- The vast majority of VC backed startups are use co-located teams
- Finding product/market fit and being remote takes additional effort
- Going remote can work for certain types of products and situations
- The best remote startups go all in with everyone behaving as they are remote working
- You have to work doubly hard on creating a positive culture
Most VC backed companies have co-located teams
I think it's important to acknowledge that most VC backed startups favour teams working together in the same space. Why? Because building a startup is hard. Really hard. Everything is uncertain, and you need to get a lot of things done with little resources. Trying to be creative and agile in a pressurised environment is easier to do when everyone is in the same room. Part of this is because communication flows a lot easier, and the other part is that being co-located means you can create a stronger culture and camaraderie within your teams. Working remotely makes this more complicated.
When you take money from a VC there is pressure to find product/market fit and then grow fast. Finding product/market fit is a creative process of building, testing and iterating. It is stressful, so camaraderie and culture can give you the edge. High growth startups need to move at pace and grow fast so the pressure doesn’t end. Working remotely will make this more complicated.
It’s no coincidence that most of the great tech companies become synonymous with their home. Like Google/Mountainview or Microsoft/Redmond and Apple/Cupertino. They do this as they have concluded it is optimal to be in the same room.
Why some startups go remote
Although most startups are co-located, there is an increasing number of startups that have a component of remote working. One of the reasons is access to talent. A growing number of talented people want to work remotely, especially developers. As an early stage startup where it can be hard to attract the best talent at the right price, embracing remote working can be a great strategy to access talent from across the globe. If you hire carefully, you can also retain staff better as there are currently less remote jobs in the market and as your employees go through different life stages, like moving to a new area, they don’t need to leave the company.
The other reason an early stage startup might want to go remote is that they want to go global quickly. Knowing that you will have distributed teams from the offset helps ensure that as the team grows the culture doesn't have to change.
Types of companies where remote working makes more sense
There are some types of companies where working remotely can be extremely positive in the best case and perform as well as a co-located startup in the worst case. For example, if you are building a startup where your product is designed to help distributed teams work better together, then it makes total sense to go remote as everyone is living your product. Your products will continually tested, and everyone will have first-hand experience of ways to improve the experience.
Another type of company where remote working can make sense is if you are building an API company, or your product relies on integrating with many other 3rd party APIs. In this case, you don’t need to worry about complex user interfaces and visual design, and writing clear specifications is easier. Also, developers generally have very good distributed workflows for working remotely, so the impact is lower.
Consumer tech startups and going remote
If your product requires an easy to use and beautifully designed user interface, then I would not recommend being 100% remote. While you might find a few examples of successful remote companies, you won't see many. I would suggest that, at a minimum, you have a co-located team that focusses on defining the user experience and then have remote engineers that can build out the scalable backend features to clear product specifications.
Your co-located team should have your product, ux, designers and front-end developers and CTO working together in the same room so that you can make rapid decisions on product direction.
Remote working best practices
If you are going entirely remote or partially remote then here is some advice you should consider to make it a success.
Go all in
Even if you have only some team members working remote, then as a company you should commit to everyone working as if they are remote. If you don’t, then your employees that are remote will feel like second class citizens as they don’t have access to the same information and conversations as those that are together in the same room. By making everyone behaves as if they are remote by default, then you ensure that everyone is effective, regardless of where they are.
Don’t skimp on the budget
Working remote shouldn’t be about saving money. It should be about accessing the best talent for your business and being global from day one. You will need to invest in making remote working a success so the cost savings you make regarding office space should be reinvested into making your company culture. Remember that culture is harder to create when everyone is remote.
Over-communication is key to remote working success. You need to make sure that everyone in your company has access to the information they need to do their jobs well. Everyone should communicate using digital channels so that people can stay abreast of conversations that might be important to them. Tools like Slack, Google Docs, Zoom, Trello, and Github, can all help your teams communicate with each other either synchronously or asynchronously.
Create rules and playbooks so that all your teams know how to use these tools appropriately. For example, if someone asks a question that needs a reply, then they should also indicate when they need a response, so their teammates can act accordingly to disturb or maintain their flow. If it's urgent, people should know they should reply quickly.
Sometimes you need some face to face time, so have clear rules on when to jump on a voice or video call. Ultimately, the rules will be different for every company, but you should be intentional in defining these behaviours.
Meet at least twice a year in person
To build a great team and culture, you should budget for bringing your team together at least twice a year. Letting people get to know each other in person and let their hair down will make a dramatic difference to how everyone works together. If your budget doesn’t allow that then at a minimum ensure that those that are close to each other meet up regularly.
Take your time to hire
Working remotely is hard for inexperienced people. Remote workers need to be good at working autonomously with little guidance. Good interviewing for are a remote team will use a multi-stage process that includes the testing of their communication skills across the different digital channels they will use daily. For example, you should try to have an interview stage over chat and another stage where you ask them to send you a video of themselves.
Running regular performance reviews is more critical in a remote startup. Without face to face time, it is harder for you to pick up on when someone is not performing well or struggling.
Weekly video 1-1s and quarterly performance reviews will allow you to ensure that you can identify how everyone is getting on and help struggling performers up their game.
Will VC’s back my startup if I am remote?
Ultimately, VC’s will back you if you can show that going remote is working, you are growing fast, and it still makes sense for your business at each stage of investment. But you really have to show great execution and commitment to making it work. My personal view is that if you do you are the exception rather than the rule.