What is the current state of remote teams in startup ecosystems?
&quot;We hire only the best, wherever they are&quot; is just a longer way of saying &quot;We hire only the best&quot; which is just a longer way of saying nothing. Every business has been chanting this forever, along with some variation of &quot;customer-focused&quot;, 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.<p>There is only one reason to run a remote team: lower cost. Every other advantage is just a longer way of saying &quot;save $&quot;. &quot;Get higher skills&quot; or &quot;Faster go-to-market&quot;? Triple the pay, and you&#x27;ll have even stronger&#x2F;faster people locally. &quot;Workers want freedom to schedule their work&quot;? That&#x27;s an argument for more flexibility in office hours, not for more timezones. &quot;People focus without background noise&quot; is so true that you should give them private offices. &quot;Reduced commute&quot; 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: &quot;If I had $100M to spare, would I start with X or Y?&quot;. I don&#x27;t know anyone who built a business that would say &quot;No doubt, remote-first&quot;.<p>However, this lower cost always comes at the expense of -<p>1. <i>Innovation</i>: 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&#x2F;people&#x2F;experiments, working in close proximity. See the book &quot;Innovators&quot; 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.<p>2. <i>Productivity</i>: The most high-bandwidth communication is when you&#x27;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 &quot;Your rate of change&quot; &gt; &quot;Market rate of change&quot;, the startup might survive. If that arrow changes direction, no amount of documentation or stigma-busting-hierarchy will save you.<p>3. <i>Culture</i>: 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 &quot;and for our team-building this week we&#x27;ll be doing a Zoom conference call!&quot; 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.<p>If <i>Innovation</i>, <i>Productivity</i>, and <i>Culture</i> 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.<p>If you are entering the startup game - with a small team, searching for a product&#x2F;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&#x2F;Figma&#x2F;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&#x27;t matter what they preach, it only matters what they practice to get their results.<p>That the startup graveyard is filled with teams who worked only in-person tells us nothing. That&#x27;s the natural order of business; it&#x27;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>P.S. &quot;But Stripe is a mega-success, and they are going remote!&quot;. 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&#x2F;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.