I'm amazed that the contract Star Theory had with Take-Two didn't have a clause prohibiting Take-Two from poaching employees like this.
Edit: A more general question: If I hire a consultancy company to build something for me, would I normally be able to directly hire the employees who did the work? That sounds like the worst possible outcome for a consultancy, so surely contracts prohibit it!?
Edit 2: Lots of people responding that anti-competes are always bad, and I don't disagree, but this feels slightly different.
How about:
Is it ethical for a company to deliberately cause you to be made redundant so they can hire you? (Emailing all employees of a company make it fairly clear it was planned)
Cleanest version I've seen thus far is a financial penalty built in that is probably not enforceable but is carefully calibrated so that it's "fk it just pay it instead of making a legal fuss about it & ruining a good commercial relationship on top of it". Leaves everyone somewhat unhappy but nobody left empty-handed. Both sides saw it as cost of doing business in a way.
Not as part of a contract for work, otherwise, the entire contract labor market that involves specific payment for customers hiring workers off of the contact would die as customers would just ignore the “unenforceable” restrictions and hire desired employees without the contracted payment to the intermediary firm.
Standalone anti-poaching agreements between competing firms are generally unenforceable (and also potentially outright illegal and actionable.)
In my experience, this is one of the main points that legal counsel argues with every contract.
If your company is being contracted to do work, your legal counsel will want to add a non-solicitation clause to the contract to prevent the other company from recruiting your employees.
If your company is contracting with a smaller company to do work for you, your legal counsel will want to strike any non-solicit clauses so they have the option to hire people out of that company later. If the other company is desperate enough for the contract, they might allow this. Otherwise they'll refuse the work.
I'm amazed that people sign contracts accepting this kind of restrictions to their lives.
That's (fortunately) illegal in the EU country I live in, as it creates artificial barriers in the job "market", i.e. it is illegal to limit people's access to work. Still, cartel practices like not hiring from "friendly companies" abound.
>> If I hire a consultancy company to build something for me, would I normally be able to directly hire the employees who did the work?
I see contracts imposing restrictions like this all the time where I live, and people sadly just nod and accept, but these clauses never hold up in court as no company has a right to decide where people can or can't work.
Having worked as a consultant, I'm repulsed by the idea that I'd need my company's permission to leave and go work for a client. Especially because the provision stinks of "cheaper than actually investing in people retention". If the issue is intellectual property transfer, that's what an NDA is for.
I believe he's talking about a contract between the companies, not contracts with individual employees. That may be different.
An employer making an employee sign a contract saying that they won't work elsewhere without the employer's permission has obvious problems, such as the vast (usually) difference in bargaining power between an employer and an individual employee, and it gives the employer massive control over the employee's life.
I believe that those are the main reasons many jurisdictions make such clauses unenforceable.
In the case of two companies making a deal that company A will buy a service from company B and not hire away B's employees, you are much less likely to have such a great disparity in bargaining power. Unless it's a very small industry, B's employees probably have many other job opportunities in that industry besides A and other companies B has worked for.
That suggests that there might not be such strong public policy reasons for make such contract unenforceable, especially if they have some time limit such as B's employees can't be hired by A for a year after working on B's service for A.
Almost every court case I can recall hearing of in this area was either (1) contracts between companies and individual employees, not between companies, or (2) arrangements between competing companies to try to limit labor mobility to keep salaries down, which raised antitrust issues.
The problem was when Take-Two messaged every worker at the company and said "We've just bankrupted the studio you work for. Come work for us on the same product you were working on before".
For a large consultancy with many clients, I agree.
But when a significant portion of your employer's income is a single client:
Are you comfortable with that single client of your employer having a strong incentive to make your job redundant so they can try to hire you under worse terms (as you suddenly lost your job)?
You don't need your company's permission, you're unemployed.
I guess what I'm thinking is something more along the lines of not hiring employees immediately after making them redundant through your own actions?
Interesting. I've heard of EU countries where leaving a job requires giving 2+ months of notice or paying a large financial penalty.
