One of the greatest innovations for tech entrepreneurs over the last few decades has been cloud computing. The ability to move capital expenditures to operating expenditures is huge. It’s also incredibly empowering to scale your computing power as your business changes. You’ve also got the added advantage of a built-in platform with various tools to handle analytics, error logging, etc. Needless to say, cloud computing has changed the game.
We now seem to be entering a new phase of the future of work where traditional employees can be replaced more and more by freelancers who live and work remotely. This new paradigm reminds me of the rise of cloud computing a lot in terms of the utility, and its potentially disruptive nature.
What this means as I start to scale my business
I’m one of the founders of a small Boston-based software company. And we’re starting to grow in ways that mandate we hire help in basically all functional areas: sales, marketing, engineering, support. While the path set by many of my peers would be to raise venture money and scale the team with local professionals, my co-founder and I have started to think about a remote team instead.
The advantages as we see them
There seem to be a lot of key advantages to a remote team:
- The cost is so much lower. Hiring in Boston mandates that you pay even entry-level employees a high salary because it’s so expensive to live in this city. Beyond that, it’s a competitive job market and there’s only so much of a discount you can get by being a startup with a strong employer brand.
- Hiring from anywhere allows us to get talent from anywhere. Go on Upwork and there are rockstar people across functional areas who live in South Dakota, Omaha, Belarus, etc. Companies like Zapier have built really interesting companies with remote workforces by acquiring talent globally.
- It’s a pretty sweet perk. People want to work remotely. Automatic is closing its San Francisco office because no one shows up anymore. Offering remote and flexible work is a great way to get amazing people.
- It’s a perk for founders, too. I’m writing this from LA right now. I’m working from here for the week, visiting friends and meeting a few potential customers. Not having people in the office gives founders a lot more flexibility, too!
Of course, there are disadvantages and challenges. How do you build a strong culture? How do you develop employees effectively? Can you really hire all functions with remote workers? I’m most skeptical that we can scale an inside sales force with remote workers, and am 90 percent sure we can’t do business development and sales development type activities like cold calling with remote workers. This type of job requires others to be in the trenches with you, along with constant coaching and motivation.
Turning capital expenditures into operating expenditures
Getting back to the cloud computing analog, the ability to have a remote, 1099 workforce has this magical upside of making your business’s cost structure a lot more flexible. With AWS, you can rent a $30 a month server, and scale it to $500 or $5,000 a month when you need to. You don’t need to buy $5,000 a month hardware and hope you use 90 percent of it, but don’t need 110 percent capacity.
While scaling people is a bit more complex (training, culture, etc.), there is a lot more flexibility in the freelance/remote worker world. Right now, our company probably needs 1/3 of a customer service person. The ability to hire someone for 10-15 hours per week is amazing vs. hiring someone in Boston at a much higher hourly rate full-time.
Beyond that, there are true functional experts whom you can hire when your talent pool is expanded globally. Just like the built-in functionality of a platform like AWS (autoscaling, analytics, etc.), there are professionals who know customer support, email marketing, web development, etc. Also, with marketplaces like Upwork, hiring can be much simpler with reviews and detailed work histories to help you quickly vet people for a given job.
Of course, you have to be careful when you start to think of people like machines. A lack of culture, professional development and mentoring is not only soul crushing for all involved, it also just doesn’t produce the best results. Your South Dakota-based customer service rockstar who works for you 10 hours a week needs to have a manager who cares in order to do her best work. It’s a good idea to learn from others about building the right culture and people operations.
What to do?
Fast forward a year and maybe I’ll have people working with us in our Boston office. Or, perhaps we never do and I can keep making trips to work from LA (or Denver, Rio, Malaga . . . ) whenever I want. I’m very attracted to the idea of a remote workforce, even if it means I can’t come in and say hello to my colleagues every day. But, I’m still a bit worried about how it will unfold as we execute.
We already use freelancers for more menials tasks, and it’s been very effective. However, the difference between a 10-step lead gen task and a complicated email marketing strategy is worlds apart. Can we execute a remote workforce strategy with everything else going on in our business?