To win in the marketplace you must first win in the workplace.
—Doug Conant, co‐author Touch Points
IF YOU EVER HAPPEN to visit Woodside, California, along a narrow tributary of Bear Creek, nestled in an old grove of oaks, sits a world renown restaurant. Buck's Restaurant of Woodside is not famous because of its BBQ Bacon Burger or Bodacious Hot Fudge Pie; though both are local favorites. It's not famous for its wild décor complete with an eclectic array of flying machines dangling from its ceiling, a human‐size Statue of Liberty holding an ice cream cone, or the giant wooden sculpture of a spawning salmon out front. What makes Jamis MacNiven's zany eatery famous is the legendary role it has played in Silicon Valley startup history. Located just four miles from Sand Hill Road (where iconic venture capital firms such as Sequoia Capital, Accel, Greylock Partners, Menlo Ventures, Kleiner Perkins, Andressen Horowitz, Draper Fisher Jurvetson, and others are headquartered), many startups without offices of their own had some of their earliest meetings at Buck's. Hotmail, Netscape, PayPal, Tesla, and many others met with VCs here. So large is the fabled status of this restaurant that venture capitalist Bill Draper begins his book The Startup Game: Inside the Partnership between Venture Capitalists and Entrepreneurs with a chapter titled “Breakfast at Buck's.”
Restaurants aren't the only places to hatch startups. HP, Disney, Amazon, and Google all started in small garages. Dell, WordPress, Snapchat, Dropbox, and Facebook all began in dorm rooms. Yankee Candle, Martha Stewart Living, Fortnite/Epic Games, and Under Armor all worked their way out of someone's basement. Even global company Microsoft was once run out of a motel room in Albuquerque, New Mexico. From the humblest of places, global multibillion‐dollar companies started. To save on rent and overhead, many startups try to work from restaurants, home, and shared working environments for as long as possible so as not to squander what little capital they have. The one truth that Covid‐19 exposed to the business world was that in the twenty‐first century, there is no longer a need for big, expensive corporate offices.
When the impact of the pandemic hit the United States, businesses had to scramble to find a way to continue functioning and keep their employees safe. Insurance company Nationwide quickly shifted nearly all of its 32,000 employees to working from home. “We've been investing in our technological capabilities for years, and those investments really paid off when we needed to transition quickly to a 98 percent work‐from‐home model,” Nationwide CEO Kirt Walker said. “Our associates and our technology team have proven to us that we can serve our members and partners with extraordinary care with a large portion of our team working from home.”1
Amazon, Facebook, Google, and Microsoft gave all employees the option to work from home. Twitter CEO Jack Dorsey went so far as to tell his employees that they could work remotely forever and never be required to work from the office again. According to the Centers for Disease Control and Prevention, 46 percent of companies implemented some form of remote working policies during the 2020 pandemic. With many businesses being able to easily adapt to remote workers, Barclays CEO Jes Staley predicts that centralized offices with thousands of employees “may be a thing of the past.” Echoing that belief, Morgan Stanley CEO James Gorman predicts that his bank will need “much less” real estate in the future. While most companies survived the 2020 pandemic, the era of the mighty corporate headquarters has died.
With the remote‐work genie out of the bottle, most employees are looking for a way to maintain the flexibility of working when and where they choose. This is the competitive advantage of any startup; you can let people work from their homes. You now have access to a global talent pool eager to maintain their freedom. Employees can travel the world while still maintaining a full‐time job and not have to wait until they retire to enjoy life. Understanding the evolving needs of today's wage earner gives you the best chance at competing for the top talent. “Remote work isn't a privilege or a special accommodation,” cautions Atlassian's Head of Talent Programs Nickie Bellington. “It's a way of working, and that's a strong statement for some people. It shouldn't be a question of rewarding top performers with the ability to work remotely.”
Of those employees required to work from home during the pandemic, three in five US workers would like to continue working remotely even after the health concerns have passed. A study by Owl Labs concluded that 80 percent of employees would like to work from home at least part of the time.
With so many corporate employees working from home, you can also leverage big company employees looking to earn some extra cash from a side hustle. Just as 99designs gave startups access to thousands of graphic artists (many of whom have full‐time jobs working for ad agencies), you now can access very skilled, specialized expensive talent and just pay for them when you need them. Obviously you don't want employees to violate any employment agreement they may have signed, but plenty of graphic artists, engineers, researchers, and salespeople are permitted to moonlight. Your virtual company, propelled by a phalanx of virtual talent, can't be beat by large companies dragged down by massive overhead and costly payrolls. With the right management tools, a virtual workforce is so efficient that it can save you from needing to raise millions of dollars and dilute your company ownership.
The concept of telecommuting, as it used to be called, started in the 1970s. The problem with working from home back in the pre‐internet days, was that the telephone was the only means of communication and all documents had to be either mailed or couriered back and forth. With today's communication and management tools, people began to recognize that work is something you do, not something you travel to. The desire for a better quality of life is so strong, that according to Gallup's State of the American Workforce poll, 35 percent of employees would change jobs if they could work remotely full‐time. Among millennials the desire to work from home is even stronger with Gallup finding 47 percent would switch jobs for the opportunity. A flexible work environment is so important to millennials, the same survey concluded that it was a bigger employment incentive than student loan or tuition reimbursement. If you need to compete with the corporate giants for talent, be more flexible and responsive to people's needs.
With 78 percent of American workers willing to take a pay cut to work from home, the truth is that having distributed workers is the new competitive advantage. Leveraging this advantage, and powered by a whole new generation of online tools and apps, virtual companies are flourishing around the world. Software developer Scopic Software grew to over 200 employees without having an office. Basecamp, Buffer, Clevertech, and Articulate are all finding that they can provide better service to their customers, and a better quality of life for their employees, by being 100 percent remote working companies.
