Biggest Mistake: No Employee Non-Compete Clause, Says BlackLine CEO Therese Tucker

Therese Tucker is the rare woman in technology to have founded a successful technology company and brought it public. The CEO of BlackLine, a provider of automated finance and accounting software now worth in excess of $1.5 billion, is esteemed for her enlightened entrepreneurship, software programming savvy, and nurturing leadership qualities.

Broad-minded and compassionate, Tucker sports pastel-pink hair and a mile-wide smile that makes her Los Angeles-based employees feel their CEO actually cares about them. She does. “Business should not be purely business,” Tucker opines. “Companies have a social obligation to care about the lives of people in the communities we serve with our products and services.”

Not surprisingly, Tucker created Blackline’s account reconciliation software to make the lives of accountants less dreary and burdensome. She also undertook an initiative over the recent holidays to clothe more than 50,000 homeless people in the city. But it’s her business chops that really set her apart: She single-handedly programmed BlackLine’s initial products and guided its revolutionary concept of continuous accounting that nearly does away with the dreaded financial close.

“The mistake we made was not having specific clauses in our employment contracts regarding confidentiality and reusability.”

Still, she’s as human as the rest of us. “I learned a really valuable lesson about the critical importance of legally sound contracts with employees, one that I will never forget,” says Tucker, shaking her signature pink hair.

The lesson was this: BlackLine gave birth to a competitor. “In California, you’re not allowed to ask an employee to sign a non-compete contract, which are banned,” Tucker explains. “The mistake we made was not having specific clauses in our employment contracts regarding confidentiality and reusability. Regrettably, an employee in our sales group had access to our source code in her laptop. She outsourced the code to India, created a competing product, and sold it.”

BlackLine had little recourse to do anything about the situation, other than take it in stride and double down on making innovative finance and accounting software products to best the competition. The company also retained sharp legal minds to devise crystal clear and enforceable employment contracts on a state-by-state basis.

The tactics worked, helping BlackLine maintain and even enlarge its market lead. The company is one of four technology companies and the only one in its space to be listed as a leader in Gartner’s Cloud Financial Corporate Performance “Magic Quadrant.” “Having good legal counsel and solid contracts with customers and employees pays dividends down the road,” says Tucker.

Once burned, twice shy.