squeezed to lower their fees when other competitors come into play. You’re probably right that even if Eric hadn’t started his own company somebody else would have come into the picure if they caught on to the income potential.
If what Trent did was illegal, then yes I think Eric should go after him. But if Eric was unprotected to begin with, this is a good lesson learnt. Eric should be more careful with his future projects by taking the necessary precautions like NDAs and obtaining patents.
NDA’s and patents are a good call. Paperwork isn’t fun and can get expensive to complete but it’s worth it if there’s valuable information and data to protect. I’m sure Trent will be more careful when he hires more people and with the rest of his current staff.
I don’t view it as Eric “stealing” knowledge about a business. Developing skills that may some day be transferable to another employer or to starting a competing business is part of any job. An apprentice doesn’t “steal” business knowledge from his master – it is part of the compensation for working under someone else.
I also don’t think that it’s fair to characterise him as “stealing” customers from Trent. People can’t steal your customer because you don’t own the customer. Customers choose who they want to do business with. They chose Eric.
Good points on the apprentice relationship and not owning customers. An employer can’t expect an employee to leave and never use the knowledge they learned on the job. It’s tricky when it comes to intellectual property though, especially in the tech world. Seems like tech companies are always suing each other for copying/stealing each other’s product features, etc. It still seems sneaky that Eric went after Trent’s existing customers, but you can’t stop people from talking to one another.