Colin Nederkoorn

Building a remote company

Downsides you should know about before jumping in

August 07, 2019

Building a remote / distributed company is one of the best decisions we’ve made for our business. We started the business in New York, and instead of being chained to that city, I was able to personally move to Portland, Oregon. We’ve also been able to hire amazing people all over the world rather than be limited to hiring from a specific geography.

However, building a remote company isn’t without tradeoffs. While perception of remote jobs is changing, there are some downsides you should know about before building a remote company.

Many investors are skeptical of remote companies

I haven’t met an investor that only invests in remote companies. However, I have met investors that won’t invest in remote companies. I was once told by a venture investor that we needed to move the company to the Bay Area and build our team there in order for them to invest in us. We didn’t.

If you’re building a remote company, your path to raising capital probably won’t look very traditional. In fact I can’t think of an example of a remote company that has a traditional fundraising story.

Acquisitions are tricky

In the Bay Area, it’s not uncommon for Facebook and Google to [acquihire companies for $1 million per engineer]. In the Bay Area where good engineers are extremely expensive and rare, that strategy might work. If you’re a remote company, good luck getting your 5 person distributed team acquihired by Google unless all of you moving is part of the deal. One of our earliest competitors exited in an acquihire and is now working at a customer of ours.

If someone wants to buy your technology and continue to invest and grow it, a remote team is disadvantaged because they’ll be concerned that you can vanish in to the ether. We saw another competitor get acquired and have their technology continue to exist as part of a larger suite.

My theory is that once you get big enough and you’re generating $25m - $100m a year in revenue as a remote business, you’re doing enough right that an acquirer doesn’t care that you’re remote. Before then, it’s a big hurdle to overcome.

Administrative overhead is higher when you’re in more places

Sure, you can hire everywhere, but do you really want to? Adding a hire in a new jurisdiction often means you need to register with the state / province, participate in the jurisdiction’s unemployment fund, and it means you’re going to get strange letters from them in the mail that you may need to respond to.

It would be a lot simpler to have one office and one state and country to deal with for employment issues. The important thing if you do go down this path is get a great operations team in place and get this under control.

People will tell you you can’t build a distributed sales team

You can. We have. It doesn’t make sense to me that people say this since it’s really common for companies to have multiple sales offices and an outside sales team that never goes to the office.

The argument you sometimes hear is that sales people learn from each other through osmosis, and the competitive energy from being in the bull-pen together positive.

We’ve found that through good process and tooling, you can build an effective distributed sales team. For example we have a weekly deal deep dive, and we just implemented a coaching and call analysis tool to help sales reps improve.

We have more work to do to prove this out, but I’m excited to at some point be a strong example people use showing that you can.

You need systems to help people succeed when you don’t see them

There are no watercoolers to congregate by. You can’t tap someone on the shoulder very easily. We struggled with team management until we formalized One-on-Ones and Feedback across the company.

We also do random chats between team members, company meetups and smaller team meetups to help people build rapport with each other. When a new person starts we often do in-person training within a few weeks of someone joining the company.

Interest in remote jobs is increasing

There’s no doubt that people are looking to remote work to help them live somewhere they love while doing something love, or to get rid of a commute, or just create flexibility in their life.

I don’t think remote work is going anywhere soon, and figuring out how to turn a remote team in to a strength is one of the fun opportunities of being CEO of a remote company.

P.S. This post was written from a coffee shop and my house