7 ms·

What is the current state of remote teams in startup ecosystems?

7 points by pyang6641 7y ago

I've been running an early-stage tech startup for the past few months. To build my MVP, I've been working with a software agency from Poland. The people there are great, but I don't think outsourcing is the final solution. I'd like to eventually build a team committed solely to my project. Thus, the question becomes: Should I hire an in-house team, or should I go with a remote team? After looking into the landscape of remote work, I was surprised to see that so many tech companies have already embraced it (e.g., Buffer and Stack Overflow). My assumption has always been that remote work faces a negative stigma, just like outsourcing. Am I wrong? How do investors/accelerators look at remote-first tech startups? Right now, I'm thinking about contacting a remote team provider. I have two in mind: Terminal (https://terminal.io/) and Bolton Remote (https://www.boltonremote.com/). Has anyone had any experience with either of these companies? They seem promising, but it's hard to tell for sure, yet. I'm also wondering about the financials of going with a remote team. Since it's pretty much analogous to an in-house team, I expect the cost to be much higher than an outsourced agency, right? Any insights from founders who have worked/continue to work with remote teams would be appreciated. Thanks!

e1g 7y ago
"We hire only the best, wherever they are" is just a longer way of saying "We hire only the best" which is just a longer way of saying nothing. Every business has been chanting this forever, along with some variation of "customer-focused", from largest investment banks to smallest not-for-profits. This noise is safe to ignore as rhetoric with no real signal of what the company actually believes. There is only one reason to run a remote team: lower cost. Every other advantage is just a longer way of saying "save $". "Get higher skills" or "Faster go-to-market"? Triple the pay, and you'll have even stronger/faster people locally. "Workers want freedom to schedule their work"? That's an argument for more flexibility in office hours, not for more timezones. "People focus without background noise" is so true that you should give them private offices. "Reduced commute" is a valid reason to encourage work-from-home twice a week, not to inject thousands of miles between key collaborators. To cut through other examples, ask yourself this: "If I had $100M to spare, would I start with X or Y?". I don't know anyone who built a business that would say "No doubt, remote-first". However, this lower cost always comes at the expense of - 1. Innovation: The myth of an isolated genius has been discredited too many times to count: innovation is a byproduct of social and intellectual interactions between unrelated ideas/people/experiments, working in close proximity. See the book "Innovators" for endless examples how this shaped the world of tech. Startup magic happens when a salesperson overhears your call with the client, or when an engineer is tired of listening to customer support people whining, or when you look over the shoulder of how your newly minted PM actually works. Oh the horrors, oh the joys. Serendipity is virtually absent in remote team even within the same discipline, and unimaginable across. 2. Productivity: The most high-bandwidth communication is when you're thinking inside your head (~5s). If you have to explain the idea to someone else, you can have a conversation and that will be 10x slower (~1m). If you have to type it out, it will be 10x slower (~10m). If you have to wait for them to read and ask a question later, that will be another 10x slower (~1 hr). When most discussions must happen in writing and asynchronously, then your internal feedback loop is 10-100x slower than the competing team working together. Pretty soon it will take 1-2 days of roundtrip chats to decide something that you could have resolved while walking back from lunch. If "Your rate of change" > "Market rate of change", the startup might survive. If that arrow changes direction, no amount of documentation or stigma-busting-hierarchy will save you. 3. Culture: First 10-20 people will define the ethos and behavior of your company forever. Creating a shared vision and excitement is a herculean task even for the most empathetic leaders, to say nothing of us mere mortals. This culture will make or break the business when the going inevitably gets rough. Just imagine yourself saying out-loud "and for our team-building this week we'll be doing a Zoom conference call!" and see what you think are your odds of creating the culture you want. Physical distance breaks the strongest of bonds: besties drift apart, kids forget parents, and lovers become strangers. Those who survive must summon inordinate energy and emotional effort after being cordial all day. If Innovation, Productivity, and Culture are not important for your company, building remote teams might be for you. I am not being facetious - many service businesses do not care about any of that, especially if they charge hourly. Examples include IT support, process administration, WordPress development, SEO, accounting, data entry, etc. Incidentally, these are the main cases where we observe remote teams being remotely competitive in the market. In other cases, companies have to start spending inordinate amounts on extra managers, coordinators, culture-building folks, on-site travels, and other overheads to try to reduce the impact of not seeing your colleagues smile at a lame dad joke. If you are entering the startup game - with a small team, searching for a product/market place, then a way to scale up - then think about what it will take to navigate that path. Alternatively, look at those around you who have done this already. There are perhaps fewer than ten kinda-well-known companies that started as remote-first (e.g. Gitlab/Figma/Buffers of the world), and zero of them matter. All other creators you respect and try to emulate (from startups like Zoom, to VCs like A16Z, to thought leaders etc) have experimented greatly and converged on the same conclusion: to create something amazing, you must work predominately in-person. It doesn't matter what they preach, it only matters what they practice to get their results. That the startup graveyard is filled with teams who worked only in-person tells us nothing. That's the natural order of business; it's brutal. That among thousands of successes from the last 20 years, approximately zero of them started as remote-first, now that tells us everything. In the evolutionary race among millions of startup organisms, one specific survival strategy is so overwhelmingly dominant as to be almost a pre-requisite of success. P.S. "But Stripe is a mega-success, and they are going remote!". No - Stripe created something amazing first (in-person), became a $20B behemoth, ran endless other HR experiments, and now decided to trial remote-first work for 5% of their workforce - backed by endless corporate support, legal/financial expertise, and deep pockets. Today they are closer to Bank of America than a startup, who also can run such experiments for the lulz.
