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  1. #1

    Angry Ex-employee stealing customers

    I had a sys-admin/tech support "manager" who left about a year ago, saying he wanted to return to school. He was a great employee, who always went the extra mile for customers. He was the kind of person I would have trusted with my own children and we had a great working relationship. When he left, there was a great void in my hosting operation in terms of tech support. I hired someone else who turned out to be the wrong person, not very customer friendly and not very helpful as a result, my customers were unhappy. I started noticing customers canceling accounts more and more and afetr a while I discovered that this ex-employee had actually started his own hosting company and was somehow "luring" many of my customers away. He has probably pilfered a good 20-30 longtime resellers who were with me for years, but left to host with him. He learned everything about running a hosting biz from me (he had no prior hosting experience). He uses the same data center, same control panels, learned about this forum from me etc. Of course he made his prices lower than mine and he offered to migrate clients to his company from my company for free. He's great with customers, so I'm sure they're all happy with him. I also think that he established alot of personal relationships with many of my clients while he worked for me, so that he probably continued to be in contact with them after he left my company. I don't think he stole email addresses of my customers, in fact I'm not even sure if he actively solicited their business. I sent him an email and confronted him and he seemed to think that there was no issue with what he was doing. I tried to explain that even if he was legally in the right (my bad for not making him sign a non-comp, but I trusted him), that I thought it was "morally" wrong to go after my clients. He disagreed. What do you guys think? Is there anything I can do? What would you do? He frequents these forums by the way......
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  2. #2
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    You blew it by not issuing a non-competition contract. Sadly theres nothing you can really do unless he actively solicits your clients.
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  3. #3
    I'll reserve my judgement on the morality of the issue until I know how he's "luring your customers" away but normally I wouldn't think it's right for him to take on your clients. There is also the possibility that he may have known some of these people better than you did and became quite personal with them. There is a lot of gray area here...

    I will also add that a happy client won't leave you. While it is regrettable that you were hurt by the hiring of a poor employee, it would seem that the bad employee is the one that started causing the damage you are seeing now.
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  4. #4
    You're probably right, but let me ask you this. Let's say he's not luring them away. Let's say that some of my customers kept in contact with him and over the course of their email conversations, they mentioned to him that they were unhappy with support at my company since he left and then the ex-employee said, "gee that's too bad, but I have my own company now if you want to host with me". Do you think that is "morally acceptable"? I try to look at it from his perspective as well, but I just think that if I was in his shoes I wouldn't have done what he did.
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  5. #5
    Personally, I wouldn't knowingly do something like this unless there was a feature/service that I provide and you didn't. Even then I most likely would contact you about it beforehand.

    Now would I necessarily condemn this guy ? As long as he is not the one contacting the clients first the answer would be no I wouldn't condemn him. They are leaving because they are not happy, while their relationship with him may make it easier for them to leave you, I think them being unhappy in the first place is the real issue...
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  6. #6
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    I agree with TVI's comments on this matter.

    It doesn't matter how much you may like or trust someone, you -need- to have them sign a contract with a non-compete and non-disclosure before they start working for you. This is critically important to avoid exactly the situation that is happening here.

    So from a legal point of view, while I'm not a lawyer and can't give legal advice as such, I don't see where you have any grounds for action in this case. And my sense is that you are on the same page with respect to this.

    From a moral point of view... it really depends on the exact circumstances. But based upon what you're saying - customers weren't happy due to the new hire you made... and since they were so happy with the person you had before, who eventually started his own business... it would make sense to me that some of them would switch over to him.

    For instance, my sister-in-law used to be a hair stylist. She worked at one hair salon and developed a very strong and loyal clientele. Her clients would call her on her work or cell # to schedule appointments because they were very happy with the service they got.

    Later, when she took a job at another hair salon - most of her former clients followed her to her new location. Is that unethical or immoral on her part? I don't think so. She did a good job and people appreciated it and wanted to stick with her.

    As an example of when I'd feel it would be unethical or immoral would be if an ex-employee intentionally stole a database of customers and purposely and directly solicited those accounts. Something like that is a bit of a different story.
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  7. #7
    Originally posted by hostmeister
    You're probably right, but let me ask you this. Let's say he's not luring them away. Let's say that some of my customers kept in contact with him and over the course of their email conversations, they mentioned to him that they were unhappy with support at my company since he left and then the ex-employee said, "gee that's too bad, but I have my own company now if you want to host with me". Do you think that is "morally acceptable"? I try to look at it from his perspective as well, but I just think that if I was in his shoes I wouldn't have done what he did.
    I'm inclined to say that I'd likely do that if I were him. In my eyes it's simply networking.

