10 ms·

Pre-seed, seed startups with employees in office have higher revenue growth

• ElfinTrousers 4y ago
  "The survey sample size was 37 companies from the Reach Capital portfolio. That’s large enough to see patterns"...[citation needed]. n=37 is skimpy.
  • blackbear_ 4y ago
    Statistically speaking, n>=30 is indeed considered a "large" sample, but that is assuming the examples are iid (independent and identically distributed) which is definitely not the case here.
  • PeterisP 4y ago
    If the effect size is this large, then n=37 is perfectly sufficient to assert that the effect exists; however, the issue is about sample selection, as "n companies from the Reach Capital portfolio" can't be reasonably considered to be a representative sample of all startups, so it can't be assumed that the conclusions can be extrapolated beyond the niche of startups like these which Reach Capital selects to fund, perhaps it depends on location or domain or size or other characteristics which affect what Reach Capital funds.
    • invalidname 4y ago
      Maybe. But there are so many biases that could impact it. Smaller and poorer companies to begin with will have lower revenue and reduce office spend. It's really hard to account for all of these biases.
• deleted 4y ago
  [deleted]
• sithlord 4y ago
  small sample, and a single VC portfolio? Could also be selection bias in who they want to fund.
• gct 4y ago
  Begun the RTO wars have
• Waterluvian 4y ago
  Pre seed and seed companies are very small and very young, right? This seems to be plausible: when you don’t yet know what you’re doing, your machine isn’t even built let alone well-oiled, you need very low latency, high quality communication. I’m doubtful that this translates into the future much, beyond, perhaps, that companies that start well are more likely to do well.
  • PeterisP 4y ago
    It's also unclear whether it's a causal relation or not - it's also plausible that the startups who happen to be "more mature" from the very beginning are both growing faster, and also able to afford an office faster; perhaps that early office doesn't influence anything but is simply a consequence or side-effect of 'better startups'. This kind of observation simply can't distinguish between correlation and causation.
    • oldgradstudent 4y ago
      It's not even clear there is a relationship. What are the p-values? Was there a study protocol BEFORE the data was collected? How many other hypotheses were tested against the data? Were the p-values adjusted accordingly?
• methyl 4y ago
  It doesn't surprise me. There is a huge advantage, in the first years of a startup, to be able to sit around with all the co-founders and early employees and exchange ideas as they come. Later on it matters less, as the advantage of synchronous communication diminishes once you have more employees than one office room can fit, which seems to be reflected in the research results.
• gt565k 4y ago
  Face to face collaboration is a lot more efficient. Startups gain from the small tight knit team being able to do impromptu brain storming and discussions on the fly. Can’t do that when everyone is behind a monitor. I am a firm believer that 100% remote work is actually a net negative for collaboration. Workshops, ideation, brainstorming, all of these thrive when people are engaged in the moment, not on a scheduled zoom call. There’s definitely a balance between in-office and WFH. WFH is great for corporate jobs cuz half your day is filled with boring meetings, but for start-ups, it’s the opposite.
  • nbaugh1 4y ago
    Yeah I think the balance should be hiring people local to your office who are willing to go in (ideally WANT to go in) but also give them the option to decide for themselves when they want to be in office vs at home. As much as I love working from home, if most of my team was together in an office that's a reasonable commute from my home, I'd definitely not want to be left out/behind by staying home everyday - personally.
    • jossclimb 4y ago
      That might work if you're working on a very popular stack, doing something like web development on react etc, but anything more specialised then that (unless you're in the valley or somewhere with a big tech community), is going to be a challenge to hire in. If you can hire globally the talent pool becomes much more fruitful.
    • ipaddr 4y ago
      Find people locally that want to go in. Filter the rest. Offer these people remote? Believe everyone will have a reasonable commute in and use the missing out emotional trigger to get people back. Then they can sit at their desk remote into meetings with others at different locations while talking as loudly as possible while everyone else puts their headphones on and browses slashdot?
  • rybosworld 4y ago
    The problem with statement's like yours is that there is no evidence to support the things you are saying. - "I am a firm believer that 100% remote work as actually a net negative for collaboration." You're entitled to your beliefs, but they are just that. I'd hate to see companies making decisions based on "feelings" they have in regards to one format being more effective than another. - "Workshops, ideation, brainstorming, all of these thrive when people are engaged in the moment, not on a scheduled zoom call." I'll counter your anecdote with my own: I've observed no difference.
