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Perhaps more interesting is that Elastic, the company behind Elasticsearch, just IPO'ed on NYSE, and they, too, have a fully distributed team of over 700 -- mig

Perhaps more interesting is that Elastic, the company behind Elasticsearch, just IPO'ed on NYSE, and they, too, have a fully distributed team of over 700 -- might even be trending toward 1000 by now. Zapier is another one at multi-hundred-person scale, and is a YC company. A couple other scaled-up ones on this model include Automattic (company behind Wordpress), DataStax (company behind Cassandra). There is also Wikimedia, Canonical, and Mozilla -- perhaps those 3 are less interesting since they have a non-profit mission tied to the internet-as-community and FOSS. It's worth mentioning that when I started my startup back in 2009 as a fully distributed team, VCs viewed that as a major -1 strike against the company. So much so that we chose not to mention it during initial pitches. We ended up finding Series A/B financing, and these days, those investors ask us to advise companies on how fully distributed teams work, so new portfolio companies can decide for themselves. They were early believers in the model, but they tell me they have noticed a major change in attitude among fellow VCs toward distributed teams. That is, they understand the tradeoffs (finally), and believe the model can scale. We now have a fully distributed staff of 70, over 400 customers, and millions in revenue. So 1/10 InVision scale, but it works well (and nicely!) at this scale. These days we also have an NYC office, but we refer to it as "the Internet cafe", about 20 of our 70 people "so happen" to work out of there regularly, with everyone else in home offices or co-working spaces. Our NYC office is also used for team gatherings, client events/visits, and board meetings. I wrote my initial views on the different scaling models for teams here in 2012: https://amontalenti.com/2012/05/14/distributed-teams https://amontalenti.com/2012/05/14/distributed-teams Also wrote a little about how the fully distributed team needs to be complemented, from time to time, with f2f interaction. This was in 2016 after several years of experience scaling hiring and organizing team retreats -- "Fully Remote, But Here For Each Other": https://blog.parse.ly/post/4736/mission/ https://blog.parse.ly/post/4736/mission/

