Episode 326 | Building a Local vs. a Remote Team

Startups For the Rest of Us

Episode 326 | Building a Local vs. a Remote Team

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Show Notes

In this episode of Startups For The Rest Of Us, Rob and Mike talk about the pros and cons of having a remote versus local team. They also discuss a hybrid approach that Rob used with Drip that he believes is superior to either methods.

Items mentioned in this episode:

• Big Snow Tiny Conf
• Audience Ops
• Delicious Brains
• SaaStr
• SQL Spreads

Transcript

Rob [00:00]: In this episode of ‘Startups for the Rest of Us,’ Mike and I talk about building a local versus a remote team, and we also weigh in on what I think is the ideal way to build a startup team. This is ‘Startups for the Rest of Us’ episode 326.

Welcome to ‘Startups for the Rest of Us’ the podcast that helps developers, designers and entrepreneurs be awesome at building, launching and growing software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob.

Mike [00:31]: And I’m Mike.

Rob [00:32]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Mike?

Mike [00:37]: Well, there’s a little bit of snow on the ground and, fortunately for me, next week I’m headed out to Big Snow, Tiny Conf in Vermont. So I’ll be headed up there with a guy named Jeremy from Forecast.ly. And then there’s about a dozen other people who’ll be meeting us up there, and a couple of days of skiing, and mastermind’s during the evenings. It should be a lot of fun.

Rob [00:55]: Sounds great. Who puts that one together? Is that the one that Brian Casel puts together?

Mike [00:59]: Yeah. It’s Brian Casel of Audience Ops and Brad Touesnard of Delicious Brains. The two of them put that together, and they also have a couple of sister conferences I’ll say. One of them is in Colorado, and that one is mostly put together by Dave Rodenbaugh but Brian and Brad are involved in that. And then there’s also Big Snow Tiny Conf in Europe which is done by Craig Hewitt. Brad I believe went to that one. That was last month. But the two in the U.S. are actually being held during the same week.

Rob [01:26]: Sounds like fun. And you’ve gone to at least one in the past, haven’t you?

Mike [01:29]: Yeah. I think I’ve gone to two so far. This is the fourth one. So this will make my third.

Rob [01:34]: That’s cool.

Mike [01:35]: Cool. What about you?

Rob [01:36]: I am also off to a conference next week. I’m repping Drip and Leadpages at SaaStr in San Francisco. So Jason Lemkin’s SaaStr has grown up to I think it was 5,000 attendees last year, and it’s supposed to be more than that this year. So it’s quite an event, and not something that I’ve ever gone to purely because of that. You know how we built MicroConf into the conference we wanted to attend. A 5,000-person conference is not a conference I like to attend. I just don’t love big groups of people. I’ve heard a lot of good things about it on a number of fronts in terms of the networking opportunities, just that everyone’s there, blah-blah-blah. I’m interested in checking it out, exploring that, and I’m already setting up meetings, and just meetups, and trying to figure out who’s going to be there that I can connect with that I haven’t seen in a while. It should be an interesting experience for me as someone who doesn’t particularly like these big – it’s a big multi track conference, and it’s a lot of the Silicon Valley stuff that doesn’t necessarily jive with the way that we grow and build businesses. So it’s going to be the assumption that everybody’s raising funding, the assumption everybody wants to get to 100 million, the assumption that if you’re not doing that, you’re crazy. That kind of stuff. With that said, there’s a lot of value still that can come out of – I really like Jason Lemkin’s thinking. I respect his outlook and opinions on so many aspects of growing SaaS businesses, and there’s a lot of folks who are going to be on stage that, I think, have a ton of knowledge and experience to lend to anyone starting a SaaS company. I do like that it is focused. It’s not just startups. I’ve been to some startup conferences where you’re just standing amid the health care startups, and the food startups, and the drone startups, and 3D printing startups. As much as I like those things as a consumer, I have really no interest in doing any of them as an actual business, and so I find that it’s less relevant. The more focused a conference can be, the more interested I am in it. So that’s it. I’m going to be out in San Francisco for four or five days just kind of getting it done.

Mike [03:31]: Yeah. You’ll have to let us know how it goes and see if we should multiply MicroConf by 100.

Rob [03:36]: I know. It’s just such a different conference. It’s not better or worse, it’s just a different way to approach an event. It’s such a different way than MicroConf. And it should be interesting.

