OK, so I’m starting a business that requires me to get bids from vendors to supply a specific product.
I go to this one vendor, whom I have used before when I worked with Company X. His response – “Let me contact Company X tomorrow and see if it’s OK for me to bid on this.”
Ethical? Legal? Other thoughts?
Obviously, I prefer the bidding process to be confidential and not broadcast to my competitors, who are unaware that I am starting this venture. After my start date, that’s fine - all bets are off. But I prefer to remain under the radar until that date.
I’m to have a talk with the vendor early tomorrow… what phrasing should I use to warn him that I consider this a Very Bad Idea (for him)?
BTW, this vendor is in the sort of business where it’s common to sell his product to people in competition with each other - akin to selling the same model deep-fryer to Wendy’s and Burger King. If I’m 5-Guys, I don’t want him calling up BK and saying “Hey, I just found out 5-Guys is opening up a location down the street. Is it OK if I sell them a couple of fryers?”
They have a business relationship with Company X. Supplying you - a possible competitor - might endanger that relationship.
Are you getting bids to supply a specific product because you, or someone else involved in the company, feels that an open bid process provides the best value given the risks and rewards etc., or is the bidding process required because a customer or a regulatory agency told you that you have to have open bids? I would suppose that a bidding requirement imposed on you would have much more significant ethical issues regarding how it is done than a bidding process that you came up with as an innovative solution to a current goal.
Which is fine and all they need to do is say “I have a business relationship with Company X and I don’t want to endanger that relationship.” No problem there - I would respect that position and that’s not the issue here.
But to turn around and tell Company X “Hey, JohnT is going into business against you.” … that’s the problem I’m having.
It’s akin to the fryer example I gave earlier. This company I asked for a quote sells fryers to whomever wants them via an RFQ process*. Is it ethical for them to tell their clients that their competition is thinking of ordering fryers for a location down the street when you (the vendor) receive this information via your regular RFQ process?
*Actually, it’s simpler than that. You call them on the phone and say “I need 3 fryers for a potential location at address XYZ. What’s your rate?” This guys response is “Oh, I sold fryers at Burger King down the street. Let me call them up and ask if it’s OK for me to sell to you at that location.”
I think he’s trying to be very ethical.
You built a business relationship with him through a previous (although potentially current) employer. He’s worried that you are doing something against the interests (by this I mean more significant than simply starting a competing business) of the person he has an existing relationship with.
How is that ethical? Upon what basis would one form an opinion that I’m doing something “more significant than simply starting a competing business” solely by asking for a fryer quote?
Too late to add:
I mean, I get that you don’t understand the relationship and all that (I have never personally dealt with the vendor before), but I still can’t see his motivation for notifying competitors of each others orders/RFP’s.
Yeah - you’re would be foolish to give us enough details here to fully understand the relationship.
I’ll try to explain what I have seen, and been involved in rectifying where I am. If the situation could be anything like this, I could understand…
It could be that you are trying to use contacts gleaned from your current employer “less than honestly” to start a competing business,
It could be that you are setting up the competing business while still working for your current employer
It could be that you were not “authorised” to have access to this vendors contacts at your current workplace.
It could simply be that he’s been burned by a similar situation before and is being a bit overly cautious.
For me, it’s not difficult to imagine a situation where someone leaving a big established player to set up a competing business is being less than honest and ethical, and as a supplier I would want to protect myself by looking out and checking with the big boy.
I may also want to maintain a reputation as being very honest and taking care of my customers and don’t want to get involved in the shit storm that might eventuate should you have come across the information, be using your old company resources incorrectly dishonestly.
That you “don’t want the previous employer to know” already puts me on the alert - why not? It really could be as simple as starting a restaurant next door, and you don’t want to tip them off, or it could be something more significant.
Got it.
The potential situations suggested are not extant in my current relationship with Company X. There is no NDA, non-compete, or other contractual relationship between me and Company X that would prevent me from starting a competing company, using vendors who currently supply Company X, etc.
The vendor is a national company whose name is widely known within their industry - a web search would disclose their existence, as well as reviewing industry trade associations, reviews, etc. Nor is Company X the only purchaser within Company X’s industry of the vendors product - far from it.
As VP of Operations at Company X I was authorized to have this information. However, I did not have it - I had to look up Company X through their website and call the sales associate. I’m not one to leave a company with a rolodex of contacts, gigabytes of information, and reams of contracts.
Company X is not a “big established” player in the industry, nor are they even the largest purchaser of vendor’s products/services.
And it really is as simple as starting a restaurant next door and not wanting to tip them off.
So… assuming that the above is true (and I assure that it is, but that’s worth the electrons on your screen)… do you think it’s OK for a vendor to use information gathered in a RFP to tip off his clients competition?
It’s as ethical as a current employer of X attempting to compete with X while in their employ.
I think you meant “employee”, and I haven’t been an employee of Company X for 10 months. I’d ask you to try again, but since the issue has been resolved to my satisfaction, there’s no need.
Business is all about relationships. The vendor has one with Company X and not one with you. It’s in their interest as a company in a relationship with Company X to keep that relationship in good standing as long as possible. Nothing unethical about it.
In what ways are vendor contact info considered confidential? If Conglom-O buys widgets from Agglomerated Widget Manufacturing, Inc. and an employee of Conglom-O wants to start their own business and they need widgets, wouldn’t it be obvious that Agglomerated Widget Manufacturing, Inc. is a potential supplier, e.g. because they turn up in a Google search for “buy widgets California quality”, they are well known in the widget field, they advertise heavily (“Buy our widgets! They are great!”), etc.?
Are there vendor companies out there that literally don’t want you to know that the sell widgets because they only sell to, say, IBM and don’t want your stupid business? E.g. would it make sense for IBM to have a confidential vendor list indicating that Dunkin Donuts doesn’t just sell donuts but also sells toilet bowl cleaner (gotta go in and say the code phrase “The donuts rise at sunset and the managers are wondering” and then they will take you to the back and show you the toilet bowl cleaner) and if it got out that you could by Dunkin Donuts toilet bowl cleaner, IBM’s business would go into the toilet?
How often does an institutional customer actually dump a vendor for selling to competitors? E.g.:
CEO, International Widget Company: “Gentlemen, I have some bad news. Several of your fellow managers have been pushing for us to stop buying toilets from ToiletCo since finding out that ToiletCo sold a few toilets to Eastern WidgetsPlus, our archnemesis. If we’re going to dump them, we have to find a new toilet vendor. Unfortunately, Bill already did some research and the only other major toilet vendor in the area, FoxToilets, currently sells to FantasticWidgets, LLC, a new startup that’s trying to compete with us.”
I use the contractors of competitors all the time in my business. And my competitors poach from me (often with my recommendation). Why the secrecy? What do you hope to gain by it?