• throwaway5Am1k 4y ago
  I don't pay attention to these studies any more. It's all endless shilling, scheming, and hidden agendas to strip workers of their recent pandemic wins (WFH). I encourage all workers to push back on this. Ignore the studies, there's big money behind it. Call out this bullshit, and call out anyone pushing this as a shill with an agenda. There is no objectivity here. The capitalists have had productivity wins for the last 50 years, time to give some time back to the worker.
  • newaccount2021 4y ago
    [dead]
• tiffanyh 4y ago
  Title should be: For Pre-Seed/Seed round startups… There’s virtually no difference for Series A and beyond. This makes sense to me. Pre-seed/seed is all about finding product/market fit. Which means high iteration, fast collaboration and that definitely happens best if everyone is in the same room. Series A and beyond is largely about scaling, which lends itself to more asynchronous tasks.
  • blagie 4y ago
    I think there is also a question of organizational size. A 4-person team in one room can be a hyper-efficient cohesive unit, a lot like a family or a group of friends. A 100-person organization requires very different processes, with planned meetings, emails, records, etc. All of that works fine (and likely even better) when people are remote.
• dmitrygr 4y ago
  People who cannot tell correlation and causation apart appear 3½ times stupider when talking in public.
• mmikeff 4y ago
  There are plenty of us who’d like this to be untrue. Myself included. Can’t deny that it’s a reasonable theory, especially for certain types of companies at certain stages.
• ntkachov 4y ago
  They had 16 companies in this survey that were remote, 2 that were "office", And the rest were some form of hybrid. They considered anything other than full remote "some office". This could easily get skewed if one of these office companies had 10x'd their revenue. And even though they grew faster, the attrition for Office was higher.
  • sjducb 4y ago
    In other words: "Study" was not statistically significant, all results should be ignored.
    • colpabar 4y ago
      All the experts agree!
      • Zurrrrr 4y ago
        Or at the least 7 out of 10 dentists agree
      • teeray 4y ago
        Expert tested, landlord approved.
    • rhaway84773 4y ago
      In other words, as the article says, the study is “suggestive and not conclusive” and others should also be doing similar research.
      • wokwokwok 4y ago
        >>> others should also be doing similar research. >> BTW, Nick Bloom at Stanford and others have done extensive research with thousands of people on remote and hybrid work here, and here… ^ from the article > Home working led to a 13% performance increase, of which about 9% was from working more minutes per shift (fewer breaks and sick-days) and 4% from more calls per minute (attributed to a quieter working environment). Home workers also reported improved work satisfaction and experienced less turnover, but their promotion rate conditional on performance fell. ^ from the linked paper. …but hey, go the statistically irrelevant one to share with people if you want a cool link to prove whatever point you want to make with it.
• jsjohnst 4y ago
  In addition to the tiny sample size point of a sibling commenter, this seems telling: > almost 90% of the responses from pre-seed/seed startups said team culture was influenced Building a good work culture is hard, it’s understandable that it’ll take time to identify and distill patterns that work well in a remote first setting, and then more time for the industry to adopt them. That doesn’t mean remote work is bad for employers, it just means it’s different. The companies that adapt will very likely have a strategic advantage in the future.
  • rhaway84773 4y ago
    > In addition to the tiny sample size point of a sibling commenter, this seems telling: I don’t understand HN comments. We don’t need to read a sibling commenter to know that it was a small sample size. The article repeatedly mentions that. All the other comments are also of the same ilk, making comments about reasons why the study’s result may not hold, as if they are new insights and rebuttals to the article, but almost all these caveats are mentioned in the article itself. One sees this in nearly every other thread as well. It’s almost as if no one even reads what they’re commenting about.
    • jsjohnst 4y ago
      > It’s almost as if no one even reads what they’re commenting about. For the record, I did read it entirely, but I’m tired of low effort/quality crap like this article trying to *splain why RTO is better and I’m making counter points not made in the source article to the article’s claims. Irregardless of my intent: https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html > Please don't comment on whether someone read an article. "Did you even read the article? It mentions that" can be shortened to "The article mentions that".