Mike [03:47]: I just realized how terrible I am at math because it’s not 100 it’s –

Rob [03:51]: It’s 180. Because we have what, 220, 230 at MicroConf? And the fee is 5,000 – Yeah. So anyways, it’ll be good. I’m genuinely looking forward to it. I love San Francisco. I’m from about 30, 40 minutes east of San Francisco. The Bay area is my town, San Francisco is my city, and so I’d love to get back there, and I will probably see at least parts of my family who can make it out to see me in the city. I don’t want to sound like I’m not looking forward to it because I very much am. I’m just a little bit skeptical I guess that how much value I’m going to be able to get out of an event that’s that large. I’m excited to go in with both feet and see the rubber meet the road and see what I can get out of it.

Mike [04:32]: You just mentioned how close some family, and where you used to live in relation to San Francisco. I used to have a little joke in my back pocket where I would tell people I lived about an hour east of Boston just to see if they would catch on to the geography.

Rob [04:44]: Well, yeah, right. Because you’re west. East is in the water.

Mike [04:48]: Right.

Rob [04:50]: Indeed.

Mike [04:50]: So what are we talking about this week?

Rob [04:52]: This week we design an entire episode around a listener question. And the question is from Johannes Akesson. He says: “Hi Mike and Rob. Johannes from SQL Spreads at sqlspreads.com. One idea I have for a topic is the pros and cons of a local versus a remote team. I’ve been thinking a lot about this. So far, I have used mostly remote employees and only local subcontractors. I’m in the phase of growing my team and I’m thinking a lot about this. Should I go for a complete remote team, a mix, or 100% local? I see pros and cons, both from the companies and from a personal viewpoint. With a remote team you’re more flexible to work from different places or from home. It can be more cost effective and maybe easier to bring in part-time employees. With a local team, I see a lot of benefits like better collaboration, building a group of people pushing each other, etcetera. It would be good to hear your experience in this area.” So that’s what we’re diving into today. I don’t know that I had many opinions on this a couple of years ago. I think it was kind of like, “I’m building a lifestyle business.” This is four or five years ago. So everyone should always be remote and this gives me the most flexibility. And then as I dug into Drip and realized, ‘Boy, to really do this right I actually think you do need people to be able to see each other face-to-face, and not just once every three to six months at a company retreat or whatever. So, we’re going to dive into the pros and cons of being remote versus local, and then I want to dig in and talk about kind of the hybrid approach that we used with Drip that I think is by far better than remote or local. Ready to dig in?

Mike [06:17]: Yeah. Let’s get started. Why don’t we cover remote first?

Rob [06:20]: Yeah. Let’s talk about a couple of the pros of having a remote team. The first, and probably the biggest, advantage to it is that you can hire the best people no matter the location. This relieves you from having to live near a bunch of good software developers, and sales people, and customer success people, and HR people. It means that you can basically look worldwide and probably find better people than you can in your locale.

Mike [06:46]: I think there’s another advantage here which is also the cost of being able to hire people who are at the skill levels that you need and you don’t necessarily have to pay local rates for them. So whether that means going overseas, or just going to parts of your home country where it’s on the outskirts, it’s outside of a major city and you don’t need to basically outbid larger companies for the same level of talent. If you can give people that freedom to work remotely then it works well for them, and it also helps you because you don’t have to pay as much for the people who are just as talented as you would get assuming that you lived in a large city.

Rob [07:22]: Yeah. It’s a good point. And I think that’s the second advantage of going remote is that you don’t have to pay the wages of a major city – if that’s where you live – and you still have the advantage of being able to get people on your team. In essence, if you think about it it’s just like arbitrage. It’s like you might be able to live in a major city and then hire in a less expensive area. I’ve seen companies do it the other way, though, where they’re in a really inexpensive area and then they’re hiring out of San Francisco. I was always thinking to myself, “Why would you do that? I know there’s good talent there, but you can find talent outside of the Silicon Valley.” It was a really funny kind of almost reversal of how you shouldn’t do this. They turned the pro of going remote into a con.

Mike [08:02]: Yeah. That is odd. But sometimes, depending on the talent that you’re looking for, you may need to do that. It just kind of depends on who you’re looking for and where those people are located. You can’t always find specific types of people that you’re looking for in remote areas.

