Blog posts by Melinda Byerley.  See more at Medium. 

When does competing turn into stealing?

PayPal, an eBay Company, recently sued Stephanie Tilenus and Google for violating agreements not to hire employees into competitive businesses.  Today, eBay announced it’s paying $240M for Zong, a company packed with at least 12 (or about 5% of the company) ex PayPal and eBay employees recruited by Dana Stalder, an ex PayPal executive and a member of the board of Zong, who is currently a partner at the VC firm Matrix Partners. He was behind Zong from nearly the moment he left the top management of PayPal/eBay.  Several key eBay/PayPal lieutenants followed him, people with critical strategic skills and payments relationships.

Why is Stephanie being sued, and Dana is being rewarded with $240M sale of a company he backed?

My guesses:

  • Stephanie pissed off a lot of people at eBay, including John Donahoe and a number other top eBay execs. This was well known in the company. Dana excelled at “managing up.”

  • Dana funded a startup which could ultimately be purchased—Google of course could not be controlled.

To be clear, I think the actions of Dana and Stephanie are both wrong. They took executive level inside knowledge of their employer’s roadmaps and strategies, and the nuances of their employer’s weaknesses, then left to go elsewhere and compete on those, hiring the best and brightest they met at their employer. Sure, you can justify it by saying employers are not loyal, you can say your employer is slow moving, but honestly, when you do either of these things you are in fact stealing from the shareholders of your previous employer.

Shady business all the way around in my opinion, and something I would never do.