• sublimefire 4y ago
  Who is responsible for the revenue growth in the very early stages? Think about that person who's job is to pull cash from someone. Well, that person probably has a background in sales, and I would argue, is fairly extroverted. IMHO it might be to do with the ability to attract talented extroverted people and ask them to work remotely.
• aliqot 4y ago
  why are news outlets so wishful for RTO?
  • esskay 4y ago
    Probably some backwards thought that it means people will buy their newspapers on their pointless commute that didn't need to happen.
  • malermeister 4y ago
    People bored on commutes read news to pass the time?
  • ahelwer 4y ago
    They're predominantly owned by real estate interests, which is also why they bang on the crime & homelessness issue so relentlessly.
  • horns4lyfe 4y ago
    They’re bought and paid for by commercial real estate interests.
• ilyt 4y ago
  No wonder, they have money to afford one!
• throwaway8j3 4y ago
  And I'm 3.5 time happier working from home.
• quartz 4y ago
  YC probably has some really interesting data on this for pre-seed companies since moving from a required relocation to fully remote. For new founders the value of being in person around other founders in the epicenter of your industry can be pretty huge. It's the questions you don't know to ask that are often the most valuable-- the overheard conversations, unexpected connections, and coffee chats that often make the difference between survival and death in the early days. IIRC early data during the pandemic indicated that while remote work didn't impact productivity for established employees it was harder for new hires to find personal traction within the company.
• Ambolia 4y ago
  Could it be that early Startups that are doing well are more likely to be able to afford an office? If all the graphs pointed to better performance in office I'd be more convinced, but only one does.
• claudiulodro 4y ago
  It wouldn't be an HN comment about a survey without noting that correlation != causation. :) Assuming their statistics are sound, could it simply be that companies with good product-market fit can afford offices? Going full-remote seems to be a popular cost-cutting measure at some of the companies doing layoffs these days (e.g. GitHub), and especially pre-revenue it may not make sense to spend thousands of dollars a month on office space. Additionally: For startups that start in a garage, like Apple originally, is that in office or remote?
• jasonlotito 4y ago
  Should also note: "In Offices" includes "Associated with an office, but work from home; available as needed."
• newaccount2021 4y ago
  [dead]
• shmatt 4y ago
  This is too easy. Some forced office time means you have employees from a big tech hub working for you. Fully remote seed stage companies aren’t paying anything close to paying rent in Sunnyvale or NYC. If you broke this down hiding the office situation, comparing startups from Kansas or Minnesota to seed stage startups in SV or Seattle, guess who would grow faster
• webjunkie 4y ago
  > Working from home may offer more distractions by chores, family, network issues. Do those little things add up to meaningful productivity differences? When you say "more", you have to compare both sides. Working in an office "distracts" me with noise, questions by others, spontaneous meetings, socializing in general, as well as other interruptions. I find it always baffling that in such arguments, the office is per default fine, and it's always remote which is the culprit.
  • baidifnaoxi 4y ago
    This. Offices are hugely distracting. All sorts of things to take your attention away and add the hierarchy element and your are obligated to talk to higher ups if the “swing by”
  • dexterdog 4y ago
    Plus they don't mention the commute time which can be a good palette cleanser if if is just the right length, but also can be a massive waste of time and stress-inducer.
    • deleted 4y ago
      [deleted]
  • naravara 4y ago
    Personally I think almost all of my distractions while working at home would go away if I could afford a maid or just had more spare time and energy for housework. So really the issue isn't "the home" so much as the fact that my home is in disarray because I have too much to do.
    • JustSomeNobody 4y ago
      You don't need a maid. Start small. The habit will build.
      • naravara 4y ago
• destitude 4y ago
  Since these were all education related would be helpful to know exactly what that means since that could also directly affect this result.
• manimino 4y ago
  "Average % Revenue growth in pre-seed companies" is a very noisy metric. Example: Suppose you had one company doing $10 in sales a year, now it's doing $100 per year. 900% growth! When you average 900% with the rest, it will skew the results wildly.
  • ahelwer 4y ago
    Yeah, it is even possible to do this sort of analysis in domains with exponentially-distributed outcomes?
    • disgruntledphd2 4y ago
      Yes, but it will be incredibly misleading. You'd want to look at the distribution of outcomes to get a sense of what's really happening. The startup I work for is remote first but has some offices so we wouldn't count as fully remote even though we mostly are.
