'Non-compete agreements stifle entrepreneurship': startup guru

California has its share of problems; but still manages to keep budding entrepreneurs free of many legal hassles, a Silicon Valley veteran observes.

Eric Ries, creator of the Lean Startup methodology and the author of the entrepreneurship blog Startup Lessons Learned, says that Silicon Valley's celebrated entrepreneurial culture isn't necessarily a result of the research universities and venture capital dollars in the area, since similar resources are available elsewhere.

Someone with a good idea needs to run with it, says Eric Ries, lean startup guru

Instead, he gave a lot of credit to California's legal system in a recent interview. While the state may have more than its share of budget issues and crushing tax burdens, the entrepreneurial spirit is allowed to flourish without teams of lawyers putting a damper on things:

"[California has] the kind of legal framework that makes that doable. For example, one important difference is in California no matter what kind of employment agreement you sign, most forms of non-compete and really onerous trade secret agreements are non-enforceable in California. So if you’re working on a cool new idea in your own time without using any company resources, your employer can’t lay claim to that same invention, and therefore you’re free to incubate something on the side and then go pursue it as a company.

In Silicon Valley we don’t tend to sue each other about that. We actually tend to see companies like Google acquiring those companies for a lot of money after their former employees do cool things. And that’s part of the way we cycle money into the system. And my understanding is that in New York that same legal structure is not in place."

Ries also had some interesting observations about the rise of entrepreneurial culture. Namely, you don't have to be a lone wolf hanging out a shingle to catch the entrepreneurial spirit. "Many of the best entrepreneur’s today are working inside big companies," he points out. "I think that if enterprises want to take advantage of that capacity, they don’t have to go scouting out to find the best entrepreneurial talent They probably have a lot those people already working for them, who are currently being stifled in their efforts to do something innovative inside companies."

This post was originally published on Smartplanet.com