Update – I’ve now been advised that Jesse Lipson, former CEO of ShareFile and VP of all things cloud at Citrix has, as the saying goes, left the building. he was apparently “asked to leave” a couple of months ago. The plot thickens….
Here’s one from the “yuck, that really is grotesque” file
First an introduction to the players here. ShareFile is a file sync and share vendor that was acquired a few years ago by Citrix. I’ve spent time with the ShareFile crew and have always found them to be really good, and ShareFile is a great product in my view.
Egnyte is a vendor in the same space, albeit a younger one. The company has been going for a few years, has gained some good early traction (despite working in an incredibly competitive field) and has picked up around $60 million in funding.
And so to the story. It seems that Citrix, as is often the way with these large technology vendors, suddenly decided that ShareFile was no longer internal flavor of the month and decided to make some serious cuts to the business unit.I’ve been hearing for a few months of significant layoffs across Citrix and with ShareFile in particular and these rumors had spread like wildfire both within Citrix and outside.
So if you were an employee of ShareFile, you’d understandably be pretty worried about your future – if your business unit was collateral damage in a change of corporate focus, you’d be forgiven for spending a lot of time and energy thinking about your own personal future. And so it was for one particular employee, Jessica Bell. Bell was a sales engineers for ShareFile and worked out of the company’s headquarters in Raleigh.
Seeing the writing on the wall, Bell looked at her options and understandably looked at other options. And into the void came Egnyte, offering to employ Bell and a handful of her ShareFile colleagues. As is the usual modus operandi for US technology companies, Bell handed in her notice and was summarily marched out of the building. Lovely.
Of course, Egnyte saw the hiring as a good chance to gain some marketing value and CEO Vineet Jain went public and officially opened Egnyte’s Raleigh office under ShareFile’s nose. It’s playbook guerilla marketing but also pretty much guaranteed to elicit a response from the larger player. And so it came to pass. Citrix sent Egnyte a cease-and-desist letter suggesting that Bell and her other colleagues were in breach of their non-compete clauses by jumping ship to Egnyte (yes, this in spite of the fact that the staff layoffs would potentially have meant they had no jobs at Citrix, anyway).
Of course, it was a complex legal situation, made more complex by the fact that different US states have different takes on non-compete clauses. They’re generally unenforceable in California (where Egnyte is based) and so Egnyte filed their own action, suing Citrix in California (essentially saying that, since non-compete clauses are unenforceable in California, Citrix’ cease-and-desist was also unenforceable).
Not to be outdone, Citrix counter-sued, this time in Florida, where it is headquartered. Upping the ante, Citrix also named all the employees who had jumped ship as co-defendants alongside Egnyte. According to the action, the employees had violated their non-compete agreements and just to add some drama to an already dramatic situation, Citrix suggested that they had downloaded sensitive documents before they left.
The legal questions
The moral issues here are (in my view) bigger than the legal ones, but it’s worth reflecting on how different approaches to non-compete clauses allowed this case to be brought in the first place. California is decided pro-employee and takes the view that corporations should not be able to put limitations on their employees such that, post-employment, they are unable to ply their trade. Of course, there is a degree of “buyer beware” in all of this – the employees signed an employment agreement which clearly set out the non-compete as well as detailing exactly where any legal action relating to the agreements would occur. Citrix specifically states that any action will occur in Florida, thereby reducing the potential impact of California’s approach towards non-compete.
In an ideal world, one would say that there is equal power here and that the employees, of their own free will, signed the agreements and that they, therefore, need to live by them – non-compete included. Notwithstanding the moral question, there is a huge amount of technical legal argument to digest here – more than most people are interested in. Questions of enforceability, jurisdiction and how it relates outside of the state in question will all be argued ad nauseam by the attorneys for all parties.
What really matters
The legal wrangling, however, kind of ignores the moral issues here. We are talking about individual employees with mouths to feed and bills to pay. If this was just about stopping Egnyte or Citrix from doing something, that would be OK. They are big, well-funded corporations that are big and ugly enough to work through these things. The individual employees, however, would appear to be collateral damage. The fact that there was every chance that their individual jobs would have been dis-established by Citrix simply adds salt to their wounds.
Pushing his version of events (which is understandable, of course) Jain told Forbes that he had actually reached out to Citrix about the alleged downloading of confidential information and suggested that they work together to ensure that any proprietary information was protected. According to Jain, Citrix refused that olive-branch and resorted to what he characterized as “corporate bullying.”
MyPOV
I’ve spent time with both Jesse Lipson, the Corporate Vice President and General Manager, of the Cloud Services unit of Citrix, and Jain. Both are thoroughly decent people who wouldn’t, I’m sure, want to impact negatively on individual employees. But Lipson isn’t in the driving seat here. While he heads up the business unit that ShareFile sits under, he is under a few layers of management himself. And given the fact that Citrix is a massive multinational company, he is also somewhat under the control of his company’s legal team. And legal teams have a tendency to ignore any issues of humanity and empathy and instead focus on the very fine details of their business’ interests. Who would be a lawyer, huh?
This will probably all blow over – a storm in a team cup some might say. but it is a good example of all that is bad with a monomaniacal focus on the corporation, at the expense of its people. Personally, I hope that Bell and the other employees get to do whatever they want and work wherever they chose. Time will tell.