marmaduke 8y ago
> less interesting since they have a non-profit mission tied to the internet-as-community and FOSS Doesn’t this aspect make them even more interesting?
- afroboy 8y ago
  Most non profit communities and FOSS are mostly have no headquarter so maybe that's why.
- pixelmonkey 8y ago
  Oh, yes, in many ways, yes! What I meant by that: these three examples might feel, to VCs and founders, like anomalies rather than examples of an alternative scaling model for high-growth software/tech enterprises operating on a startup-to-IPO trajectory. Elastic, Automattic, InVision, Zapier, by contrast, are "traditional high-growth startups" in every respect, but where the founders simply chose fully distributed as the scaling/hiring model.
  - deleted 8y ago
    [deleted]
amyjess 8y ago
> There is also Wikimedia, Canonical, and Mozilla -- perhaps those 3 are less interesting since they have a non-profit mission tied to the internet-as-community and FOSS. Canonical is a for-profit company. They're also not fully distributed, either; I have a friend who moved to the UK a couple of years ago to work out of Canonical's headquarters.
- pixelmonkey 8y ago
  That's interesting. My mistake, then. I had cited it from memory of talking to some Canonical staff during my own interview processes, where it seemed to me that it was fully distributed and driven by a non-profit mission (namely: sustaining salaries for F/OSS contributors).
- gowld 8y ago
  Canonical is incorporated for-profit but barely pays its bills after 14 years in business, and relied heavily on Mark Shuttleworth wealth and willingness to spend money on things he likes without turning a profit. (Shuttleworth sold his startup Thawte for about $0.5B in 1999 at age 26, and has less than that wealth now.)
chiefalchemist 8y ago
re: " These days we also have an NYC office, but we refer to it as "the Internet cafe", about 20 of our 70 people "so happen" to work out of there regularly..." It would be interesting to know: - How many other distributed companies have a similar arrangement (i.e., a non-distributed "HQ")? - Does this make employees more productive and/or satisfied? - When on the journey does it make sense to transition from centralized to distributed? - Are distributed orgs more (or less) likely to outsource commodity-esque (e.g., bookkeeping) services?
- pixelmonkey 8y ago
  Our onboarding materials explicitly say, "NYC is not HQ". And it's not HQ. It is just an office we leased because we ended up with 10+ staff in NYC and they preferred an office to a co-working space, for security/privacy. (If you've ever lived in NYC, you know it can be challenging to have a home office at any reasonable cost, due to typical square footage of living spaces. That's part of the reason I left NYC.) We are a Delaware C-Corp. Yes, we have our mail sent to NYC, but that's for the lawyers/accountants. As for the NYC staff, they find that one "problem" with the office is that it has a "library atmosphere". I personally don't think that's problem, but I am the CTO and an engineer, so I prefer quiet & focus. Some people expect an office to have "energy" and ours is definitely lower on that scale. I try to remind people that "the web is our office and the front door to that office is your internet connection." Are people happier in our NYC office than on our remote team? Hard to tell, but the NYC folks complain about commuting a whole lot, and often take the occasional work from home day to spare themselves of it. I never hear those complaints from the other staff. I guess one benefit of the NYC staff is that they can have happy hours and dinner/drink outings, which inspires some jealousy on the non-NYC team. We make up for that by throwing annual and semi-annual team retreats. Our last two were in Upstate NY at a writer's retreat campsite (really fun getting to know everyone over campfires and s'mores) and the one before that was in Reykjavik, Iceland, where we rented out a whole hotel and got to know each other on city and countryside excursions during 23 hours of daylight! Where on the startup journey does transition to distributed make sense? Well, for us, day one worked! We reversed the typical evolution. We were 100% office-free for a few years. Then, in 2012-2013 or so, we got an NYC office, after a frustrating experience with a sub-leased co-working space for the NY staff. But we refer to it as the NYC internet cafe, not HQ. I think that is healthy for teams like ours. Are distributed teams more likely to outsource stuff? I dunno, probably. We outsource commodity accounting/legal/payroll/benefits services, but we have an in-house finance/collections team. We also outsource PR, cloud hosting (obviously), and we use a lot of SaaS services.
tixocloud 8y ago
Thanks for sharing this. Very timely as it’s currently going through my mind. Did you guys first start with the founders distributed as well? Going to be interviewing some guys who aren’t in the country I’m based in but from a skills and vision perspective, looks to be a good match.
- pixelmonkey 8y ago
  My cofounder and I worked together from cafes on nights and weekends, but also did a whole lot of remote collaboration, in our first couple of years. We did a 3-month summer accelerator where we were f2f every day early on, as well. But when that was over, we switched back to mostly remote collaboration. For the bulk of our first 2 years of operation (which was really a bootstrapping period), we worked mostly over the web. This despite the fact we were both in/around NYC. But, he was based in Manhattan at the time and I was in Astoria, Queens, so we'd save ourselves the trouble of meeting up f2f, though occasionally would co-work together. I think what you'll find is that in the founding period, f2f can help a whole lot, and, of course, if you are pitching for fundraising or enterprise clients, you almost always need to do some f2f visiting with people. So, don't be religious about it. But for "the work itself" (e.g. code, design, writing) there is no need to be colocated.
  - tixocloud 8y ago
    Thanks. What’s shaping up to be is that my technical co-founder could be remote while I’ll be dealing with the F2F interactions. While I feel somewhat comfortable having a remote co-founder, I worry if it will come back to bite me. Also, for your remote employees outside of the US, how do you structure your payroll, determine compensation and pay them? Seems like it would be quite an extensive HR payroll setup, which might not sit well with investors or potential acquirers?
sytse 8y ago
GitLab being all remote has been a problem during fundraises. We mentioned it since we're transparent and inevitably investors will want to visit your office. During our latest D round it was a smaller problem since later rounds are more based on financial metrics and comparables (GitHub, Atlassian, Jfrog). But I wouldn't say that it is no longer a problem with VCs, many still have scaling concerns. As one of the best investors said that passed on us: we're in the pattern matching business and all remote doesn't match the pattern. It might very well work but we will invest only in a handful of businesses anyway, we might as well pick ones that are a complete match.
- tixocloud 8y ago
  That’s sad to hear given as I’m looking to raise funds but also hoping to build a distributed team given the abundance of worldwide talent. Does this change your strategy somewhat in that it limits your access to capital which forces you to look at profitability sooner?
  - sytse 8y ago
    I think you can raise a comparable amount of funds for a distributed team, it will just be with fewer investors and at a lower valuation. The valuation will be lower since an acquisition is less likely. Most acquirers of companies under $100m want the acquired employees to join their office. Since this is unlikely with a distributed team there will be a discount on the acquisition price of up to 50%. There was an upside to this. Since distributed companies make for a less valuable acquisition target our investors are aligned with our plan to become a public company https://about.gitlab.com/strategy/#sequence- https://about.gitlab.com/strategy/#sequence- For public companies being remote is less of an issue since financial metrics are much more important and in the case of an acquisition they would likely stay as a separate entity.
    - tixocloud 8y ago
      This will be a challenge for me as my investors already feel the company has the potential to be an acquisition target for one of the big guys and feels we should be building it that way. We’re also based in the U.K. and am not sure how many Saas platform tech companies become public.
roystonvassey 8y ago
Sounds like the perfect working model but how do you handle the multitude of labour laws, payroll, taxation etc?
- toomuchtodo 8y ago
  You pay someone like Trinet [1]. You wire them funds, they distribute to employees in all 50 states and handle payroll, taxation, etc. They act as the employer as record, show up on employee W2s, etc. There are other companies out there that perform the same service, but Trinet is the company I'm familiar with having worked at a fully remote startup. If you have international employers, there's more complexity besides wiring them funds; you have to ensure you're not violating local labor law as it relates to employee vs contractor classification. Talk to an attorney! [1] https://www.trinet.com/ https://www.trinet.com/
sciurus 8y ago
At Mozilla we do have offices. I don't know what the exact office vs home based worker breakdown is, but I think the majority work from home. It's certainly true on my team, which is spread across three countries and nine cities. https://www.mozilla.org/en-US/contact/spaces/ https://www.mozilla.org/en-US/contact/spaces/

