The Free Market Is a Myth
On competition, Stockholm syndrome, and owning our skills
It was 2016.
In my quest for better work, I quit my job and started contracting for a friend with a small research company. He was very good at quantitative analysis but did not have the operational skills needed to scale a company. Luckily, I did.
We clicked immediately. I had just the right combination of research management experience and operational expertise to help him build the foundational structures of the business. This allowed him to focus on what he was truly good at, the research and big-picture thinking needed to grow the company.
After several months I was officially named COO.
This new title came with an employment contract that contained a pretty intense non-compete agreement. It stated that I could not work for the company’s clients or competitors for ten years if I accepted the position. Ten. Years. This was the first time in my professional career that I had been asked to sign a non-compete, and the terms felt staggering.
At that point, I didn’t consider myself an entrepreneur. I was exploring and experimenting, trying to find something better than the 9-5 I had left behind. But I knew signing something like that would eliminate any ability to find meaningful work if things went south.
We operated in a pretty small pond at the time. The education research space in Denver was where I had built my network, and our clients were my connections just as much as they were his.
I don’t blame him for going that route. Non-competes of that nature were pretty standard in the start-up community that we were a part of. He was also fresh out of a failed partnership a few years prior and needed to know I had skin in the game.
With that said, it was at that moment that I knew I could never work for someone else again.
I had helped to build something that could not have been built without me; the business's success at that point was just as much mine as it was his. The non-compete made it feel like I was building his company, giving him all the power.
I would never be able to leave and then use my network to build another business or even work for someone else in our network. Conversely, he had no skin in the game—there was nothing stopping him from deciding that he wanted to quit or let me go; he would be totally free to continue to work with all of our existing connections.
I realized that I wanted to build our company, and if that wasn’t on the table, then I had to build my company.
This realization came as a surprise to me. I had been operating in traditional employment situations my entire career, I was used to ceding control and power in exchange for money and stability. Until then, I thought being the COO was a dream job, a role that, up until that moment, would have been everything I wanted.
The problem was I had tasted the freedom and control that came with being a contractor, the freedom to work for myself. I didn’t know how much that freedom meant to me until it was threatened.
Who owns you?
In traditional employment contexts, other people not only own your skillset, but they also own your ideas and the products of your labor. The employer decides what they need, they ask for it in a hiring process, you sell it to them, and are compensated accordingly. Once that happens, they own you.
A non-compete agreement takes this ownership a step further, where they don’t just own your skills while you work for them; they own them long after you’ve cut ties. After all, didn’t they teach you everything you know?
In January of this year, the FTC announced that it was considering a rule change that would not only ban non-compete agreements but also nullify existing ones. It described non-competes as an “often exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses.”
Well…duh. In a country supposedly worshipping free markets, non-competes always seemed like an Emporer-has-no-clothes situation. This “standard” practice went against the basic tenets of laissez-faire capitalism.
A hostage situation
America would have you believe that we are a free market, an environment where individuals can succeed based solely on their ability to contribute something unique and “work hard” to bring it to fruition. That unique contribution competes with others, allowing the best ideas to rise to the top until even better ones usurp them in an ongoing cycle that enables us to meet our ever-evolving needs.
The truth is, no market is entirely laissez-faire because markets were/are created and controlled by people, specifically people in power. The nature of power is that its aim is always to maintain and consolidate power.
Non-competes are a perfect example of this tendency—if your employees can’t go work for your clients or competitors, they have no choice but to stay even if their jobs aren’t giving them what they need. Employers are holding them hostage but framing the agreement as mutually beneficial. The logic being that if we were truly allowed to compete, the businesses that provide our livelihood would not be able to exist.
On the flip side, employers have no such handcuffs. They are free to hire and fire at will, make terrible business decisions that lead to collapse, or just decide to dissolve everything to try something new. There’s nothing holding them back from cutting ties and starting over.
What is ours?
Competition is a myth designed to make us think that we have to “own” our ideas and skills and protect them from others who would try to take them from us.
The truth is, we don’t “own” any of it.
There are no new ideas, just new ways of combining and presenting them to the world. Every epiphany is a spark ignited by the ideas of others.
While our innate strengths and talents are uniquely ours, our skills are not. Every interaction we have, every project we work on, and every human we interact with teaches us new things.
Competition breeds scarcity, which creates an environment where we need legal agreements to “protect what’s ours.” These agreements hinder not competition but the independent thinking and the freedom required to collaborate and create something better than any individual can create alone.
My former business partner was trapped in this way of thinking, as I have been so many times in the process of building my business. He thought that what we had was his and he needed to protect it instead of realizing that if we had framed it as ours, we could have made it so much more.
I learned so much from working with him and building that business that I use every day, not only in my business but when I coach others on their businesses. Collaboration is what helped me build those skills, not competition, and collaboration is what helps me continue to share those skills freely in order to help others.
Stockholm syndrome
That’s the tricky thing about power; when it operates at its best, it twists the promise of “freedom” to make us think that structures and policies that suppress our freedom are really designed to make us freer.
Non-competes supposedly made entrepreneurs freer to build better businesses because we were “protected” from people stealing our ideas and taking them into the open market on their own. They also supposedly made employees more secure by protecting the human capital and IP of the companies they worked for.
What non-competes actually did was give the powerful a mechanism to buy and own the ideas and skills of others, consolidating this “freedom” in the hands of a few and hindering innovation, wage growth, and upward mobility. It made it so they didn’t have to compete while the rest of us did.
Competition as a concept forces us to look at each other as threats and not assets. I decided to step outside of a system that told me someone else owned my talents so that I could use them to help as many people as possible bring their ideas to fruition.
We don’t need to protect the freedom to compete; we need to protect the freedom to collaborate.
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© Sarah Duran 2023
Image by Peshkova via iStock.
The Obvious Disclaimers…
This information is for educational and informational purposes only. It is not intended as, and shall not be understood or construed as, professional advice. What you decide to do with this information is up to you and all repercussions are on you.