This can be really nasty for a small business. On the one hand, you understand the desire to build a seed for a software company, on the other you're dedicating scarce resources to pay this employee to work exclusively for you.
I'd tend towards overly-harsh on this one: You're either an employee or an entrepreneur. The choice is binary. We'd love to have you as an employee, but a person building their own business and riding on the salary we (a small business ourselves) pay while they do it is not welcome.
Every employer I had before heading off and starting my own company had an air-tight IP policy which basically owned my software-developing ass. That makes sense: You're either an employee or an owner, you don't mix the two.
you're dedicating scarce resources to pay this employee to work exclusively for you
Bull-fucking-shit. I don't understand the mentality that because someone pays me for 40+ hours of work per week, they think they own me and can demand that I work exclusively for them, or that anything I do in my own time belongs to them. If my work suffers, or if I'm stealing IP or clients, that's another story. But if I'm working on something in my own time, fuck you if you think you own it.
As I mentioned in replies to your other comments above, running a business requires your full attention. It's not a hobby. It's not a side-project. It's a way of life.
You cannot work for another person while running your own business. A business becomes the centre of a person's universe and an employee's work will suffer if they are building a genuine business on the side. No amount of dramatic profanity will change that reality.
Of all the vigorous down-mods and "you're wrong!" comments I've received here in response, I've yet to read a single real-world example of a person who has a full-time employee on staff working on their own business, or who is a full-time employee working on their own business while being paid a salary by another company.
Why? Because you're an employee or you're an entrepreneur. Those are not compatible mind-sets.
If you work for me and want to start your own company, great! I'll happily send you on your way and offer every bit of support I possibly can to ensure your success, but I won't pay you to build your own business.
I have and have had several coworkers that remained very productive at work while running their own businesses on the side.
My own personal experience was much as you say. (I kept my day job for 8 months while trying to do my startup on the side.) Eventually I found that the startup was all-consuming, I couldn't concentrate well on my day job, so I quit.
I can't help thinking that maybe this is because of my inexperience as an entrepreneur, though. Because several people have created successful startups while employed by someone else. Steve Wozniak did the Apple I, video controllers, floppy disks, and all sorts of other hardware while employed by HP. Pierre Omidyar created E-bay and grew it to profitability before he quit his day job. Joshua Schacter wrote del.icio.us while employed by Morgan Stanley. Bill Gates grew Microsoft while both he and Paul Allen were employed by Altair.
I've yet to read a single real-world example of a person who has a full-time employee on staff working on their own business, or who is a full-time employee working on their own business while being paid a salary by another company.
You're clearly not reading carefully, because I pointed out examples where I've done this, and I'm sure many others have as well. Most businesses are started on the side of something else, including most successful businesses. While it's likely true that you can't indefinitely work as an employee while building a business, you can certainly start a business that way, and it's been done many, many times before.
I'm not arguing that you shouldn't have the right to fire someone if you don't like them working on something else on their own time, just that your mindset is indicative of a larger management problem of viewing your employees as assets that you own 24/7. Why would anyone of value want to work somewhere like that? There are plenty of people out there who value output over input and understand that an employee's personal life is none of their business.
Dude, you're hiring contractors for temporary work. Of course they have their own businesses!
Put someone on your payroll full-time with benefits, paid vacation and sick leave and then encourage them to start a business on their own time while you pay them full wages. Then you'll have something to crow about.
The only information that should come into play when making decisions about the firing of full-time employees should be their actions between the time they start work and end work every day. Your preconceived notions about how an employee's outside activities affect their job will not apply to everyone, and are irrelevant to the question of continuing their employment.
> The only information that should come into play when making decisions about the firing of full-time employees should be their actions between the time they start work and end work every day
This just simply isn't true. Imagine if your CFO gets caught with hookers and blow by the cops on a Saturday night. It may not affect his work during work hours but it most definitely negatively affects your company from a PR perspective.
So you just can't make a blanket statement like that.