• esskay 4y ago
  Honestly this is a pretty weak argument. The number of companies taking part in the survey is pitifully inadequate to gain any real useful insight.
• cowmix 4y ago
  FWIW, the company I work for went hiring crazy as soon as we committed 100% to full remote a few years before COVID.
• karmelapple 4y ago
  I co-founded a remote-first organization over a decade ago, and we beat the odds of how most businesses fail in the first few years - we're still in business today, and growing. We were remote from the beginning, but we got together in-person more frequently at the start. It was helpful to brainstorm and get other ideas generated in-person. Along with the other comments here, it seems the advice is to get together in-person more often at the start of a business. I highly agree.
• ren_engineer 4y ago
  pre-seed startups from a single VC and they don't release the raw data. A single company doing well could be completely skewing the data. the fact they lump all forms of hybrid remote with fully in-office is also dumb. This seems like a VC twisting their data to push a narrative against remote work. I will say that hybrid seems the worst of both worlds, you get most of the bad parts of remote work and also lose most of the benefits like being able to recruit talent anywhere, people being happier due to shorter commute, etc.
• kryptiskt 4y ago
  Is it causation or just correlation? It would make sense if those who were growing fast were the ones most likely to be able to afford office space.
• tarotuser 4y ago
  Grew their office size? Grew their square footage of their office? Grew their costs? Grew their profits? > Data shows that pre-seed and seed startups with employees showing up in a physical office have 3½ times higher revenue growth than those that are solely remote. Revenue.. So how does that index to costs? Evidently profitability isn't changed.. or is even lowered, else it too would have been used as an anti-remote wedge. > James Kim at Reach Capital, an early-stage tech ed investor, surveyed their portfolio of 37 companies 37? That's it?
• JamesMcMinn 4y ago
  Articles With Headlines that Exaggerate the Story Get 300 Times More Views
• arnaudsm 4y ago
  There is a big bias that older founders are more pro-RTO and have more network and experience. Also 37 samples from a single fund is not enough. That's Statistics 101 : decent p-values and control your variables before making bold statements like this.
• varelse 4y ago
  [dead]
• WaitWaitWha 4y ago
  Could it be that the specific seed companies that "[m]ost roles required to work a traditional in-office work week" were involved with business idea that had a better chance in succeeding, because of market conditions and product demand? That is, maybe the seed companies that did better with in-office had tangible products, versus no-office seed companies did not - and at this time the market wants tangible products? edit: i.e., are the all software development firms? Are they all widget making companies? All service companies? (why is it so hard today to express what I mean?)
  • colinmorelli 4y ago
    I think I can summarize this for you: The conclusion in the article might be true, but for innumerable reasons the study was flawed and its results shouldn't be taken seriously.
• windex 4y ago
  Trying really hard on the narrative to get people back to filling expensive real commercial real estate. A lot of firms are invested or locked into expensive real estate. As someone who realized the additional life benefits of working alone and away from the stupidity of mindless commutes, I am not buying this kool aid. Saving a ton of money on rent as well.
• cmdialog 4y ago
  I wonder how long this conversation is going to continue. In-office vs. Remote. Seems like the In-office folks are pining for a bygone era, as if we will ever go back to the way things used to be. Personally, I will never go back to the office again except for special occasions. And I will never work for a company who would force their staff to be in-office.
  • horns4lyfe 4y ago
    As long as there are powerful people in a position to lose money on their office real estate investments, we’ll keep hearing this dreck, and people will keep naively believing it’s just an organic news cycle.
• superb-owl 4y ago
  Aside from the tiny sample size, there's a lot of potential correlation/causation confusion here. A pre-seed startup where the founders meet f2f every day is probably much more serious than one where the founders are just on Zoom. But that doesn't mean you can't be a serious remote team.
