Written by Krystian Sekowski
JD Candidate 2025 | UCalgary Law

In the realm where risk intertwines with innovation, Tyler Cowen illuminates the American venture capital (VC) system in his book "Big Business: A Love Letter to an American Anti-Hero." In his chapter on VC, Cowen explains how the American VC system emerges as a global beacon, a lifeline for visionary minds whose ground-breaking ideas are not yet primed for the public market. Cowen emphasizes that VC, often synonymous with Silicon Valley's tech juggernauts, symbolizes America's exceptional ability to nurture fledgling firms with exponential growth potential.
 
What distinguishes venture capital is its daring embrace of risky ventures—those that traditional banks, risk-averse and bound by convention, would typically shy away from. Cowen paints a vivid picture of an ingenious entrepreneur with a concept carrying a mere 2 percent chance of success but possessing the potential to revolutionize industries. While conventional bankers might dismiss such odds, venture capitalists, according to Cowen's insights, have the acumen to see beyond mere numbers. They comprehend the long odds, strategically funding numerous start-ups, understanding that, although many may falter, the select few that succeed could redefine entire industries.
 
As Cowen delves into, venture capital transcends the mere infusion of capital; it is a meticulously crafted tapestry of systematic networks, honed expertise, and an innate ability to recognize and foster talent. In the corridors of Silicon Valley, it transcends monetary contributions, evolving into a fusion of financial backing intertwined with invaluable advice, guidance, and mentorship.
 
Cowen argues that venture capital's influence extends far beyond the bounds of Silicon Valley and the tech-centric domains. His exploration reveals that approximately 20 percent of VC firms specialize in information technology, with the majority diversifying their investments across various industries. Whether in healthcare, medicine, or green energy, venture capital, guided by calculated risk-taking, emerges as a catalyst capable of reshaping entire societies.
 
Cowen's exploration unveils the colossal impact of venture capital, asserting that companies backed by VC contribute a staggering 21 percent to the U.S. GDP and play a pivotal role in fostering 11 percent of private-sector jobs, as per the National Venture Capital Association. Beyond financial contributions, Cowen underscores VC's transformative effect on economies and job markets.
 
The success stories of tech giants—Microsoft, Apple, Google, Uber—find common ground in venture capital. Cowen illustrates how these narratives underscore VC's pivotal role in nurturing businesses that ascend to market leadership, effectively shaping the tangible fabric of the American dream.
 
As Cowen elucidates, venture capital is not confined to Silicon Valley's glamorous precincts; it is a transformative force shaping economic landscapes in diverse regions like Boston, Brooklyn, and Austin. Cowen's exploration underscores how VC becomes a driving force in economic evolution, gentrification, and fostering vibrant communities.
 
On a global scale, Cowen acknowledges the formidable challenge of replicating the success of American venture capital. The American model, he contends, thrives on a distinctive blend of finance and trust, forming a delicate yet potent ecosystem that proves challenging to recreate elsewhere.
 
Contrary to assertions of being "good finance," venture capital, Cowen asserts, operates as an integral component of the broader American financial symphony. VC becomes a harmonious force propelling innovation in the intricate interplay with bank backstops, letters of credit, and the orchestrated chaos of initial public offerings.
 
Cowen's exploration also tackles the inevitability of failure in the venture capital landscape. He positions it as an integral part of the entrepreneurial journey, a driving force behind creative destruction that paves the way for replacing outdated economic sectors with new, vibrant ones. As Cowen underscores, the result is a dynamic American economy with the resilience to adjust, adapt, and thrive.
 
In Tyler Cowen's exploration of venture capital, readers uncover the hidden magic propelling America's innovation landscape. It transcends mere monetary transactions; it's about transforming dreams into reality, fostering diverse ventures, and shaping the dynamic heartbeat of the American economy. In Cowen's narrative, venture capital becomes more than an investment—it becomes a journey, an experience, and a driving force behind the nation's entrepreneurial spirit.
 
Citation:
Cowen, Tyler. Big Business: A Love Letter to an American Anti-Hero. St. Martin's Press, 2019. Pg. 138-142.
 