I assumed that serious issues such as illegal behavior were obviously excluded from my statement. Your case also applies to the defense industry where disclosure of classified information can land you in jail. I'm talking about clearly legitimate out-of-work activities here.
How mature does their business have to be? Markus Frind (of plentyoffish.com) doesn't have an outside full-time job, but from what I hear he easily could. But the issue is not whether there are examples. The issue is that you shouldn't need to know whether an employee his a business or not. You look at their performance and nothing else. If you're right, their performance will suffer and you have reason to let them go. If you're wrong, you'll never even realize they have a business on the side. However, the converses of these two statements don't hold.
Markus Frind had a day job for most of the time he was developing PlentyOfFish - when he's described his development process, he said "Basically every waking moment outside my day job was devoted to improving the site, trying out ideas, and making it better for my users."
BTW, between your post and mine up-thread, that's 5 examples. Microsoft, Apple, E-bay, Del.icio.us, and PlentyOfFish.
Define "own business": I guess if you are looking for multi-million dollar businesses being run in someone's spare time, yeah, you won't find many examples. But what about the guy who simply wants to have a second source of income by running something in his spare time? Plenty of examples of people who turn a hobby into something that resembles a business. Plenty of people earning a second income by trading something, creating something. How much revenue is enough? 5K / month?
Well, gee, if it's so awesome to empower one's staff to start their own business while working on your payroll, I'd expect employers of software developers would be trumpeting their fine examples from the hills to attract the best staff possible!
Why the silence? Because starting a business while working full-time for another employer does not work, and any person who has started their own software development company would understand why.
What if you're doing open source software? That's a similar situation. I think the idea of an employer trying to tell you what you can and can't do in your own time is pretty offensive. You have to keep things separate, of course, but beyond that, your own time is your own time, period. Obviously, if it's visibly affecting an employee, in terms of less hours worked, or lower quality, ok, sure, have a talk about it, but the difference is that you're looking at work time in that case.
I've nothing but good things to say about employees working on "side-projects" and open source projects. They're superb for self-education (I enjoyed participating in both while I was an employee) but are completely different than running a business.
Running a business isn't a hobby: It takes all of your attention, day and night.
I'm not paying employees to start their own business, I'm paying them to work on mine.
edit: I know this chafes with the 'free spirits' on this site who haven't found the guts to start an actual business yet, but I promise you'll find it's true when it's your cash going out as wages.
If you think you can buy every thinking hour of anyone, you are just kidding yourself. Someone that wants to start a business on the side will do that if you want or not. If this hurts your feelings, maybe you should reconsider your ideas about work.
Wrong, you're paying employees for their output. If their output is suffering, for any reason, find someone else. If you lack the necessary metrics and management skills to measure their output, that's your problem, not theirs.
Get back to me after you've run a business of your own. Not a hobby: A self-supporting corporation which provides your full livelihood.
Let me know then how well you'd do as an employee working for someone else, and if you'd be eager to hire on staff with the same "starting a company on-the-side" mindset.
I've been self-employed for the last 18 months and I regularly hire contract people to do work for me. Additionally, I own several real estate properties for which I employ a manager and regularly contract people to perform services for me. I pay them to get their jobs done, they do, and I could care less what they do with their own time.
I have no problem hiring someone who is going to start something with their own time, as long as they do the job I hire them to do. Back when I was an employee, I was always pursuing ventures on the side, and without exception, my employers were supportive and sad to see me go when I left, for the simple reason that I did my job.
"I pay them to get their jobs done, they do, and I could care less what they do with their own time."
That's one of the best answers yet. Anything else is entirely unacceptable. (And reminds me of amazon, worst place I've ever worked.)
If they're getting their work done, then you as an employer have no right to complain about what they're doing with their own time and equipment, end of story.
Stealing IP is a different issue altogether, of course -- and that's never acceptable.
However... the main reason that I pursue side projects is that my work fails to offer an intellectual challenge for me. I get my job done, and then hunt for intellectual exercise in order to keep my brain in shape.
