When is a startup a conflict of interest with existing job?


5

I want to found a startup that offers library applications using a SaaS model. I also work for a state academic library as a System Analyst / Developer. Would founding such a startup be a conflict of interest with my existing job? What legal issues would it raise?

I plan on working there for at least two more years as I finish my degree. What is the best way to pursue my goal? Thanks,

Getting Started Legal

asked Oct 13 '09 at 00:44
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Brice Stacey
74 points

4 Answers


3

What does your employment agreement say? What trade secrets and confidential information were you planning on integrating into your start-up?

If you're allowed to do it and you're not using their resources/info to make it happen, then there is no conflict. That's basically how almost all products (software or otherwise) start: you get experience in the industry, notice a problem in the industry, and then solve the problem on your own time by innovation. And often times, you'll find that the previous employer becomes the first (free, beta) customer.

Sounds like you're off to the right start. As for the best way to pursue your goal... I'd start with research. Why would yours be any different? What can you offer that's better than other services?

answered Oct 13 '09 at 00:48
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Alex Papadimoulis
5,901 points

0

I would definitely talk to your boss about this.

If there are potential legal questions related to employment agreements or intellectual property, talk to an attorney that YOU hire to make sure that your understanding is the same as your employer's. You don't want to get into a lawsuit over this.

Even if there are conflicts, you might be able to work out an agreement (in writing) that could allow you to pursue your start up anyway.

In fact, if you are doing something on your own time, with your own resources, that could potentially benefit your employer, you might (if you play your cards right) be able to make your current employer your first customer.

Let me know what happens!

answered Oct 15 '09 at 00:51
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Del Putnam
1,031 points

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I agree with Alex on most of his suggestions, the top things to look out for are

  • Contracts, employment agreements - Clauses which talk about intellectual property confidentiality and disclosure
  • You can use their resources if you disclose appropriately and that you are benefiting them with your startup - this requires you to have a contract signed with them and a lot of mutual trust. However donot attempt this if your employer think you would be a future threat. (I would suspect this would not be the case if you work for the state library)

It is good to understand when Conflicts of interest normally arises.
They arise when employees engage in activities for personal gain that compromise their ability to represent their employer’s best interests.

Examples of employee activities commonly viewed as creating conflicts of interest include:

  1. having significant financial interests in customers, suppliers, or competitors; working for a competitor;
  2. self-employment in competition with the organization; soliciting or accepting gifts or gratuities from suppliers or customers; using the organization’s equipment and supplies for personal gain;
  3. and using inside information about the employer for personal benefit.

As long as you keep the above points in mind you should be ok.

anup @ paper.io

answered Oct 13 '09 at 01:45
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Anup
547 points

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I would start by:

  1. Discuss with your boss
  2. If he okays it, start creating your
    own libraries from scratch, making
    sure not to steal from your current
    employer
  3. If he denies it, ask what parameters you must work within for a startup
  4. Use the next few months to identify your competition and determine viability

Good luck!

answered Oct 13 '09 at 02:17
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Marcus Blankenship
376 points

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