• asoneth 4y ago
  I recall a Computer-Supported Cooperative Work paper (possibly this one? https://dl.acm.org/doi/10.1145/358916.359005 https://dl.acm.org/doi/10.1145/358916.359005) that identified different levels of collaboration including working together in the same room ("radically colocated" in CSCW jargon), working near others on the same floor, working on different floors or parts of the building, and working remotely or from different offices. They claimed that radical colocation was significantly more productive compared to the others, and collaborating across different floors was no better than being in different parts of the world. Based on my experience since then I am less skeptical about those claims than when I first read the paper. I've been on skunkworks projects where a half-dozen people worked out of the same conference room for a couple months, offices where my teammates' desks were clustered together around a meeting space, open-plan offices with my team spread across the building, and working remote during Covid. For well-established projects any of them were fine. But for new projects I felt like we gained a tremendous advantage by being in the same room. Maybe that won't always be true, but I wouldn't be surprised if it still holds today.
  • gofreddygo 4y ago
    Oh how different experiences are. I have been involved in projects small and large. Worked in co-located teams and distributed (locally and globally). Some products failed, others survived. The driving force in projects that survived was the team's sincerity, manager's determination and combined experience in the domain. Not timezones, not manager seniority and certainly not the mean square of shouting distance between all team members.
    • asoneth 4y ago
      I agree that team cohesion, manager skill, and domain experience are significantly more important factors to the success of a project than physical proximity. A bunch of random people dumped into the same room will not outperform an experienced remote team. But that is not sufficient evidence that proximity is not a contributing factor. To be more explicit: all else being equal (i.e. similar cohesion, skill, experience), teams that work together in a dedicated room seem to outperform expectations compared to similar teams that are spread across an open office or working remotely. (Personally I did not notice anything close to the "doubling of productivity" claimed in the paper above, but it was sufficient to be noticeable even with a small sample size.)
• arthurofbabylon 4y ago
  Beyond the insignificant sample sizes, this study also fails to respect selection bias.
• dboreham 4y ago
  Pre-seed startups have offices, and revenue?
• jdulay19 4y ago
  As others have said, the small sample size in this really quite silly. I would also add, companies raise more for in-office in the first place - most are in the Bay Area, more need to pay more to justify in-person to employees with options -> more funding needed, etc ..
• duxup 4y ago
  I work at a small company, not a start up. I work from home 3 out of 5 days a week, but having said that: When I am in generally most of us sit around a conference table and work together when we are in the office. All but one of us is generally at the table when we're in the office. It works great, we can work fast and efficiently, I can overhear things other people have to say and so on. There's lots of things that happen fast and on time because we're all right there. Having said that this is all OPTIONAL. It works for all but one guy and I think that is part of what makes it work. Too many folks out there want a one size fits all deal and forget about the team part of team...
• tarokun-io 4y ago
  I've worked both 3-persons startups twice, once all sharing an apartment (with this exact reasoning: being together should make us more productive or increase motivation), one other time completely remotely. In both cases, no member of the team know anyone else before joining the team. Guess which one was more performant? The remote one. By an order of magnitude. Two examples are anecdotal data, but so are 37 IMO. It almost feels like the title of the article was written before the experiment was done.
• alirob69 4y ago
  I read a study that ranked productivity as going: 1) Hybrid; 2) Remote; 3) In-office.
• eweise 4y ago
  Personally I could care less which is more productive. My life is much better working from home. I've optimized for founders wealth at my own expense for too much of my career. Stock options are a gimmick. 90 days to vest after leaving? "Unlimited" vacation. Tiny little desks squished together. No thanks.
• jonathanstrange 4y ago
  I'd love to see a study that investigates the benefits or drawbacks of remote work + 4 hours of joint rowing and having a beer afterwards per week. My experience is in academia, which certainly doesn't translate to business 1-1, but I suspect that most benefits of in-person office work come from social aspects of team-building such as personal bonding, meeting for a coffee, chatting in the hallway, and so on, and not from working in an office itself, especially not when the office space consist of large, shared offices.
  • prettyStandard 4y ago
    As a rower... Joint rowing?
    • r2_pilot 4y ago
      As a smoker... Joint rolling?
• renewiltord 4y ago
  The reactions to these are just like the "marijuana causes/cures cancer" articles. If it cures, it is evidence of the Man keeping it down. If it causes, the methodology is flawed. The reactions describe the community more than they describe the article.