I'm amazed that there are people out there who think we have a choice. I would not have my most important clients if I refused to sign non-solicitation clauses.
The interesting bit here is if Star Theory are going out of business then any contracts will presumably become void because one of the signatories has ceased to exist.
Although in Star Theory's case, their development contract was coming to an end, so it's possible it had already expired at that point. And the contract may have also had certain required metrics like development progress and financial health that would lead to it being terminated in cases where the company was effectively defunct.
Also, by this locally-optimized move they sacrificed ability to work with other independents in the future, ie top independents will less likely to work with them.
There's also been at least one instance where people left the company and were rehired by their client during the do-not-compete timeout of a year; in practice, a do-not-compete clause cannot be enforced in a court, and given that the client is several orders of magnitude larger in terms of finances than the consultancy company, a legal battle wouldn't pan out the way they want it to.
So the guy took the job and the risk, and he still works there. Probably earns a lot more as well.
Depends. I've known consulting companies that have absolutely enforced them--though the circumstances have usually been around someone setting up their own shop rather than going to a client.
The broader issue with non-competes is more chilling effect than than actual enforcement. When I was with a small consulting firm we wouldn't touch anyone who had an even vaguely related non-compete. Just wasn't worth the risk or even the effort/cost of getting a lawyer involved.
This is common in the enterprise software world, from what I've seen.
Please don’t use the word “poached” to describe getting employees to voluntarily join your company by offering better compensation. Unlike animal poaching, employee poaching is actually good for the employees being poached. In the name of preventing “poaching” many Silicon Valley companies in the past engaged in an illegal scheme to fix employee wages.
Huh? They withdrew the contract from their current employer, making them redundant, then offered them a job.
I'm not sure abusing your position of power as sole "client" to bankrupt my employer to hire me counts as "offering better compensation".
If not poaching, perhaps coercing, compelling, forcing?
That depends on their negotiation positions. "We're effectively killing your employer, you can join us for 10% less salary or take your luck on the job market." This situation was more akin to a mass prisoner's dilemma than standard poaching.
> the same game Star Theory had been developing
certainly means they had an earlier contract.
> The LinkedIn message went on to say Take-Two was setting up a new studio to keep working on the same game Star Theory had been developing, a sequel to the cult classic Kerbal Space Program. Take-Two was looking to hire all of Star Theory’s development staff to make that happen. “We are offering a compensation package that includes a cash sign-on bonus, an excellent salary, bonus eligibility and other benefits,” Cook wrote.
I won't go so far as to condone Take-Two's actions, but I don't see this entirely as a negative for the employees involved if (and it's a big if) Take-Two chose to pay the employees extra compensation and bonuses instead of giving the money to a middleman.
As someone who went through an acqui-hire only to see our founders walk away with millions while the employees' salaries remained unchanged, I wouldn't be opposed companies directing those acqui-hire funds to hiring bonuses given directly to the employees.
What an acquihire gets you, as an executive, is that people you otherwise wouldn't be able to hire, because you can pay above market without wrecking your budget. These people are either vesting out equity or they are on explicit retention packages, but from a budget standpoint _they aren't on you_.
Another way to think about it is that this buys you the time necessary to, using the normal levers available to you, get employees to the point where a set of overlapping RSU grants are vesting quarterly, thereby both avoiding a steep compensation cliff and getting the total compensation to where it needs to be in a way you could not do on day one.
Are you saying the whole point of acquihires is essentially an accounting trick?
I have always understood acqui-hire as "Big company sees a team of talented devs with good cost structure (aka: manageable salaries) so they pay a one time flat fee to get that team working on their problems"
At no point have I ever expected developers salaries to change during an aqui-hire. They might get a boost after the aqui-hire if they have trouble retaining the devs for whatever reason. But usually the whole point of an aqui hire is the relative low salaries of the employees compared to their performance.
FWIW, I don't think acqui-hiring is only about getting a team that is relatively cheap for their output. Regular hiring processes are also not cheap and by buying an entire company you can "hire" several devs in one shot (and at a lower risk) where it might otherwise take much more time to find that much extra capacity.
