For a Startup, Is a Virtual Office Enough?

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There’s a really interesting discussion going on at Hacker News right now about the merits of startup founders being in the same city or working virtually from different locations. “Most founders will tell you […] that being in the same physical location as your co-founders is critical to success,” writes thread starter shbrown. “My co-founder and I seem to work very well at a distance.”

Working effectively at a distance is something that we face at SitePoint as well. Though SitePoint can’t really be classified as a startup anymore, most of the team is located in Melbourne, Australia, and I am located in Rhode Island in the USA. The huge distance (11,488 miles according to Google Maps) and the time difference (Melbourne is 14 hours ahead of me) does present some problems, certainly, but are they dealbreaking ones? We don’t think so.

Pros of Working Virtually

1. It’s cheaper. With no office space to rent and no daily commute, working out of your respective homes can be cheaper.

2. Working from home can be productive. Your home is comfortable, so as long as you can ignore the local distractions (keep the TV off!), you can theoretically be more productive due to being happy with your environment. 37signals founder Jason Fried chimed in at Hacker News to voice his support of startups staying away from the physical office, at least in the beginning. “FWIW, David and I worked together 7 time zones apart for 4 years or so before he finally came to Chicago in 2006,” he wrote. “David wrote the code for Basecamp in Copenhagen and I designed the interface in Chicago. The distance was a big advantage to us. It helped us each focus on what we were good at without too much meddling. When you’re close it’s real easy to spend time worrying about stuff that doesn’t matter. When you’re further apart you tend to actually focus on the work since that’s the only thing you can do.”

3. Online communication tools are pretty good. With Skype, IM, email, online whiteboards, video conferencing, groupware tools, concurrent version systems, etc. staying in touch remotely shouldn’t be a problem. In fact, at some offices, employees find themselves chatting with one another over instant messenger even though they’re just a few cubicles apart.

Cons of Working Virtually

1. Fundraising is more difficult. Not every startup can be bootstrapped from start through to profitability — many (most?) will need to seek funding, and VCs will want to meet everyone on your team. Most investors will want the team working together after you close that first round anyway, so it might be wise to find out ahead of time if you can all work well together.

2. No office isn’t always cheaper. Strictly looking at your budget, nixing the cost of renting an office looks like a great deal. But what you may save on rent and utilities, you might lose on lost productivity. While some people might be well suited to working at home, others can’t deal with the distractions. And there are a lot of them: kids, neighbors, the mailman, the allure of the TV and refridgerator, the phone, etc. The lesson here, though, might be that you have to make sure you hire the right people for the working environment (or find the best working environment for your people).

3. Communication is better. Online communication tools are pretty good, but nothing really beats face-to-face contact. So much of human communication has to do with body language and facial expression, that chatting in person can have real advantages. Face-to-face contact is also tangibly faster. When your coder is having trouble understanding how the latest design mockup maps to the feature roadmap, for example, being able to sit down in person and work out the details will go a lot quicker than trading emails, IMs, or phone calls. And if you’re in the same city, you don’t have to deal with pesky timezones.

4. You miss the social aspect. Working at a startup (or even many corporations) can be fun. Not necessarily the part where you slog through the work day, but the bit where you go out for a beer with your coworkers afterward. Working alone and in separate parts of the world can get lonely for many people and may negatively effect their job performance. (Again, though, this could be a hiring issue.)

So Can Working Virtually Work?

Clearly, based on the success that virtual teams have had (my former employer, the very successful ReadWriteWeb blog, is completely virtual, with people working out of New Zealand, Oregon, Florida, Georgia, and elsewhere), it is very possible to find success with an all-virtual team. Being in the same city for a startup is not a necessity.

However, as you grow, it might become more difficult to work in an all virtual environment. What worked great for 5 employees or a small group of founders might not work when you have 10 or 15 people working.

The key to a successful virtual work environment is to create open channels of communication. Make sure everyone feels in the loop no matter how far away they are physically, and make sure you hire people who can handle the unique pressures of working on their own. SitePoint has done a great job of making sure I feel like part of the team, even though I’m not in the office with them every day — from including me in meetings via Skype, to keeping in touch daily with Basecamp, instant messenger, and email, to making sure I get a copy of the monthly employee newsletter. At the same time, they’ve given me enough freedom that working out of my home office still feels like working out of my home office.

Do you have any experience working virtually? How does it compare to working in a physical office? Do you think startups founders who are in the same location have an advantage over those who aren’t? Let us know your thoughts in the comments below.

Josh CatoneJosh Catone
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Before joining Jilt, Josh Catone was the Executive Director of Editorial Projects at Mashable, the Lead Writer at ReadWriteWeb, Lead Blogger at SitePoint, and the Community Evangelist at DandyID. On the side, Josh enjoys managing his blog The Fluffington Post.

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