    Just my 2 megs worth....
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  8. #8
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    Welcome to the business world.

    Clients follow employees they like all the time. That is why an employer is advised to have a well written and legally enforcable non compete agreement. If this did not happen on a regular basis then non-competes would never have surfaced and not be used as standard operating practice.

    And to reinterate a previous point. Even if he remenbered the domains and emailed them announcing his service, few would leave if they were happy. Period.

    Your problem isn't him. It is you. Find out why they left and fix it.
    I spent a lot of time climbing the ladder of life.
    Then... I found out it was leaning against the wrong wall.
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  9. #9
    Maybe a little harsh, OMC. But I agree.
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  10. #10
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    Morally, maybe he crossed the line, legally, sounds like he didn't do anything illegal that I can hear.

    My suggestion, concentrate on your current clients and making them happy before you lose more.

    Good Luck,

    R.P.
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  11. #11
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    Hostmeister,

    Try looking at this from your former employee's point of view. Here's a possible version of the same scenario, from the point of view of your former employer:

    FORMER BOSS ACCUSES ME OF STEALING CUSTOMERS

    I used to work for a great hosting company as the sys admin/tech support guy. I had an excellent boss, he taught me all I know about hosting, and I enjoyed a good rapport with the customers. They always knew they could call me if they needed something or had a problem and that I'd go the extra mile to help them out.

    I decided that I'd gone as far as I could in that company, and I wanted my own business, so I left to go back to school, and started my own hosting company.

    Because of what I'd learned working for hostmeister, I contracted with the same data center, and use the same hosting platform. I even started posting on the forum that my old boss had told me about. I kept in touch with a number of former customers. They encouraged me in my new venture, but were happy with their current hosting provider, at first.

    I guess the customers didn't like the new guy that my former boss replaced me with. They wrote me and complained, and asked me for help. He wouldn't help them, and his customer service skills were pretty bad. They told me that they wanted to find another host. I felt bad for the customers, and so I told them that if they wanted to host with me, and get help when they needed and good customer service, they would be welcome, and I'd even migrate them over for free. And since I've got lower overhead, I can charge lower rates.

    It was all going great until I got an email from my former boss, blaming me for the fact that his customers were deserting him. It's not my fault they would rather have good customer service than lousy customer service. It's not my fault that the customers were unhappy.

    Now he's going on to a forum that we, and our reseller customers, frequent, using words like "pilfering" and "luring" to refer to what happened.

    All I did was offer them a solution that would make them happy. Is that morally wrong? What do you guys think? What would you have done in my place?
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  12. #12
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    I was just about to post something similar to Phoenix's story.

    1. Customers were happy when he was running things at your business.

    2. He left, customer service went into the toilet.

    3. Customers decided to stick with the guy who knew what he was doing.
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  13. #13
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    I agree with the following statements:

    - If they were happy with your service, they would likely not go elsewhere, so there was something lacking in your offering (perhaps the new tech you hired turned them off).

    - You should always always always have your employees sign a non-compete agreement.

    However, what confuses me is how did your existing customers actually come to contact your ex-employee? I would assume that their communications with him were through your site email address, through your support desk. I can't imagine that they would be getting support from him (while he's working for you) through an external address. So there's something illogical with assuming that they would/could contact him after he left your employ.

    So if he left your employ, as far as I can see, the only way they could have contacted him is if he contacted them first. Otherwise, they'd have no way of knowing that he started up on his own, right?

    If that is the case, I think that morally and ethically, he really dropped the ball. Legally, I'm not sure you have a leg to stand on. But if he indeed went after your customers directly, it speaks volumes of his character.

    Lesson learned, I suppose.

    Vito
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  14. #14
    Greetings:

    "You should always always always have your employees sign a non-compete agreement."

    While I agree with the base line statement, my understanding that in order for a non-compete to be valid, the employee must still be able to get a job in the field for which they are trained.

    If you have a system administrator, you cannot create a non-compete whereby they cannot get a system administration job.

    So the wording has to allow them to do something in their field.

    Thank you.
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  15. #15
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    Agreed, dynamicnet. It would be illogical to prevent someone from being able to "ply their trade".

    But the agreement should prevent them from directly soliciting your customers...

    Vito
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  16. #16
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    Vito-

    Basically that is right. The best written non competes may only prevent you from working for a direct competitor, or starting your own business for 90-120 days.

    However, you also stipulate your business model, systems, admin procedures and client base are off limits. I have written many non competes and always have legal advice. I have been taken to court 3 times and won each time. That is why I said it needs to be 'legally enforceable'.
    I spent a lot of time climbing the ladder of life.
    Then... I found out it was leaning against the wrong wall.
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  17. #17
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    Still, I have to wonder how the customers were able to contact the ex-employee.