Improved employee moral isn't the only benefit of having a distributed workforce. Intuit estimates that employers save more than $11,000 per remote worker by needing less office space, electricity, equipment, and furniture. Being freed from constant co‐worker interruptions, numerous studies have shown that remote employees get more work done each day. According to a 2020 Harris Poll, 65 percent of remote workers report being more productive at home than in the office.
An even more important benefit of remote working is the size of the talent pool you get to draw from. Instead of being limited to those employees who live within a commuting distance from your office, you can now hire the best employees from around the world. “Do you want to access talent everywhere, or just in specific markets?” HubSpot's Chief People Officer Katie Burke posits. “If the answer is everywhere, you need to be at least open to the possibility of remote work — it opens doors to attracting and retaining talent around the world, literally and figuratively.”2 With foreign worker visas to the United States being harder to attain, foreign workers can join the team without moving to America.
Allowing for such flexibility will help you recruit better talent, too. Employees put such importance on having the freedom to work remotely that they are more loyal, have less turnover, and are more productive. Employer benefits of remote working are only half of the value equation.
According to recent studies, employees save between $2,500 and $4,000 per year by working at home just half the time. Workers also save the equivalent of 11 workdays per year that they otherwise would have wasted commuting. For big cities like New York, daily commutes average 81.6 minutes roundtrip per day, which at New York's minimum wage would translate to $5,324 in lost wages/productivity per worker per year. By forgoing traffic, congested trains, and urban noise, remote workers report being less stressed and able to spend more quality time with family and friends.
Commuting is also bad for the environment by releasing harmful chemicals and greenhouse gases into the air. Commuters are exposed to as much as twice the particulate matter in the air that causes oxidative stress in humans than during other parts of the day. Prolonged exposure can lead to respiratory and heart disease, as well as cancer. “We found that people are likely getting a double whammy of exposure in terms of health during rush‐hour commutes,” according to Michael Bergin, professor of civil and environmental engineering at Duke University. “If these chemicals are as bad for people as many researchers believe, then commuters should seriously be rethinking their driving habits.”3
Remote working is also one of the easiest ways for companies to reduce their carbon footprint. According to a study by the Telework Research Network, if just 40 percent of Americans who could work remotely did, the nation would save 280 million barrels of oil per year – the equivalent of taking 9 million vehicles permanently off the road. Leverage workers' desire to protect our environment as a competitive advantage when recruiting new talent.
Additionally, both employers and employees may have possible tax savings by working from home. Many communities have incentives to reduce commuter congestion, and some employees may be able to deduct their home office expenses on their state or federal taxes. Flexible working arrangements also provide more diversity in the workplace by being more accommodating for single parents, those taking care of elderly relatives, or individuals with disabilities that are unable to easily travel to a workplace.
The advantages of leveraging a remote workforce will make your startup able to respond to changing market conditions faster, launch new products and services with less capital, and expand into new territories seamlessly. But none of these advantages will come to fruition if your virtual company isn't managed properly.
Building a remote‐worker company takes planning and preparation. Many of the management techniques that are utilized in an office environment (stopping by someone's office, grabbing a coffee together, or celebrating a co‐worker's birthday), can't be used with distant workers. Additionally, a global remote workforce must be managed across a wide range of time zones and cultures. To best succeed and get the most out of a dispersed team, here are five techniques I recommend for managing remote workers:
“One way in which dispersed teams can ensure they get off to a good start is to engage in a formal launch process,” recommends Harvard Business School Professor Anthony Mayo in his online course Leadership Principles. “Even if a face‐to‐face meeting isn't possible, it's critically important to be deliberate and intentional in launching the team and collectively agreed upon norms to govern the work you do together across locations. Through this process, team members get to know each other in a meaningful way, and that helps lay the foundation for working together more effectively in the future.”4
“You can never overcommunicate enough as a leader at a company, but at a remote company, nothing could be truer,” suggests Know Your Team CEO Claire Lew. “Because you don't physically see people in person, information doesn't spread in the same way, so leaders need to do the heavy lifting for evangelizing the message.”5
Celebrate victories and promotions companywide. With a shared purpose, when one team member succeeds, everyone succeeds. Having a purpose unites employees toward a goal and against the external competition. And at least once a year, schedule a global face‐to‐face conference somewhere fun and exotic. When I was working at the global music company EMI, Special Markets President Eli Okun set a sales goal and a stretch goal for his division each year. In addition to the traditional raises and bonuses that came from hitting the sales goal, if the stretch goal was met, everyone in the entire division and their significant others were sent to Hawaii to celebrate. Eli's plan was such a great motivator that most years the team went to Hawaii.
For all of the many advantages of building a virtual company, there are some risks. Not everyone is suited for remote working. Many remote employees complain of feeling disconnected from their in‐office coworkers and dissatisfied with their job as a result. A study by software maker Buffer reports that loneliness was a challenge for 19 percent of remote employees.
For first‐time remote workers, there is a period of adjustment. Many come into the job with a preconception of being able to travel the world and work from the rainforests of Costa Rica or the beaches of Phuket, Thailand. You should suggest that working from a local café with less distractions might be a better place for new hires to start. Remote employees also feel more pressure to prove themselves. Rather than slacking off, many remote workers put in longer hours and burn out quickly. That is why communication and time tracking is so important. By having one's company promote a healthy work–life balance, most remote workers find that they would prefer to never go back to a nine‐to‐five office again.
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