Is my collection of articles mine to take?

Sept. 1, 2000
Can I take the file of journal articles I collected with me from my current job when I start a company?
1304qa Chang New

Q: Can I take the file of journal articles I collected with me from my current job when I start a company?

A: You want to have a clean break, especially if you are to form a company in the same business space as your current employer. My advice is not to take the file. Everyone is polite at the time of your departure and the company will not object to your taking these boxes of documents. Nor will they go over every document to verify that the boxes do not contain any proprietary company information. So there is nothing wrong with taking information that's available from the public domain, and it is probably OK even though they were reproduced on company copiers and therefore strictly speaking are company property. But things can get ugly in a hurry once word gets around that you intend to compete. Your current company may decide to make an example of you and take you to court on grounds that you misused company information. Now think of the impression you'll make on a judge and a jury when you vehemently deny there was anything proprietary contained in the "n" boxes you took. For sure, you don't want to take anything proprietary. I recommend that you do not even take things like the company phone directory with you.

Q: Why is there a disproportionate number of immigrants starting companies in the photonics field?

A: If you look at graduate school enrollment in the engineering disciplines, there is a high percentage of foreign students, and a lot of us remain here to become American citizens. In this case there are advantages to starting with a clean slate. Everything is new to an immigrant and he or she did not grow up in the traditional American family where most heads of the family earned a decent wage. Arno Penzias, the Physics Nobel Laureate who came to the United States as a boy said, "One of the great advantages of immigrants is the loneliness; you sit on the side, try to be part of the group, and you see more things." So an individual looks around, sees other people with similar backgrounds starting successful companies, and it is easy to come to the conclusion that "it can be done," and "why not me?" And there is no role model saying, "get a decent job," holding back that decision. I believe the trend will continue for more engineers to start companies, regardless of race or national origin.

Q: How much do companies pay their technical advisory board members?

A: I am not sure whether there is a guideline or even a rule of thumb on this matter because it depends a lot on the size of the company and the role the advisors are expected to play. The proper role should be to provide company management with a broad overview of what is going on in the outside world and to provide objective input for formulating a strategic roadmap to grow the business. In reality some companies use their technical advisors like consultants, and other companies use their advisors for window dressing and for name-dropping. Once the responsibilities and expectations are defined, compensation can be determined more logically.

Compensation is usually a combination of cash and stock options. One can very easily compare this to what directors get. There, the rule of thumb is about one-half percent ownership of the company per director. Since directors have more "duties" than advisors, one-half percent may be a reasonable upper bound on stock. In addition, some companies pay their directors an annual fee, and some pay additional fees for attending each meeting and for serving on additional committees. So it's also appropriate to work out an annual retainer, plus a consulting fee for additional time spent. Most advisory boards are not effectively used, therefore also think about how to get your money's worth in developing enough traction to engage the advisors.

Q: I am shocked that recruiting firms are now asking for warrants to purchase stock in my startup company. What's the norm?

A: Everyone is asking for stock warrants and stock options these days, from service providers to landlords. Big recruiting firms who do mostly top executive searches have been getting warrants for some time. Their fee is typically one-third the annual salary, plus warrants for one-third the number of stock options the executive receives the first year. They also have a set salary for each position, and that determines the fee even though the actual salary may be less. Smaller search firms are less demanding. Generally, they get just one-third of the first year's total cash compensation. Most firms want one-third of the fee up front, and one-third at the end of each month; so the fee is paid in full after two months of search, whether the search is successful or not. Some firms only demand one-third payment up front and the rest at the completion of the search.

About the Author

Milton Chang

MILTON CHANG of Incubic Management was president of Newport and New Focus. He is currently director of mBio Diagnostics and Aurrion; a trustee of Caltech; a member of the SEC Advisory Committee on Small and Emerging Companies; and serves on advisory boards and mentors entrepreneurs. Chang is a Fellow of IEEE, OSA, and LIA. Direct your business, management, and career questions to him at [email protected], and check out his book Toward Entrepreneurship at www.miltonchang.com.

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