Rob [08:18]: I think the third and final advantage of remote that we’ll talk about briefly is this gives you as the founder a lot of freedom. You don’t have to go into an office every day. You can travel and it doesn’t matter. It doesn’t impact the business any more than if you were to be at home, or wanted to work from a coffee shop, or wanted to work from Europe for a month. Aside from the time zone, no one is going to notice the difference. So it really gives you the most flexibility and, I think, kind of the most freedom as a founder if that’s something that you’re looking for.

Mike [08:47]: I think there’s actually another pro here which is it gives freedom to the people that you’re hiring, so that – depending on what they’re circumstances are – they may want to — let’s say that they already have a fulltime job and they want to work part-time because they’re saving for a wedding, or they’re trying to go on a trip next year, or something along those lines. It gives them the flexibility to work a full-time job, and then, in addition, work on your things, or be a consultant and work on your stuff part time. There’s a lot of advantages to being able to hire somebody for part of their time, not necessarily all of their time. That’s, obviously, much more on a contractor basis, or a limited basis, but a lot of times it’s very difficult to build your business and then you happen to have an extra $10K coming in every single month and you say, “Okay, now I can hire somebody.” It doesn’t usually work out that way. You usually end up in a situation where you need some additional help and you might have a couple thousand dollars extra a month, but it’s obviously not enough to hire somebody fulltime. So you have to decide, “Am I going to hire somebody part time, or am I going to hire in advance of the revenue in anticipation of that?” And that’s obviously a little bit dangerous, but it gives those people some flexibility as well.

Rob [09:54]: Yep. That’s a good point. Let’s talk about the negatives, the cons of hiring remote. I think the first one, and the one that I noticed the most when we were remote, and then when we switched to a more localized approach, is that it’s hard to collaborate. Period. Even with the software and webcams and all the cool technology. The Slack. All that stuff. The digital whiteboards. It’s just harder to collaborate. There’s nothing better than being able to look face to face. Especially on the really hard problems where it’ll take you three, four, five hours of going back and forth in discussion, and these hardcore meetings, and these chance encounters, and overhearing a discussion. Those things just aren’t replicated the same way when you’re remote.

Mike [10:33]: Yeah. It’s hard to put your finger on exactly what the problem here is, because if you could then it would be a lot easier to say, “Okay. Well, let’s solve this in this particular way.” But there’s a lot of subtleties here to that collaboration problem which are not easily pinpointed. You talked about some of them where – the digital whiteboard, and SKYPE and headsets and cameras, and stuff like that. It helps to some extent, but I don’t think that it’s quite the same. You don’t get the same feel working remotely with somebody as you do if you’re working five feet away from them, or even 25 feet away if you’re in a larger office space. It’s not quite the same feeling when you’re trying to collaborate on particular problems. It’s also hard to get on a SKYPE call for several hours, to be honest. It’s difficult to maintain your focus on a particular problem, because there’s usually so many other things going on, and you’re at your computer so naturally there are other distractions that will come up like email. And if you are just at a whiteboard, for example, then there’s no popups coming up. There’s no additional notifications. There’s no other people pinging you on SKYPE or Slack or anything. You can kind of get away from that if you’re physically located next to each other, but you can’t do that when you’re collaborating over a computer.

Rob [11:45]: Yeah. I believe that, hands down, you will build a better product, and you will solve problems faster and better, if you’re all in the same location. I just don’t think there’s any way to argue with that. Now there are other pros and cons of both of these, but that one has just become ingrained in my mind over and over and over, in terms of being able to collaborate with people. This is not something you can schedule. You can’t say, “Well, every quarter we’ll get through and then we’ll get together and we’ll plan the next 90 days. Or every month we’ll get together for two days.” It isn’t the same. It’s not the same as being able to interact and collaborate on a day-to-day basis on an ad hoc basis where you’re hammering out a bunch of stuff. Especially in a startup, with as frequently as things change. I can imagine being in a fortune 500 where you have this waterfall approach, and you probably could plan out months at a time and things move so slowly that there’s no need for those ongoing conversations. But when you’re remote, it makes it harder. The second con, or negative, of remote is – it’s a subtle thing – but it’s this lack of comradery, or lack of team unity. I know you can get together every three to six months and all hang out in a house and it’s really cool, and the buzz you feel from that does carry over for the next week or two. But you’ll notice that it fades, and that being together every day – like we were in Fresno with the Drip team – it really was like that kind of all the time. It’s weird to say, but we went out to lunch once a week. That was staff meeting. We hung out outside of work because we liked working together so much. We developed friendships. And there was just this thing of everyone being on board with the mission of the company, and doing the best for the team, and it meant there was a lot of cohesiveness in our thought, and a lot of unity and everyone trying to help each other out a lot and getting things done very quickly. Going out of our way to help each other in a way that when you’re remote, yeah, you’re totally – you’re friends, you’re colleagues, you’re cordial. But, again, there’s that unspoken – that thing that you just can’t get when you’re not around folks in person every day.

