Broadcom Sues SpaceX for Allegedly Poaching Employees

41 Comments
SpacX Founder Elon Musk

SpacX Founder Elon Musk

In a lawsuit, Broadcom has accused Elon Musk’s SpaceX of using an agreement under which the companies explored a cooperative deal to supply microchips to poach its top engineers.

The company says SpaceX violated nondisclosure agreements and poached its top engineers “to procure a family of sophisticated, customized computer chips without bearing all of the research and development costs inevitably involved in creating such chips,” according to the complaint filed March 23….

Broadcom’s co-founder and chief technology officer Henry Samueli met with SpaceX CEO Elon Musk in October 2015 in attempts to solidify an agreement, at which time Musk insisted Broadcom keep its “A-team” on the project, according to the complaint.

But even as Samueli and Musk were meeting, other SpaceX representatives were attempting to uncover the identities of the “A-team” engineers working on the Space X project, Broadcom says in its complaint.

Five Broadcom engineers – all of whom worked on the SpaceX project – resigned their positions with the company effective March 11, and refused to disclose their new employer, according to the complaint.

Broadcom says SpaceX confirmed they hired the five engineers on March 9, saying nothing prevented them from hiring other Broadcom engineers.

For its part, SpaceX says the Broadcom engineers – all named as defendants in Broadcom’s complaint – approached them.

Read the full story.

Editor’s Note: The computer chips are likely for SpaceX’s planned 4,000 satellite constellation for global Internet service. I can’t see what else they could be used for.

Not to pre-judge this dispute, but stories like this about SpaceX have circulated in the space industry for years. Two sources who previously worked with Musk told me that it was standard operating procedure to approach potential partners with the goal of identifying which employees to hire. A third source told me of a case where every employee in a potential partner company received offers to work for SpaceX.

There’s a general view that SpaceX sees partner and supplier relationships as temporary until the company can bring production in house. At least for anything worth producing in house. Sources have alleged to me that the company has not been respectful of other people’s intellectual property.

A friend of mine from Silicon Valley says these are common practices — along with 70 hour work weeks — that Musk brought with him from that tech hub. I think he’s right; if you want to understand how Musk has disrupted the space industry, you need to start there.

This is one of the main areas where Ashlee Vance’s biography of Musk falls short. There’s a passage in it where Musk is complaining about Jeff Bezos hiring away SpaceX engineers. If the author had talked to more of Musk’s competitors, he could have played that scene with the irony it deserved.

Musk is beloved by the NewSpace crowd for his company’s achievements, but he and his company are absolutely hated by a large segment of the space industry. Some of that is jealousy over SpaceX’s success, but much of it has to do with Musk’s business practices.

  • TomDPerkins

    “Sources have alleged to me that the company has not been respectful of other
    people‚Äôs intellectual property.”

    If there were evidence of that they could successfully be sued.

    Unless the NDA with Broadcom forbids hiring their employees for X long, I don’t see they have a leg to stand on, and if it does, it may be void with respect to such for being in restraint of trade–precisely because people are not IP.

  • Douglas Messier

    That comment was a general one based on other alleged incidents. It does not relate directly to Broadcom. Let me emphasize again, I’m not pre-judging the Broadcom suit because all I know about that situation is what’s in the story. That being said, the charges do ring true based on what I have heard.

    Suing is often dependent upon resources. Broadcom has the money to do so. Others are not in such a position. Consider a hypothetical of an individual who feels SpaceX did wrong on IP. The company denies it. Does he or she risk a legal battle against a billionaire and his well-paid lawyers that could go on for years and may not have the desired outcome?

    Another source told me that Musk’s attitude toward lawsuits is bring it on. His lawyers are better than your lawyers.

  • Flatley

    CA law is very lenient with respect to letting employees go where they want — as it should be — and even the basic non-compete contracts you’ll get from most companies elsewhere are illegal in CA. I think this is more about making noise about the poaching than anything else – getting those practices out in the open is probably more damaging to SpaceX than anything monetary (“keep your A-Team on this” is particularly scummy), and it’s not like Broadcom is getting their engineers or the SpaceX contract back under any circumstances.

  • Frank MacLeod

    “Not to prejudge the dispute”….Which is exactly what you have done. “…other ALLEGED incidents”.

    “Another source told me that Musk’s attitude toward lawsuits is bring it on. His lawyers are better than your lawyers.”

    Blah, Blah, Blah. You are just full of unsubstantiated and unattributed “sources” aren’t you. Go back to Journalism 101, and perhaps take a course on Media Law as it concerns defamation as well.