That's a pretty broad generalization. I'm actually working on building a business on the side of my work, but I do my job. I focus on my own thing when I'm not at work. I also get my work done, and take time to test it.
There will in theory come a time when my side efforts will require effort enough to get in the way of my regular job, which is in fact the goal, but I have the integrity to face that -- and when I reach that stage, I'll leave the regular job.
If you're running a small business where everyone working for you has to put in 80-hour weeks in order to keep up with their work, then the fault is yours for your poor management -- though to be honest, I'd never consider working for you just because of your attitude toward your ownership of me.
Get it straight: you don't own your employees, period. What they do when they're on the clock is your business. Everything else is not. If you can't get that through your head, you shouldn't be attempting to run a business that requires employees. That's not an opinion, it's actually law -- don't forget, we abolished slavery.
If an employee on your payroll starts a business, they're not doing so with your best interest in mind and their work's focus will change accordingly.
Fuck. That. Shit.
Everyone is a contractor. There is no loyalty on either side of the employer-employee relationship. It is a hurtful delusion to harbor fantasies otherwise.
Judge an employee on their performance. Nothing more, nothing less.
What happens off the clock is none of your business. Literally.
Good use of someone else's life-affirming stick-figure profanity! As The Man in this case, I feel totally stuck to, dude.
I'm still waiting to read of even a single example of a full-time employee who is working on (not preparing for) a business of their own while collecting a full-time salary. If it's such an awesome thing, there must be dozens of examples to choose from, right?
Why the silence? Because that employment arrangement does not work, and any person running their own full-time business would know why.
Working as a contractor while getting your business up and running? Great! That'll work fine.
Working as a full-time employee while starting a business? Doesn't work.
If you walk the talk and start your own company, you'll understand why you wouldn't want to be paying a person out of your own pocket while they're going through that process.
The burden is on you to find evidence that an employee's work is slipping. They prima facie have zero obligation to you to justify their off-the-clock activities. Even informing you of those activities I would take as a token gesture of goodwill. In your specific case you have not given any evidence of failure to perform on this employee's part. You've projected your own insecurities onto this third party but not demonstrated any issue actually being present. If this employee's work has objectively suffered then can his ass and get on with life. If his work has not deteriorated then you've got your example right there. Sitting under your nose.
Quit worrying about what this employee can or can't do. Pay attention to what he does or doesn't do.
Sorry snowflake, the world doesn't work that way. You'd think the inability of any of you to find a single real-world example of an entrepreneur working on someone else's payroll would confirm that reality for you, but I see you choose to cling to a dream-world instead.
You're an entrepreneur or you're an employee. You cannot mix the two, and if you find the pills to start a business yourself you'll understand why.
Are you saying that if your most productive employee were also running a side business (not side project), you would fire him out of principle?
Or are you just assuming that the side business would make the employee less productive to an unacceptable point (a fine reason to let someone go, but that a side business would cause this is still just an assumption).
I agree it can be pretty destructive in a small company, but what about big businesses? They're inefficient anyway, so the lost productivity is not such a big deal over there. Is it morally acceptable to freeload, but only in big businesses?
I don't think it's morally acceptable to freeload, but for big businesses the point is likely moot: The IP agreement they will have had you sign at the start of your job will take away all rights to your on-your-own-time product in any case.
The interesting philosophical issue I find is what if you can freeload and your work doesn't take a drop. Or more provocatively, what if you freeload and your work productivity increases? In this case, it's likely that your abilities could be managed better to more fully extract your potential. Unfortunately this is impossible (or very difficult) for most companies to do.
I'd tend towards overly-harsh on this one: You're either an employee or an entrepreneur. The choice is binary. We'd love to have you as an employee, but a person building their own business and riding on the salary we (a small business ourselves) pay while they do it is not welcome.
Every employer I had before heading off and starting my own company had an air-tight IP policy which basically owned my software-developing ass. That makes sense: You're either an employee or an owner, you don't mix the two.