Mike [13:45]: The next thing is a little bit country specific, and this pertains specifically to the United States, but it you have people that are located in multiple states, then you are considered to have what’s called a tax nexus. And a nexus is essentially every place where you have an employee working for you, you are considered to have a nexus there, and you are supposed to be collecting taxes from people who order your software in those locations. Now there’s a lot of subtleties here that you have to deal with in terms of whether or not you’re offering software as a subscription or it’s a downloadable product. But that said, it complicates the issue when you have contractors and employees working in different locations, whether it’s in your country or in foreign countries, and sometimes, these tax nexuses can be established even if you just have an employee who’s working in another country, for example, and then you are then subject potentially to collecting taxes for people who order your software in that country. It becomes a complicated headache to some extent, and governments certainly don’t make this any easier. They want their money, to be perfectly honest. But they don’t really consider the ramifications for much smaller businesses, or ones that operate entirely online because, quite frankly, that’s not really their concern. Their concern is the retailers, and they’ve never really quite caught up with the times in terms of being able to make an easy way for you to collect taxes based on sales over the internet.

Rob [15:09]: Yeah. This is something that most people don’t talk about, but if you start hiring people randomly, especially in the U.S., if you hire 10 people across 10 states, your tax nexus becomes very large, and it becomes very complicated. It’s not just the amount of money you’re paying. It’s a tremendous accounting headache just to track all of that. So really be, I would say, be careful before hiring new employees in just any random state, because it will get complicated on you quick. The fourth negative, also relates to this, is the additional administration time for every state that you run payroll in. I know that with paychecks, as I even tried to add states, it was a nightmare. With Gusto it was a little easier, but someone on my team had to go out and get the unemployment number from the state which is some random website. Then there was the disability number. And then there was the actual state income tax number. There’s all these numbers and each of them took 30 to 40 minutes of filling stuff out just to get some type of approval. And then it took three weeks to get it. And then I couldn’t run payroll while we were waiting on that. It was just this whole project that I wasn’t counting on. So as you add states, count on four to eight hours of killed admin time right at the start. And then plan on dealing with a bunch of kind of bureaucracy, in essence. Then they screwed one of them up and it didn’t work. Again, it’s just one more thing that really isn’t moving your business forward. And it sounds like a small thing of like, “Oh, I’ll just kill a day doing that.” But it’s a lot more of a pain in the butt than I think you realize. And then every time you run payroll now you’re paying all these multiple states – Gusto does that for you – but anytime there’s confusion, or a dispute, or whatever it’s more manual interaction that you’re dealing with. It’s just that added accounting complexity.

Mike [16:50]: I’m just going to point out that every time something goes wrong, which it inevitably will, it chews through several more hours of your time. Let’s say that you chew through four to eight hours just setting things up, and then you have to wait for three weeks for things to go through with the state, they might not have been correct. Or they may have left out something. I remember having to go just to the Department of Motor Vehicles here in Massachusetts to get my license when I transferred it over. I ended up going back four times because they said, “Oh, you just need this and this.” And I’d have to go back and they’d say, “Oh, you need this other thing.” I’m like, “Well, why didn’t you tell me that last time I was here?” Finally, by the third time, I just said, “Is there anything else I need? Is there a list of everything that I need?” And they said, “Oh, yeah. Here it is.” And there were two other things that they didn’t tell me about. It’s the exact same thing when you’re trying to pay payroll taxes, because there’s all these things that they’re not going to tell you about, and every single state has a different mechanism for getting all that stuff done. Some of them require certain things. Some of them don’t. It’s just a mess. And, like you said, if any little thing goes wrong, or if one state changes rules a little bit, or requires a sign-off, or a signature, or a new piece of paperwork filed. Sometimes it’s quarterly, sometimes it’s annual, they expect you to know what those things are and they won’t tell you in advance. There’s no mailing list or whatever you can sign up for that says, “Hey, here’s all the things that you need to know about running a business in such and such state.” None of them do that. It’s kind of a fighting against the machine at that point. It’s just awful.