That one part is key. Acqui-hires are justified because the teams display high performance, not low cost. If the truth is that they happen for the second reason, expect a lot of fighting back against it once the word gets out.
I guess it’s still fundamentally about cost, but not necessarily first-order costs as you describe.
Most aquihires I know lead to an increase in salary and a retention bonus (a pool was set as part of the aquihire negotiations).
Since payout is tied to % employees who stay on for X years, both sides care deeply to keep them on board
Is delaying the release by over a year and a half a win? I wonder how much in royalties/costs they're really saving.
It also seems to be conflating me using CloudFlare's DNS with me using DoH. Also, they're ironically removing my choice, because I chose CloudFlare's DNS yet I can't see the content because of that.
Granted wasn't him that implemented airplane aerodynamics on KSP (it was a modder of KSP, his mod being considered "mandatory" with how much it changed the game physics)
There are possibilities that it is arranged differently, for example if the IP you are developing can be used multiple times the company that ordered the IP may want to offer you the rights to distribute and use it further, for a discount, but it is very unlikely a game would make sense for this.
While it can get messy, generally the IP belongs to the original creators unless otherwise stipulated by contract. Most likely, Star Theory gained ownership of the IP created by their employees via employment contracts. The contract between Take Two and Star Theory would then stipulate the conditions underwhich Star Theory gives that IP to Take Two.
How and when that IP gets assigned should be a part of any such contract negotiations and not something you should gloss over or sign blindly.
It would seem one way to protect the contracted company would be the right to withhold releasing the source code until the terms of the contract were met. You may not want to fight that legal battle, but at least it would give the smaller guy some leverage. As it sounds from the article, Star Theory Games doesn't have anything to fight back with.
The tactics described in this article would be extremely shady from one small business to another... but a massive corporation swooping in and basically ruining another company? Wow.
edit: Ah I see they hired only about 1/3 of the staff.
Granted it's from the mouth of T2, but it sounds like the offer was at least more universal, and they would have preferred or at least been amenable to absorbing the whole team.
One of the people involved said he didn't take the offer because he didn't think he'd get the same benefits. Since the contract stuff was about royalties, it might be that joining take-two meant trading royalties for salary/bonus, and as interest grew in KSP2, that might be a shitty deal.
Those employees can expect precisely nothing once the game is complete, unless coincidentally their new employer has another project they can be immediately put to work on.
> The contract with Take-Two was the studio’s only source of revenue at the time. Without it, the independent studio was in serious trouble.
> The [founders] had been in discussions about selling their company to Take-Two but were dissatisfied with the terms, they explained.
> Take-Two hired more than a third of Star Theory’s staff, including the studio head and creative director.
> By March . . . Star Theory closed its doors.
So, a small game studio played chicken with Take-Two, a $15 billion juggernaut, and lost. Take-Two picked up the pieces.
Somehow I wouldn’t bet on them going to devs, but I’m just an old cynic.
Or in other words, same people who dicked over the original team, now dicked over another team, and probably have enough content done to still make a financial killing in the process. Given the pandemic I suspect they'll hire on the rest of the Star Theory team at a steep discount as well.
Still, the hardball tactics by Take-Two is sad to see.
(Planetary Annihilation was not a bad game; it just wasn't the Total Annihilation / Supreme Commander sequel that people were expecting.)
That said, they over promised and under delivered on the original, and then had a stand alone expansion (Planetary Annihilation: Titans) that finally filled most of the promises.
I recall that at first they did a bad job of supporting players who had pre-ordered, but eventually walked it back and gave kickstarter supporters the expansion for free and early purchasers large discounts.
Wasn't original Kerbal Space Program made by Squad? I'm glad they released it for Linux. I doubt Take Two will do the same.
Anyway no way I can buy it now and support that.. Also even if I just pirate it, its probably gonna turn out shite anyway now with giant publisher running everything.
... I'm not sure that Take Two wins the war, though. Now other development companies will be more wary about working with them.