  • Aerospike

    How about just a quick google on the matter?
    http://www.businessinsider.com/elon-musk-recruiting-strategies-for-spacex-2015-6?IR=T

    http://www.bizjournals.com/seattle/blog/techflash/2015/01/elon-musk-looks-to-poach-microsoft-boeing-workers.html

    and apparently Tesla and Apple are even considered to be in a “employee poaching war”
    http://9to5mac.com/2015/02/05/apple-tesla-poaching/

    I’m not saying that SpaceX is evil, but if you open your eyes a little bit you will realize that this practice is basically “high tech company recruiting 101” and happens all over the industry.

  • Douglas Messier

    I won’t betray the confidence of my sources and expose them to SpaceX’s lawyers.

    Defamation is spoken. Libel is written. That much I do know.

  • Douglas Messier

    Yup. That is exactly right.

    I’m sure it happened in the space industry before, but Musk seems to have taken it to a whole new level. Other companies feel he had raided their talent and expertise. It’s one of the reason’s SpaceX’s costs are low.

  • DJN

    Isn’t the free market a wonderful thing! These engineers get better jobs. SpaceX customers get better service at lower cost. Broadcomm gets a new customer for their mechant silicon. Some engineers get hired a Broadcomm to fill vacancies.
    If SpaceX broke a contract, well they will suffer the consequences. After all, thats why we have contracts. Sorry the whiners and bloggers don’t like the way things work, we the customers, employees and investors do.

  • Terry Rawnsley

    Actually Doug, I’m on your side here but “defamation” encompasses both “slander,” which is verbal as well as “libel,” which is usually written. I doubt Mr. MacLeod is an attorney or he wouldn’t be dangling the fantasy that your article has somehow defamed SpaceX. Even had you defamed them, suing you would open a great many doors in discovery that I’m sure Mr. Musk would prefer stay closed.

  • TomDPerkins

    He’s got a serious case of “gotchitis”. Wherever he is is the parking garage of the Watergate.

  • TomDPerkins

    Although the door’s wide open for it, I’ll resist a “Deep Throat” joke.

  • TomDPerkins

    So if their costs are so low SpaceX is paying them peanuts?

    Or is it SpaceX is dead serious about doing great things efficiently, and the people jump ship to SpaceX to be a part of that, looong hours and all?

    I’m thinking it’s that last one.

  • Michael Vaicaitis

    I think you make a good point here: SpaceX is about “doing great things”. Most other businesses are about making money so that they can make money. SpaceX is unashamedly about making money so that they can do great things.
    That’s not to suggest that abusing employees, or even laws, could or does not happen, or that it does happen, just that the base motivation does not align with “normal” business practise.

  • Douglas Messier

    I stand corrected. Thank you for pointing out my error.

    I agree with your assessment.

  • Douglas Messier

    The parking was not in the Watergate it was across the river in Rosslyn.

  • Redditor

    The plural of company is companies, not company’s.

  • cynthia curran

    Broadcom had a merger a year ago. Everyone there knew that eventually there would be layoffs. Broadloom this year is laying off 700 employees.

  • Terry Rawnsley

    There is no “greater good” or “we’re doing great things” defense to tortious interference with contractual relationships. I disagree that the alleged abuses would be for an atypical reason in the case of SpaceX. Abuses of customers or contracts or partners or employees happen in business because the perpetrator believes them to be in it’s best interest – whatever that interest happens to be. SpaceX is no different than any other company that is alleged to have cheated. Whatever they did, if they did anything at all, they did to benefit SpaceX and only SpaceX.

  • Terry Rawnsley

    That attitude didn’t work out so well when he sued the DoD. I also wonder how that CA WARN Act complaint is progressing?

  • Michael Vaicaitis

    I wasn’t really speaking of the legality or motivations of SpaceX as such. I was responding to Tom’s point of the complex motivations of employees joining SpaceX, for instance, jumping ship from Broadcomm. It is quite plausible that potential recruits might be tempted/motivated not merely by financial remuneration, but also by the purpose of the organisation, which is, undoubtedly, atypical.

  • windbourne

    Personally, I am happy to see this. This is supposedly, one of the reasons why avago bought broadcom. It would help them in the space arena. So, this is not likely to go away.

    As to spacex raiding ‘partner’ companies, all musk companies do this. It is the pattern that bill gates established.if you have a strong patent or market, then they willvtruely partner. But if you are small, or have no patents , then they bring the engineers and get rid of the junk. It worked wonders for MS.

  • windbourne

    Taking ppl OK. Taking IP is not. We will see what happens.

  • windbourne

    That pretty much describes all 3 of musk companies. I deal with Tesla ppl and they do speak about pay ( low, damn low, really damn low, etc ), but love tesla, the stock, and how they KNOW they are changing society.
    Likewise I have known ula ppl, and other than a ula salesman, all have spoken about spacex in positive terms. They would love to work at spacex. But, these 2 were laid off due to their high pay and I suspect that going to work for spacex on low salary and long hours will not fly.

  • TomDPerkins

    Thanks, but I’m not sure you didn’t just prove my point for me.