    It seems to me that the only way this would happen is if he contacted them first.

    Vito
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  18. #18
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    Probably so. Either individually or mass mail announcing his venture.

    As has been pointed out by someone else, those in the 'service' industry have a client base that follows them. In fact, in many cases they are hired just because of this client base. Stock brokers, beauty consultants, any outside sales person, comes to mind.

    Is it wrong? ::hrug::: depends on the agreement you have with the person concerning your client base. Legally anyway. Morally? Business is a tough arena. If none of us used our network to build our business and prosper most would be lying. Most of us do it in some manner.
    I spent a lot of time climbing the ladder of life.
    Then... I found out it was leaning against the wrong wall.
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  19. #19
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    The point is that this employee did not come into the company with a "following" of customers. He was basically wet behind the ears and learned the ropes as he worked in the company. So once he became adept at his job, he decided to branch out on his own and (seemingly) solicited business from his previous employee. Tsk, tsk. No matter which way I look at that, I cannot condone that behavior.

    Vito
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  20. #20
    I like the hair stylist example... perfect...

    Seems you may have drop the ball a little with customer service being an issue. Someone once told me that you never hear about the what great service you offer, only the bad, and the bad seems to spread like wildfire. If someone has a bad experience with you you can bet he/she will tell as many people as they can, and it spreads from here. From what I need hear in the forums it seems to make or break compaines. Sure, can always know what your techs are up to, but as a owner/manager you should have noticed that people weren't happy and made changes as quickly as possible. Sounds like he was in the right place at the right time.

    I tought about hiring a sys admin, but have been afraid of something like this, or worse. So I joined a local Linux group, made a few friends and couldn't be happier.

    I can personally tell you even a non-compete agreement can be hard to prove unless you have some very deep pockets. There are plenty aways around it.

    One thing that happen to me in an old business of mine I had was my "ex-employee" took our client list, gave it to a friend and there you go. I never had any direct proof but I know this is what happen. Been there - done that. Sure, could of went after him but an attorney I am not and they just don't come cheap.

    I guess my toughts are as an owner of your own business, you need to be more in touch with your client base and listen to what the are telling and asking of you. It's hard to wear some many hats as I am finding out, but in order for me company to be succesfull you need to be on top of things.
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  21. #21
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    No one is asking you to condone it.

    The -point- is his employer gave him valuable and marketable skills. His employer also did not have the foresight to protect his assets. It would also appear his employer also left himself vulnerable to attack. And now wants to call foul because he didn't cover his butt.

    Lesson is this- No matter how well you like someone always assume they are going to f*ck you if given the opportunity. I have stayed friends with many people because they respected this principle I have.
    I spent a lot of time climbing the ladder of life.
    Then... I found out it was leaning against the wrong wall.
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  22. #22
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    Agreed, OMC.

    The point I'm making is that everyone seems to be concluding that the end user customers simply chose to contact him directly for alternate hosting. The fact is that there is seemingly no way they could have contacted him unless he contacted them first.

    Vito
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  23. #23
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    -IF- there was a mass exodius that would seem to be true.

    It may have been 5 clients or it may have been 50 or 500. With a few for him to have kept in contact with them and they jumped ship it is entirely possible.

    If it was more than a handful then he solicited no doubt.

    Having said that I still assert the employer made many mistakes. IMNSHO neither are clean in this. Unfortunately the employer learned a lesson about business the hard way. Also unfortunately the former employee learned how to use the system to his advantage.

    That is called a lose/win proposition. We should all look for and settle for no less than a win/win.
    I spent a lot of time climbing the ladder of life.
    Then... I found out it was leaning against the wrong wall.
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  24. #24
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    Originally posted by OMC
    The -point- is his employer gave him valuable and marketable skills.
    Exactly, and that's what employers do. In most work situations except the most mundane, employees will learn skills while on the job. The value of that education is part of what an employee gets out of their employment, beyond salary and tangible benefits.

    You can't expect your employees to pay for what they teach you, and can't expect them not to use the knowledge they've gained if they move on. You can pay them well and keep them happy to keep them with you, but if they leave they take along what they've learned. It's part of why an good, experienced employee is a valuable asset.

    And we shouldn't lose site here of that this employee gave to the company -- his customer service skills and his attitudes apparently played a major role in building the company's success.
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  25. #25
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    JayC, your post confuses me.

    Of course he gave to the company. That's what he's paid to do. And he was paid for his efforts. That's called a salary.

    No doubt an employee will pick up skills as he goes through time in your company. And he can certainly take his new skills with him if/when he leaves your employ. But surely that does not entitle him to grab your customer base in the process?

    Vito
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