- bwb 7y ago
  I appreciate the long post, but that is a lot of opinion on remote work that isn't backed up by reality. Maybe you had a bad experience but it does not have to be that way. I'll try to share what I've seen and my experiences running remote teams over the last 20 years (largest was growing a company to ~135 over 18 countries). Remote can have cost savings benefit, but that is not the only reason why it is done. Remote can also improve productivity and innovation and create a different type of culture. If done right I think remote drives a lot more DOING and a lot less MEETING. Plus you can find and hire talent all over which is AWESOME. Here are the results from a 2 year Standford study on how much remote work from home can boost productivity: https://www.inc.com/scott-mautz/a-2-year-stanford-study-shows-astonishing-productivity-boost-of-working-from-home.html https://www.inc.com/scott-mautz/a-2-year-stanford-study-show... If done right remote can increase productivity. There are usually fewer distractions, communication has a clear point, and mindless meetings don't happen. It always depends on the culture and operations of the company, but remote puts roadblocks around informal communication that requires an organization to communicate well or fail. Offices make that easier, but too easy IMO and so much is run via rumor/gossip. Innovation can happen in any environment. That said, I think remote has advantages in getting a wider range of opinions from very different team members. I also think remote demands a bit more rigor around designing a process to support innovation, and I think that results in better results after you get over that hump. Offices might avoid that initial hump, but they also seem to hit the problem of meetings over doing and they struggle to build a system to drive innovation after they have ingrained habits. Culture doesn't matter at all, in my exp both office and remote culture develops the same way.
  - bwb 7y ago
    Also, just because it was done one way doesn't by default mean it is better or done for a reason that has been tested. Most of the companies you name did it that way as its what they know and it is how everyone else is doing it. Plenty of companies are disproving that model that you named. I would imagine we see a lot more happening around remote as it becomes a more mature model.
  - e1g 7y ago
    The ability to work remotely/from home should be table stakes at a young business. If a company does not offer this, they probably have some questionable ideas about people's work ethic etc. But this discussion is not about that - it is about whether the very first team in a startup should be remote-only. That is: no office, no co-location, and first people work on the core product in a fully distributed/remote manner. Or, if a team with comparable people would achieve more if they worked in-person 50%+ of the time, with option to work remotely/from home when they chose. This are two critical points: 1) first 10 employees, not employees after #100 and 2) "in-person first" with option for some remote, or "remote-only" with no option for in-person (beyond occasional sprints). Phrased differently, the OP is deciding whether in a small startup the founder and the core team should work in-person, or should rely on email/chat. > If done right I think remote drives a lot more DOING and a lot less MEETING. That's an argument against useless meetings, not for remote work. This discussion is bound by the context of a brand new startup (guessing 1-5 people?). A new initiative of that scale is more likely to have too few meetings/talks/reviews than too many, as might be the case for 150+ people company. > the results from a 2 year Standford study... The key qualifiers from the study: the company existed, and was successful already due to working primarily in-person. Management decided to allow employees to work remotely, after they spent first 6 months together. People start work in-person, build up knowledge and group mechanics, then can self-select to work remotely. At the end of the experiment, half of those remote workers changed their mind and wanted to come back to the office because they felt isolated. The situation would be only be worse if these people were remote-first (i.e. never had 6 months in-person collab) and were remote-only (i.e. no strategy to combat isolation). The study aligns with my position: start in-person, experiment with remote when in-person becomes a troublesome (you are so successful you are running out of office space, or you're in so many countries you can't have offices everywhere, or you hired every talent in your city etc). > remote puts roadblocks around informal communication that requires an organization to communicate well or fail Agreed. Remote makes communication harder for everyone, adds layers of complexity, and generates demand on the time of founders/managers. A new startup has low chances of success, and unlimited list of tasks that are hard - there is no upside to signing up for optional complexity and obstacles. > I think remote has advantages in getting a wider range of opinions from very different team members. This advantage is granted by working in a diverse team, with engaged people, following the same vision, with a sense of emotional support. Being remote-only is unrelated at best, and more often a strike against most of those points due to how difficult it is to nurture relationships (personal or professional) over text.
badpun 7y ago
The companies with strongest engineering culture and most value growth I've worked at were two US-based startups who hired a lot of remote people, including Latin America and Europe. I would say the predominant reason for them to hire remotes was the fact that you can get some very good to amazing people for a price of someone unremarkable in their area (NYC and SF respectively). Also, if you just need manpower, you can get some solid performers for $60k-$90k. Given the tight budget of early stage startups (one of them refused to take funding and relied on a lot of remote people until they got sold for hundreds of millions), their call was that higher caliber of people outweights locality.
- pyang6641 7y ago
  Hey, thanks for sharing! A lot of people argue that hiring remote employees allows you to find more talented candidates (i.e., compared to in-house). Personally, I don't think that hiring remote implies higher or lower quality workers. My sentiment is: Going remote grants you access to a larger pool of equally-talented candidates for cheaper. And that in itself is a HUGE advantage. On an unrelated note, I'd love to connect with you on LinkedIn. You can find me at https://www.linkedin.com/in/pyang6641/ https://www.linkedin.com/in/pyang6641/. Cheers!
6nomads 7y ago
It's a great way to hire high-quality specialists from everywhere in the world, maybe it'll be even cheaper. Also, in terms of remote work, only one thing matters — work. Teamwork becomes result-oriented, not process-oriented.