marmaduke 8y ago

> less interesting since they have a non-profit mission tied to the internet-as-community and FOSS Doesn’t this aspect make them even more interesting?

afroboy 8y ago
Most non profit communities and FOSS are mostly have no headquarter so maybe that's why.
pixelmonkey 8y ago
Oh, yes, in many ways, yes! What I meant by that: these three examples might feel, to VCs and founders, like anomalies rather than examples of an alternative scaling model for high-growth software/tech enterprises operating on a startup-to-IPO trajectory. Elastic, Automattic, InVision, Zapier, by contrast, are "traditional high-growth startups" in every respect, but where the founders simply chose fully distributed as the scaling/hiring model.
- deleted 8y ago
  [deleted]

amyjess 8y ago

> There is also Wikimedia, Canonical, and Mozilla -- perhaps those 3 are less interesting since they have a non-profit mission tied to the internet-as-community and FOSS. Canonical is a for-profit company. They're also not fully distributed, either; I have a friend who moved to the UK a couple of years ago to work out of Canonical's headquarters.

pixelmonkey 8y ago
That's interesting. My mistake, then. I had cited it from memory of talking to some Canonical staff during my own interview processes, where it seemed to me that it was fully distributed and driven by a non-profit mission (namely: sustaining salaries for F/OSS contributors).
gowld 8y ago
Canonical is incorporated for-profit but barely pays its bills after 14 years in business, and relied heavily on Mark Shuttleworth wealth and willingness to spend money on things he likes without turning a profit. (Shuttleworth sold his startup Thawte for about $0.5B in 1999 at age 26, and has less than that wealth now.)

chiefalchemist 8y ago

re: " These days we also have an NYC office, but we refer to it as "the Internet cafe", about 20 of our 70 people "so happen" to work out of there regularly..." It would be interesting to know: - How many other distributed companies have a similar arrangement (i.e., a non-distributed "HQ")? - Does this make employees more productive and/or satisfied? - When on the journey does it make sense to transition from centralized to distributed? - Are distributed orgs more (or less) likely to outsource commodity-esque (e.g., bookkeeping) services?

pixelmonkey 8y ago
Our onboarding materials explicitly say, "NYC is not HQ". And it's not HQ. It is just an office we leased because we ended up with 10+ staff in NYC and they preferred an office to a co-working space, for security/privacy. (If you've ever lived in NYC, you know it can be challenging to have a home office at any reasonable cost, due to typical square footage of living spaces. That's part of the reason I left NYC.) We are a Delaware C-Corp. Yes, we have our mail sent to NYC, but that's for the lawyers/accountants. As for the NYC staff, they find that one "problem" with the office is that it has a "library atmosphere". I personally don't think that's problem, but I am the CTO and an engineer, so I prefer quiet & focus. Some people expect an office to have "energy" and ours is definitely lower on that scale. I try to remind people that "the web is our office and the front door to that office is your internet connection." Are people happier in our NYC office than on our remote team? Hard to tell, but the NYC folks complain about commuting a whole lot, and often take the occasional work from home day to spare themselves of it. I never hear those complaints from the other staff. I guess one benefit of the NYC staff is that they can have happy hours and dinner/drink outings, which inspires some jealousy on the non-NYC team. We make up for that by throwing annual and semi-annual team retreats. Our last two were in Upstate NY at a writer's retreat campsite (really fun getting to know everyone over campfires and s'mores) and the one before that was in Reykjavik, Iceland, where we rented out a whole hotel and got to know each other on city and countryside excursions during 23 hours of daylight! Where on the startup journey does transition to distributed make sense? Well, for us, day one worked! We reversed the typical evolution. We were 100% office-free for a few years. Then, in 2012-2013 or so, we got an NYC office, after a frustrating experience with a sub-leased co-working space for the NY staff. But we refer to it as the NYC internet cafe, not HQ. I think that is healthy for teams like ours. Are distributed teams more likely to outsource stuff? I dunno, probably. We outsource commodity accounting/legal/payroll/benefits services, but we have an in-house finance/collections team. We also outsource PR, cloud hosting (obviously), and we use a lot of SaaS services.