Rob [18:11]: Yep. I’ve run into it. Another negative of remote is that it does take a unique employee to make it work. Not everyone is able to work remotely for sustained periods. A, it can be isolating, even when you’re working remotely with a team. B, folks get distracted – and especially over long periods of time. Like, you hire somebody, six months they’ll be good, a year they’ll be good. Two or three years into it a lot of people really run into challenges of just being able to stay focused, stay motivated without folks around them. Because it’s the norm to be in an office. As sad as that might be, or as disturbing as that might be, that’s how we’ve done it for the past 80 years since offices were invented, or 100 years or whatever. So people are used to having that interaction with other folks and, as a result, I’ve known founders who have hired people and they’ve worked out really well on the technical side, but they haven’t been able to be productive and to really produce long term as a remote employee in essence.

Mike [19:06]: I think part of that goes back to what you said before about one of the cons being a lack of unity. It’s just that comfortability that you get, the socialness of working with other people. Because as you said working remotely is very isolating and if you don’t have a mechanism in place, or a system in place, for getting out – whether that’s you or the people who are working for you – then it can be very easy to fall into this trap where you basically fire up your laptop every day and you work for eight hours and you don’t leave the house for days or weeks on end. Long term that’s going to be detrimental, and that’s part of why offices work so well, is because you get that social aspect that, as humans, we kind of need that. Whether that is social engagement at work or outside of work. But if you don’t leave the house to go to work then it isolates you that much more. Especially if you’re sitting there for long hours working on code, or different things, and you’re not really talking to a lot of people. It can be very difficult both for the founder and for the people who are working for them.

Rob [20:03]: And then the last couple cons for going remote or having a remote team. The first is time zone complexities, and this depends on how remote you are. If you hire someone in Europe or in Asia and you’re in the States, you’re talking nine to 12 hours’ difference, if you’re on Pacific time versus Asia. I think it’s even 14 hours’ difference. That becomes kind of a pain in the butt when you have this day or two-day delay because everything’s asynchronous. We’re trying to hire within three time zones, three hours’ difference of Pacific when we were in Fresno, and I felt like that was a pretty good way to manage it. I think trying to do an eight or nine hours off reduces even more of the ability to collaborate, and the team unity, and that kind of stuff. So depending on how you arrange it, this may or may not be a major con for you. And lastly, this kind of plays into needing unique employees, or unique team members, to be able to pull it off. But, unless you’re on top of things, some people will naturally start to slack off. It may not happen in the first week, it may not happen in the first month but over time things will come up, and they realize that they don’t need to, necessarily, clock in and clock out, because I imagine you’re not running a startup like that. I think that you can see people start to become less and less productive over time unless you do hire people that are really able to stay focused, or there’s some other thing that’s motivating them, because if they look at it as a job, there’s always something else that they can be doing. They really need to be bought into whether it’s working with the team, or the vision that you have, or loyalty to you. Because if you don’t have that, people will inevitably try to find ways to basically not put in the full-time work.

Mike [21:42]: Yeah. I don’t think that that’s necessarily intentional. It’s just a matter of how things tend to work out, in terms of the workloads and the ways that people put time in. So, if you’re working remotely it’s very easy to get up a little bit later and then call it a day early, for example, and you don’t think very much of it because sometimes you’re just thinking about things after work or you start including that extra time. It’s difficult to track it as well. Most of the time the founder’s got other things going on that they’re not going to track that. For them, their sole focus is working on the business and trying to get things up and running and, quite frankly, micromanaging employees or contractors is not at the top of the priority list. You don’t want to have to do that. This can be a problem longer term. I think in the early days it’s much easier – and by early days, like early on working with somebody – you tend to not see this very much. But as time goes on it can become a problem, and then it becomes difficult to address because you don’t have the clarity of when they’re working in the office, and not that them being in the office equates to productive time, but it’s difficult to judge how much people are actually working or how much time people are putting in.

Rob [22:52]: Yeah. I like that thought. I agree with you. The sentiment is that most people won’t do this intentionally, but it can happen pretty easily unintentionally.

Mike [23:00]: Yeah. And then it becomes uncomfortable to bring up.