Written by Justin Chia
JD Candidate 2025 | UCalgary Law

Non-compete provisions are key mechanisms that start-ups and companies use to safeguard trade secrets and other sensitive information that employees may obtain during employment.[1] The primary concern with non-compete clauses is their potential to unfairly restrict an individual’s ability to find employment in their preferred trade or occupation.[2] Clauses with narrow geographic and temporal terms are more likely to be upheld by the courts in Canada. Additionally, courts are more likely to uphold restrictions on activities in which the employee is prohibited from engaging are not overly broad.[3] Non-compete clauses and various other restrictive covenants, including non-solicit provisions and Non-disclosure agreements (NDAs), can protect a start-up’s trade secrets from its competitors.
 
The U.S. Federal Trade Commission recently proposed a nationwide ban on non-compete clauses.[4] The ban would prohibit employers from imposing non-competes on employees, regardless of how narrowly framed. The FTC’s main concern is that non-competes unfairly restrict an individual’s employment opportunities and undermine economic competition and innovation.[5] Any agreement that purports to limit an employee’s opportunities to seek future employment will fall under the ban, even if not explicitly labelled as a non-compete.
 
Ontario is currently the only province in Canada that has imposed a ban on non-compete clauses.[6] The prohibition on non-competes reflects the common law presumption that they are contrary to public policy. Whether the rest of the provinces or the federal government will follow suit regarding outlawing non-competes remains to be seen.
 
The implications of a ban on non-competes for start-ups are not precisely clear. Still, it would likely considerably impact how start-ups seek to protect trade secrets and intellectual property more broadly. Should a ban on non-competes be imposed, start-ups still have a variety of other restrictive covenants at their disposal to safeguard IP, including NDAs and non-solicits. Ontario, however, is discussing a potential ban on NDAs in the context of workplace misconduct, which, if implemented, could also be extended to IP.[7] Potential bans on non-competes and other restrictive covenants emphasize an increasingly clear reality. Corporate and employment legal regimes require start-ups to balance commercial interests with the rights of employees, which is by no means an easy task.


[1] Bryce C Tingle, Start-up and Growth Companies in Canada: A guide to Legal and Business Practice, 3rd ed (Toronto: LexisNexis, 2018) at 131.

[2] Shafron v KRG Insurance Brokers (Western) Inc, 2009 SCC 6 at para 16.

[3] Payette v Guay Inc, 2013 SCC 45 at para 61.

[4] “FTC. Proposes Rule to Ban Noncompete clauses, Which  Hurt Workers and Harm Competition (5 January 2023), online: Federal Trade Commission <https://www.ftc.gov/news-events/news/press-releases/2023/01/ftc-proposes-rule-ban-noncompete-clauses-which-hurt-workers-harm-competition.>

[5] Ibid.

[6] “Ontario Bans Employee Non-Competition Agreements: What Does This Mean for Trade Secret Protection?” (9 December 2021), online: Fasken <https://www.fasken.com/en/knowledge/2021/12/ontario-bans-employee-non-competition-agreements-what-does-this-mean-for-trade-secret-protection.>

[7] “Ontario to consult on banning NDAs in cases of workplace harassment, misconduct” (6 November 2023), online: CTV News <https://toronto.ctvnews.ca/ontario-to-consult-on-banning-ndas-in-cases-of-workplace-harassment-misconduct-1.6632398.>

Written by Brody Gray
JD Candidate 2024 | UCalgary Law

The OpenAI Story
The recent news story of OpenAI brings the question of corporate governance and control into the spotlight. The story began on Friday, November 17th, when OpenAI announced they would be parting ways with CEO Sam Altman. The board ousted Altman after losing confidence in his ability due to an apparent lack of communication.[1] This news kicked off a weekend of high-tech corporate drama the likes of which Hollywood can only dream of.
            By Monday morning, Altman had secured employment at Microsoft. Quickly after this announcement, an OpenAI employee letter began circulating in which employees flipped the script.[2] Employees claimed they had lost faith in their board and demanded their resignation,[3] going as far as threatening their resignation if their demands were not met.[4] To further the drama, a board member of OpenAI publicly posted about their regret towards the board's actions and alluded to efforts to bring Altman back.[5]
            This dramatic plot seems to have concluded, with Altman returning to OpenAI as CEO, as announced in an OpenAI blog post by Altman.[6] Included in the blog post was a comment from the new Chair of the Board, Bret Taylor, stating how much he wants to express gratitude to OpenAI, and specifically OpenAI employees, "who came together to help find a path forward for the company over the past week."[7] What began as a board of directors ousting a CEO ends in the CEO's return and the board's dismissal.
 
