seeing how far you can get if you know you are only going to raise $100,000. We’re continuing to look at whether the changes in the private venture capital market in IT mean that, in some cases, there may be a role for public funding.
X: Back in July you published a blog post listing all the reasons why the Patrick Administration is being cautious about taking a stand on the question of non-compete agreements in Massachusetts. As you know, many people think the use of non-compete agreements in many employment contracts puts a big damper on innovation, by discouraging people from switching employers or starting new companies. What kinds of evidence would it take to persuade the Administration that some kind of change is needed in this area?
GB: Our approach on these innovation agenda issues has been to really engage in dialogue with the business community and the academic community and give first priority to the things where we see broad consensus and shared priorities. As I have been talking with people in the IT industry in Massachusetts, the issue of non-competes is frequently brought up, and there is concern that Massachusetts law is inhibiting innovation on some peoples’ parts, and that’s something we take seriously. But from Day One I was really surprised at the lack of consensus on the subject. I know there are some people who feel very strongly about the issue, but not only is there a lack of consensus that one answer is better than another, but there is a tremendous range of opinion on how important the issue is. Some people feel it’s a very important issue, but I’ve also heard from a lot of people that it’s not one of the top three issues—that there are things that Massachusetts could and should do better, but that [reforming non-competes] is not one of the top three things that would really help the innovation ecosystem.
So, as I said in the blog post—what Representative Brownsberger is working on, we are going to keep in close touch on that. I’m not saying that everybody has got to agree to [proposed reforms]; if a guideline is that we are not going to make a change unless everybody is happy, then we would never make a change. But I don’t think a ban [on non-compete agreements] is the place where we are going to find broad consensus. Rep. Brownsberger is trying to find another balance point that there could be consensus around, and if he can find such a place, we’ll work with him on that.
X: One last question. One of the organizations under your direction is the Office of Consumer Affairs and Business Regulation, which has been working on new regulations around the way Massachusetts businesses store and protect private personal data. The implementation of those regulations has been postponed four or five times now. Isn’t there a point at which these repeated postponements create uncertainty in the business community about whether they will ever really have to change their data-protection practices?
GB: The ideal situation would be that we would come out with a set of regulations and that we were not revising and postponing them several times. But in this particular case, we have been listening to the business community, and we have been hearing that the earlier versions of the regulations were not reflective of the best practices in the industry for balancing consumer privacy with business operations. So we have been continuing to make changes, for two reasons. One is that we were hearing that the regulations as they were originally proposed were burdensome on business, in ways that were not central to protecting personal information. That was the main reason for holding off. The other reason is that in the course of having these conversations with companies in a variety of industry sectors, it became very clear that businesses were sizing us up as a partner, and sizing up whether we were innovative ourselves. And what we heard from a variety of folks in the tech sector was that the fact that you’re issuing these rules which don’t reflect the ways in which good businesses are protecting personal information really shows us that you’re not very tech-savvy, and it undercuts your credibility.
A draft of the new regulations has just been issued, and legally those draft regulations have to go through a new public hearing. But the early returns on the public comment have been that this draft is a dramatic improvement, and we are cautiously optimistic that we have struck the right balance this time. Just a simple example of what I was talking about is encryption. The statute that ordered us to issue regulations set a certain standard for encryption. But the tech folks were telling us that encryption technology is changing every day, so the idea that you could say in your regulation, “Here is the encryption standard,” is totally ignorant about how the technology is working. They said, if you want to set a performance standard for the protection of privacy and then allow us to use the technology that is available today, tomorrow, and the next day, then that is something we can work with—but don’t tell us to use a certain technology. So we’re leaving that up to the private sector, and we think part of the reason the new draft regulations have been well received in the early returns is that they are saying, “Here’s what we want you to do if you are handling personal information: we want you to keep it safe, but we are going to give you more flexibility about how you take care of that.”