Rob [23:03]: Right. And that’s the thing. If you’re going to build an organization and you’re like, “Boy, we’re a startup and we’re going to be cranking on this for a good solid two years, and then we’re going to sell, or then we’re going to IPO” or whatever it is. Then a lot of these things don’t matter. These are longer term things that if you want to build a business that’s sustainable, and that is actually generating revenue, and you’re thinking out two, three, four, five years, some of these things will creep in. And these are not often talked about because so many of the startups that we see remote workers and how all that works just haven’t been around that long. There are a few. There are a couple. Like Basecamp comes to mind and Buffer. But most of the big high profile ones, or even just the ones that we hear about in our circles are like, these are like one and two-year-old companies, and there’s a lot of stuff that’s going to creep in after that. Let’s switch over to talking about local, and just doing the traditional having an office, you hire everybody in the same locale. When I say everybody, I mean almost everybody. Sometimes there’s a really specific position that you may need to hire remote for. But imagine it’s like someone who’s kind of an independent contributor and they don’t need to work with the rest of the team on a day to day basis. So, I’m saying mostly local here. The pros to this are kind of the cons of being remote is the ability to collaborate, look eye to eye, work on hard problems. The comradery and the unity of being able to go out to lunch with people, of being able to be in the room and have conversations and plan things. And number three, I’ve found that that all builds into the team basically being more invested in the business outcome, or in the outcome of the startup, than if you were to build a completely remote team. I do think there are ways to work around these and to, even if you are remote, to try to get as much benefit as you can from these. But I don’t see that there’s any way that if you’re remote that you can possibly nail these three as good as being local in the same office.

Mike [24:48]: I think some of that has to do with the fact that you’re not getting the feedback from the business, or the founder, when you are working remote. For example, if you added some code to the product that really made a difference for a particular piece of it, and you work in the same office, it’s much easier – and probably much more common – for somebody to say, “Hey, great job doing that. I really appreciate that you did that.” Versus if you’re remote, then those people have to make it a point to kind of go out of their way to provide that feedback to the people who are working remotely. So, as you said it’s not that it can’t be done, it’s just that it’s more difficult and you have to put forth a conscious effort to do it. In those cases, it’s more likely to get swept under the rug, or just not addressed, or you’re not giving that feedback to people because you’ve got other things that you’re thinking about that are probably overtaking a lot of the other things that come to mind including that feedback to the people who are working on stuff.

Rob [25:39]: Right. And, of course, you can do this in Slack or via email or something, but it doesn’t have the same impact as looking someone in the eye and, in front of everybody else, being like, “You totally rocked this. Nice job.” Something we did at Drip when we were coming up, and we still do, is have stuff we call “launch juice”. It’s fire cider. It’s a nonalcoholic, very strong – I think it’s like habanero and honey and apple cider vinegar. And we do a shot of that when we do a big launch of anything. So, major features. So maybe we’ll do a shot once every month or two. And that’s just a really cool thing that you technically could ship bottles and shot glasses out to everybody and then all get together on video, SKYPE and then do it together. But there’s just something about being in that room, pouring them, and being like, “Cheers team! We totally rocked this.” And doing it together that you just can’t quite get with a remote team. All right. So let’s talk about some of the drawbacks of being local. The first one is that it can be really expensive. You can higher salaries, especially if you live in a major city. The second is the talent pool may be thin if you don’t live in a major city. If you need to hire six developers and several support people over the course of a year or two as you’re growing, if you don’t live in a major city that’s actually a lot harder than it sounds to find people who can all make it to the same office that are of the quality that you’ll want. And I think the third one that comes to mind is just the expense of having an office and of having to manage all that. And maybe there’s even the admin costs of having to find that and sign a lease, and the commitment, and how all that shakes out. Again, referring back to my experience with Drip, we were in a good position that we were able to find really inexpensive office space in a little local tech hub called Bitwise Industries in downtown Fresno. It was a revitalized warehouse building, in essence, and so our lease term was not very long. Our lease cost was exceptionally low compared to other founder friends who I talked to. But I would have done a co-working space, and just rented out more and more desks, or rented out more and more office space, rather than sign some big three to five-year lease, because that would never have felt comfortable to me. But this is another thing that you have to think about if you’re going to be local that is not even on your radar if you’re going to be remote.