• importantbrian 4y ago
  This is very likely just selection bias. Companies who's founders choose to be remote first are going to vary philosophically from in office companies in more than just one way. In my experience, remote first companies tend to be less focused on growth at all costs and less wrapped up in hustle culture. That probably does mean sacrificing growing revenue at the fastest possible rate, but in order to draw the broader conclusions from this that people are trying to ascribe to it you would need to have both a much higher powered study, and have a study where companies are randomly assigned to in office or remote so that you can control for all the possible confounders.
• ironlake 4y ago
  So employees of seed startups should have higher equity if they work in the office even once, since apparently walking through the doors of a leased cube farm leads to much better results for the management class. From my perspective, as a not-seed investor, my expected rate of return (salary) remains exactly the same if I work from home or at the office. Seed investors have stacked the terms so early employees get as little of the exit as possible, even in the rare instance where there is a profitable exit, why do I care about higher revenue growth?
• crsv 4y ago
  Did they control for industry? When looking at something like revenue you so much of your outcomes at early stages are functions of externalities as much as they are from how you organize and operate. Did they control for business model? This sample just seems super unrepresentative and cherry picked for an outcome.
• waynenilsen 4y ago
  There is a very clear statistical standard here "difference of means" test at the very least. Very very small dataset. Lots of options all of which would most likely conclude no statistical difference and low power.
• dasil003 4y ago
  I'm extremely skeptical that this kind of study can tell us anything about the relative value of remote vs in-office work. When it comes to early stage startups, success is going to hinge on the founders and early hires ability to focus and execute on the right things. What those "right things" are is nebulous (hence the challenge of startups!), but I'm quite sure that remote vs in-office is not one of those inflection points (unless it is! in a specific case!). I'd further postulate that VCs who use remote vs in-office as a meaningful investment signal will do nothing but water down their ability to find the outliers in their non-preferred segment. At this point it's pretty clear that remote vs in-office has a huge list of pros and cons on both sides, many of which could be showstoppers for specific individuals or businesses, but none of which are universal. It's a tradeoff. As with all tradeoffs you should make it with your specific context in mind. A founder who is keying off a study like this because they think data > gut feelings does not have what it takes to be a successful founder.
• helmsb 4y ago
  Revenue of a startup is no where close to being a reliable measure for such a small sample size. Give me any variable and I can make a similar graph to prove anything you want. Correlation != causation.
• sokoloff 4y ago
  I would have described "Static Hybrid" and "Synchronized Hybrid" as the opposite of the way they appear in the image table. https://i0.wp.com/steveblank.com/wp-content/uploads/2023/02/Work-Configuration.jpg?ssl=1 https://i0.wp.com/steveblank.com/wp-content/uploads/2023/02/...
• hgsgm 4y ago
  What are these Seed and Pre-Seed companies that have revenue at all? Isn't landing 1 customer a huge revenue boost for many early companies?
• linkjuice4all 4y ago
  If you were to start a company today that disallowed remote work you’d have to: 1.Rent or buy an office that is large enough to hold your expected work force based on your starting and expected future headcount over the course of the lease (or pay money to move when your first place is too small) 2.Pay on-going costs of operation and maintenance of said office space 3.Purchase equipment for the operation of your company (including additional perks like coffee or whatever if you’re generous) 4.Find employees within a reasonable distance of your location that have the skill set you need and will work for the wage you offer 5.Expect those employees to pay out of their own pocket the expense to get to and from work and any additional expenses they might have for childcare etc Productivity would have to be massively increased to justify all of these additional costs and constraints so you’d think by now this would shake out in the data (at least a dataset larger than 37 businesses that may not even have a stable business model yet). I just don’t get it. And this doesn’t even factor in the actual bullshit of working in an office or signing off exactly at 5 because your work day is done (at least in an ideal world). The only thing I miss about going to the office is being able to talk to co-workers “off the record” - which I can do with remote co-workers on any non-company controlled channels. This whole RTO thing is baffling.
  • asoneth 4y ago
    > Productivity would have to be massively increased to justify all of these additional costs and constraints so you’d think by now this would shake out in the data I agree with you about the immense costs of an in-person office. But the fact that neither remote nor in-person businesses have demonstrated clear superiority in the market yet indicates to me that the benefits of being in-person are likely in the same ballpark as the costs. (My guess is that it'll end up depending on the type of business. For businesses with higher than average profit per employee it might make sense to pay the fixed per-person costs of being in-person to unlock the productivity multiplier -- for everyone else, not so much.)