  • Douglas Messier

    Tom, what I meant is this: it’s a lot cheaper to hire people who have already developed skills and have specialized knowledge than it is to hire a company to do the work for you. Or to acquire the company. Or spend the time and money to develop the technology yourself.

    This is one of the things that Broadcom is claiming in its lawsuit. The company put a lot of time and effort and money into developing technology and the team to develop it. SpaceX comes along under the pretext of a partnership, learns as much as it can about the technology, and hires away the core team. SpaceX has just saved a ton of money on development.

    SpaceX is saying there is nothing to stop it from hiring Broadcom’s people, and it won’t be implementing the plan Broadcom had proposed. So, SpaceX is pursuing something sufficiently different to avoid IP or patent violations.

  • Douglas Messier

    That works for a lot of people. At least for a while. But, you hear cases of folks getting burned after a few years and leaving for places like Virgin Galactic where hours are much more reasonable. You’ve got people at Virgin’s Mojave and Long Beach who are former SpaceXers.Other people end up out of the space business entirely. I understand that options vest after five years, so you have folks hanging around at SpaceX until then.

  • Douglas Messier

    SpaceX seems to lay people off regularly, too. Probably not the five guys it just hired from Broadcom.

  • Terry Rawnsley

    Very true. I’m sure that was part of the recruitment spiel that they got from SpaceX as well. Money or other perks is usually the prime motivator unless they were being really mistreated by Broadcomm.

  • ukarmy04

    Thanks for sharing. Now how exactly is this relevant? Doug was using the singular possessive form of “company” when referring to the achievements of SpaceX (a singular company).

  • windbourne

    There is a real reason why turnover is high. Musk is running this like a normal high-tech start-up. Those that are young and putting in the hours and hanging on to their stock will very likely make the numerous millionaires from Microsoft, and 100 millionaire from Google look positively poor and few in numbers. Keep in mind that the longer they hold off IPO, the more that it will be worth, assuming it continues this path ( Google vs Alta vista and netscape ).

    In the meantime, with spacex restarting American launch, possibly growing Sat building, and very likely will provide the launch capabilities to go to the moon and Mars dirt cheap ( in spite of what ndt says ), this will provide loads of new opportunities for those veterans of spacex, BO, etc.

    5 year vesting? Wow. Only the young.

  • Flatley

    I’d guess with about 75% certainty that the Broadcom 5 are working on something for SpaceX substantially similar to whatever was proposed earlier. If that’s the case, and if Broadcom can somehow claw out the necessary documents, there will be blood. Regardless of what happens, there should be some interesting information popping out into the light of day; this’ll be a fun ride.

  • duheagle

    I do too, but lawsuits of this sort typically take at least two years to get to any kind of conclusion and five to seven years is not unheard of. Unless SpaceX is found liable in some way, I’m guessing you’ll never hear about any of those suits ever again.

  • duheagle

    I did about 30 minutes of digging around on-line and came to the same conclusion. The acquisition by Avago was announced about 10 months ago but only closed fully in the last week or so. No coincidence, I think, that that was when the Broadcom Five jumped ship to SpaceX. I don’t doubt that SpaceX has sharp elbows when it comes to talent recruitment, but this particular situation could well have gone down exactly as SpaceX claims it did.

    As to alleged improprieties involving intellectual property, it is well-established that departing employees may be enjoined from taking documents and code with them, but anything they carry out in their heads is theirs and may be freely used by them in service of a new employer. SpaceX has suffered both gains and losses of this type and will continue to do so.

  • TomDPerkins

    Making the claims of your “source” baseless.

    In and of itself, hiring someone cannot be an IP violation.

  • Douglas Messier

    No the alleged IP violations I mentioned were from a different case.

  • windbourne

    Sadly, I agree with you.

  • Vladislaw

    Musk and SpaceX are not raiders snatching humans for slaves. You can not “raid” someone if they love the place they work and feel they are getting fairly compensated. If so many people are ALWAYS willing to move over to Musk’s enterprises there must be a good reason. It also is telling about the company they leave.

  • Vladislaw

    Yes there IS something stopping Musk from hiring Broadcom’s people. Broadcom AND those people in question. If Musk has this reputation and EVERYONE is aware of it.. why not give the key employees so much money and offers for matching and bettering ANY OFFER made to them by Musk?

  • Vladislaw

    Broadcom was aware of Musk’s reputation BEFORE dealing with him. Why didn’t Broadcom offer the moon to those key employees? Stock options? Bonus options? Promotion options? Making it virtually impossible for musk to toss money at them?

    They sure didn’t seem to be acting very defensively against this “raider” that “everyone” knows about and the tactics that would be used.

  • Vladislaw
  • Sam Watson

    Doug fixed the typo Redditor referred to, so your snarky comment is as irrelevant as Redditor’s.