Mike [27:49]: The other thing is that you have probably a lot more competition for the types of people that you’re looking for. Even if you are in a smaller area, the pickings are thin in terms of trying to find those employees or local workers. But at the same time you’re also competing against other companies that have open job listings. I remember when I had an office over in Hudson, Massachusetts here, because we were in the same region as Monster.com, all of our job listings that went out to Monster.com inevitably got pushed down by, quite frankly, them, and several other large companies that were in the area. And it was very difficult to get noticed by people who were out there actually looking for jobs. Then once you did get noticed you tended to get a lot of people coming from the recruiters saying, “Hey, let me try and help you fill this position.” which just drastically increases the cost for that position to just find somebody. So there’s a lot of things that go into it that just increase the costs overall. The other thing I’d probably mention here is that you’ll find that there’s probably less flexibility for the people who are coming into your office and saying, “Yeah, I’ll come in for a couple of hours to actually do an interview.” And those people are looking for the type of 9-to-5 job that they’re willing to come in the door and spend eight hours there and then go home at the end of the day, versus the types of people that are looking for a remote position. Maybe they’re looking for it because they can only work a couple of hours in the morning and then a couple of hours in the evening. And the scheduling flexibility that those people are looking for is different than the type of scheduling the people who are local are looking for.

Rob [29:27]: Yeah. I think that’s actually a really good point and something I left out. Another pro of going remote is that people look at being able to work remote as a big perk, and so you may be able to find people who think differently about work, or just who are more willing to come work for you and wouldn’t necessarily – there’d be too much completion if they were only local. So, that remote ability allows you to basically land folks who you otherwise wouldn’t be able to. Cool. I think those are kind of the pros and cons as we see them. The approach that I want to lay out that we stumbled upon with Drip was this hybrid approach. It’s where we spent about 40% to 50% of our time in the office and then the remainder of the other 50% to 60% remote. And by remote, I just mean we worked from home or from coffee shops, but we found that it was crazy in terms of our ability to collaborate. We would all come in on let’s say Tuesday and Thursdays, and so we had all the touch points, we had the unity because we did the lunches, we had the comradery. The team was invested in the business outcome. We were all in one state. It’s like the Goldie Locks zone is what we found. It eliminates the time zone complexities, the tax complexities, and it allowed us to solve really hard problems when we needed too on a recurring basis. But we also were able to go home and do maker time. And that was a big deal for developers especially to be able to two and a half to three days a week – depending on what they wanted to do – and be able to basically be on their own. Of course, we were all communicating via Slack and stuff, but it really helped them get stuff done on the days they weren’t in the office, and then to use the office days as the days to have the interpersonal and the collaboration time. I think that if I were ever going to grow another business – which presently I have absolutely zero plans of ever doing it again – but if that were ever the case, I would strive really hard for this in-between, hybrid approach of having people that are local enough that a couple of days a week together is a possibility.

Mike [31:26]: I think with the hybrid approach you’re kind of trading certain cons for pros in some situations, and then trading certain pros for cons in other situations. For example, if you have that situation where you’re coming into the office a couple of days a week, yes, you get the pros of being able to collaborate with people, and getting the team unity, and lots of other things that you wouldn’t get from a remote team. But then you’re also accepting the responsibility that you still need to hire people who are reasonably remote. You can’t just expect them to commute for four or five hours or whatever. So, you’ve still somewhat limited yourself in terms of the geographic region that you’re hiring in. But there are a lot of benefits to, what you said, that hybrid approach. Some of it has to do with concentration and being able to just take a couple of days and focus on the problems, and then revisit it and come back to a physical meeting place where everybody’s working together and get all that comradery that we had previously talked about.

Rob [32:17]: And I’ve got to be honest. I think before really building the team at Drip, and at our peak – I shouldn’t say at our peak, because we’re actually higher than that now in terms of employee count – but when we were acquired we were at about 10 people, and there were two contractors, eight employees, and five of us were there in Fresno and five were remote. But before growing that team, I hadn’t realized the value of this collaboration and the comradery/team unity piece, but it became very apparent to me as we grew the team, the value of those things. And that’s why I think we landed on the whole hybrid approach.

Mike [33:52]: Well, Johannes, I hope that answers your question. If you have a question for us, you can call it into our voicemail number at 1-888-801-9690 or email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from ‘We’re Outta Control’ by MoOt used under creative comments. Subscribe to us in iTunes by searching for “startups” and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening and well see you next time.