tixocloud 8y ago

Thanks for sharing this. Very timely as it’s currently going through my mind. Did you guys first start with the founders distributed as well? Going to be interviewing some guys who aren’t in the country I’m based in but from a skills and vision perspective, looks to be a good match.

pixelmonkey 8y ago
My cofounder and I worked together from cafes on nights and weekends, but also did a whole lot of remote collaboration, in our first couple of years. We did a 3-month summer accelerator where we were f2f every day early on, as well. But when that was over, we switched back to mostly remote collaboration. For the bulk of our first 2 years of operation (which was really a bootstrapping period), we worked mostly over the web. This despite the fact we were both in/around NYC. But, he was based in Manhattan at the time and I was in Astoria, Queens, so we'd save ourselves the trouble of meeting up f2f, though occasionally would co-work together. I think what you'll find is that in the founding period, f2f can help a whole lot, and, of course, if you are pitching for fundraising or enterprise clients, you almost always need to do some f2f visiting with people. So, don't be religious about it. But for "the work itself" (e.g. code, design, writing) there is no need to be colocated.
- tixocloud 8y ago
  Thanks. What’s shaping up to be is that my technical co-founder could be remote while I’ll be dealing with the F2F interactions. While I feel somewhat comfortable having a remote co-founder, I worry if it will come back to bite me. Also, for your remote employees outside of the US, how do you structure your payroll, determine compensation and pay them? Seems like it would be quite an extensive HR payroll setup, which might not sit well with investors or potential acquirers?

sytse 8y ago

GitLab being all remote has been a problem during fundraises. We mentioned it since we're transparent and inevitably investors will want to visit your office. During our latest D round it was a smaller problem since later rounds are more based on financial metrics and comparables (GitHub, Atlassian, Jfrog). But I wouldn't say that it is no longer a problem with VCs, many still have scaling concerns. As one of the best investors said that passed on us: we're in the pattern matching business and all remote doesn't match the pattern. It might very well work but we will invest only in a handful of businesses anyway, we might as well pick ones that are a complete match.

tixocloud 8y ago
That’s sad to hear given as I’m looking to raise funds but also hoping to build a distributed team given the abundance of worldwide talent. Does this change your strategy somewhat in that it limits your access to capital which forces you to look at profitability sooner?
- sytse 8y ago
  I think you can raise a comparable amount of funds for a distributed team, it will just be with fewer investors and at a lower valuation. The valuation will be lower since an acquisition is less likely. Most acquirers of companies under $100m want the acquired employees to join their office. Since this is unlikely with a distributed team there will be a discount on the acquisition price of up to 50%. There was an upside to this. Since distributed companies make for a less valuable acquisition target our investors are aligned with our plan to become a public company https://about.gitlab.com/strategy/#sequence- https://about.gitlab.com/strategy/#sequence- For public companies being remote is less of an issue since financial metrics are much more important and in the case of an acquisition they would likely stay as a separate entity.
  - tixocloud 8y ago
    This will be a challenge for me as my investors already feel the company has the potential to be an acquisition target for one of the big guys and feels we should be building it that way. We’re also based in the U.K. and am not sure how many Saas platform tech companies become public.

roystonvassey 8y ago

Sounds like the perfect working model but how do you handle the multitude of labour laws, payroll, taxation etc?

toomuchtodo 8y ago
You pay someone like Trinet [1]. You wire them funds, they distribute to employees in all 50 states and handle payroll, taxation, etc. They act as the employer as record, show up on employee W2s, etc. There are other companies out there that perform the same service, but Trinet is the company I'm familiar with having worked at a fully remote startup. If you have international employers, there's more complexity besides wiring them funds; you have to ensure you're not violating local labor law as it relates to employee vs contractor classification. Talk to an attorney! [1] https://www.trinet.com/ https://www.trinet.com/

sciurus 8y ago

At Mozilla we do have offices. I don't know what the exact office vs home based worker breakdown is, but I think the majority work from home. It's certainly true on my team, which is spread across three countries and nine cities. https://www.mozilla.org/en-US/contact/spaces/ https://www.mozilla.org/en-US/contact/spaces/