So, Who is Actually in Charge?
            This whole saga seems to run counter to our ideas of the corporate hierarchy and begs the question of who is actually in charge. To answer that question, I will begin by echoing the ever-applicable legal answer of 'It depends.'
 
What the Law Says
            Corporate legislation is rather clear on who is in charge. All ultimate authority rests with shareholders, who are the company's owners. Yet shareholders are not expected to give their opinion on every single issue. For efficiency, expertise, and practical reasons, shareholders elect directors. Corporate legislation states that with more than 50% of the voting shares, directors can be elected to act in the interest of the shareholders.[8]
            Once directors are elected, they form a board of directors, which is given very broad authority to manage or supervise the business.[9] This authority to run the business includes the power to manage the corporation's affairs, yet directors typically will not concern themselves with the day-to-day management. Corporate legislation grants directors the authority to appoint officers and then delegate powers to these officers.[10] There are a few specific categories of authority that directors are forbidden from granting to officers. In the Alberta Business Corporations Act, those are laid out in section 115(3).
            Directors then have the power to appoint officers. They will appoint the CEO, CFO, CTO, COO, and various other positions depending on the context of the company and the business they operate. Officers are typically granted broad management powers, and the officers oversee the corporation's day-to-day management.
            The above structure is laid out in corporate legislation, but it is also subject to unanimous shareholder agreements, articles of incorporation, and bylaws. The exact share percentage required to elect a director or the powers directors can delegate to officers may change from corporation to corporation, but this describes a general structuring and chain of authority found in most corporations.
            It would, therefore, appear that the law paints a clear picture. Shareholders elect directors to manage on their behalf. Directors take this authority and oversee the company's strategy and long-term planning, elect officers, and further delegate the day-to-day management. Officers then manage the company on a day-to-day basis, reporting back to the board of directors. The chain places directors higher than officers, and it would seem clear that it is the directors in charge.
 
So, What's the Catch?
            The reality is that corporate governance is not necessarily this clear-cut, as shown by the OpenAI story. For starters, CEOs often sit on the boards of corporations they manage to increase communication and efficiency. Some CEOs may be highly prominent figures or exceptionally well liked and respected within the company. The reality of social context and working relationships should always be considered when assessing the power dynamic.
            There is also the reality, as shown by OpenAI, that corporations require the efforts of multiple parties, including their employees, to function correctly. A board of directors may have the legal authority to fire a CEO, but if employees refuse to work for anyone else, this authority is of little use in practice. The board of directors should be wary that they cannot afford to alienate large portions of the corporation, even if they have the legal authority to act in such a way.
            This discussion is particularly relevant to entrepreneurs and those working in start-up companies. This nuanced power dynamic is even more prominent, as start-up companies are often close-knit groups with intricate social relationships. Founders who sit on the board of their companies may have the legal authority to dismiss officers, but they should not conflate legal authority with practical ability. Directors dismiss CEOs frequently and can exercise their authority to do so without complaint. Still, these decisions should be made with an understanding of the contextual dynamic within any specific corporation.


[1] “OpenAI employees threaten to quit en masse after former CEO Sam Altman joins Microsoft”, NBC News, (20 November 2023), online: https://www.cbc.ca/news/business/microsoft-sam-altman-openai-chatgpt-1.7033588.

[2] “Majority of OpenAI employees threaten to quit as backlash against ouster CEO continues”, CBC News, (20 November 2023), online: https://www.nbcnews.com/business/business-news/sam-altman-joins-microsoft-openai-ouster-rcna125940.

[3] “Majority of OpenAI employees threaten to quit”, ibid.

[4] “OpenAI employees threaten to quit en masse”, supra note 1.

[5] “Majority of OpenAI employees threaten to quit”, supra note 2.

[6] “Sam Altman returns as CEO, OpenAI has new initial board”, OpenAI Blog, (29 November 2023), online: https://openai.com/blog/sam-altman-returns-as-ceo-openai-has-a-new-initial-board.

[7] “Sam Altman returns as CEO, OpenAI has new initial board”, ibid.

[8] Alberta Business Corporations Act, RSA 2000, c B-9, 2(2)(a).

[9] ABCA, ibid s. 101(1).

[10] ABCA, ibid s. 121(a).