pyang6641 7y ago

Hey, thanks for sharing! There was a lot to digest here. I think you might be a little too cynical about remote work. Like bwb mentioned, there are studies to suggest that working remotely leads to significantly higher levels of productivity. And if we assume that innovation is a byproduct of productivity, then remote teams are more innovative as well. In terms of culture, I really don't think there's much of a difference here. The example you provided wasn't the best, and if I wanted to meet with my remote team, I'm sure we could always arrange some in-person meetings (just not that often).

e1g 7y ago
"With infinite money, would you rather create a team that works in-person or remote-only?". I bootstrapped my SaaS to $600k ARR with a remote team before switching to "in-person core + satellite", and I'd never start with remote-first because how much harder it makes everything (from comms, to on-boarding, to training, to culture, to payroll, to knowledge transfer, to customer support etc). My position is: the founding/core team is more effective (i.e. = motivated, engaged, and better aligned) when they work in-person at least 50% of the time. Two days a week, or more. I see this as axiomatic, because we are social creatures and the nature of innovation/productivity requires rapid exchange of ideas among developers/sales/marketing/founder roles. If we do not agree on this, then the rest is irrelevant. If we do agree on that, then the natural conclusion is: if money is no object, you must structure a startup to prioritize in-person collab (but offer remote days, because psychology is hard). In the real world, money is an object most of the time, so this is when remote-only discussion start ("May be if we talk on the phone every morning..." and "Do we need to fly in 4 developers for a month, or can the screen share?" etc). In the VC territory, money is free and time is priceless. It makes sense to spend extra ~few hundred thousand/pa to have the team co-located if it increases odds of success by >5%. That's it: the essence of my cynical argument "this is purely about costs" actually means "With infinite money, one strategy is more likely to deliver superior results. Now we guess how much more likely, but FYI serial founders and people with ~infinite capital almost universally choose the in-person strategy even today". Lastly, an appeal to authority. Pick someone you respect, and see how they actually work. They likely avoid meetings, and sing the praises of focused/remote thinking, while going to the office every day to sit down face-to-face with the people that move the lever the most in their business. For a small startup, that's your first 5-10 people. Try to see the whites of their eyes as often as possible.
- pyang6641 7y ago
  You create a compelling argument that's hard to beat. All of your points have been duly noted. You've piqued my interest: What was it like bootstrapping a SaaS to $600k ARR with a fully remote team?
  - e1g 7y ago
    All of the anxiety and stress of a startup, but only a fraction of the camaraderie. In this thread we have people discussing how it totally worked when they were a remote member, or how it can help companies with dozens or hundreds of people and they are all right. No one is talking about raising a child when you, your partner, and the kid are all distributed. “It’s not even close!”. Perhaps. But being a remote founder is much closer to that than to being a remote employee #100.
    - pyang6641 7y ago
      Well, you certainly have strong opinions about remote work, e1g. In fact, that's why I'd love to stay in touch with you via LinkedIn. My profile is https://www.linkedin.com/in/pyang6641/ https://www.linkedin.com/in/pyang6641/. Your connection would be appreciated. :)