WORK[etc] Web App Blog

Weighing in on the ... Why Distributed Teams Are Less Effective Debate.

07
Jul
Posted by Daniel Barnett Wed, 7 Jul '10 @ 5:39 AM
This is a bit of a deviation from my usual product updates, but bear with me … It is a subject very close to the hearts of most of our customers and indeed ourselves.

Are distributed teams functional?  Can you build a successful business with your key people in different parts of the world?

Debate around this question is quickly growing out of comments V.C. Mark Suster made in a recent post entitled “The Power of ‘In Person’ – Why Distributed Teams are Less Effective”.

Mark essentially argues that if you want to become a big business, if you want to attract VC investment (at least from Mark’s firm) then you better make sure that the key players in your team work from the same location.  Distributed teams are out.  As are offshoring and outsourcing.

In a very short response, Simon Mackie @ WebWorkerDaily, supports some of Marks’s statements, but ends with the a (state-the-obvious) comment that, thanks to the Internet and technology, “working in a distributed team is now easier than it ever was before”.

Initially, Mark’s article and the responses that are popping up everywhere annoyed me.  I can see where he is coming from, but I also know that 99% of our customers who run distributed teams are successful.  I know this because the customers increasing the number of users on their account each month far, far outweigh customers decreasing their seat count. 

Now, the fundamental issue that many people have missed is that Mark is talking about well-funded start-ups that aim to become very big businesses.  The next Facebook or the next Google.

But, for most business owners and most feet-on-the-ground start-ups, “big” sits on a very different scale.  A million dollar turnover inside of 12 months is big.  A ten million dollar turnover inside of 5 years absolutely huge.  Hell, just being in business and paying the bills next month can be a big deal.

Most, if not all WORKetc customers operate distributed teams, this is part of the appeal of WORKetc - manage your entire business wherever you are and wherever your team is.

And in fact, this is exactly how WORKetc as a team operates:
  • Dan lives in Sydney, Australia
  • Caryl is in Phoenix, USA
  • Simon in Nova Scotia, Canada
  • Nick in Jaipur, India
  • And Eva is in Manilla, Philippines.
I don’t believe that if the WORKetc team was all sitting in the same office, day after day, that we would have got to where we are right now.  This is why:
  • Cost.  If we were all based in Silicon Valley or a major city like Sydney or New York, then we wouldn’t be in business today.  The cost of wages, office space and ancillaries would easily exceed $500k per annum.  Given that it has taken us 36 months of constant, iterative development (whilst also building the customer base), $500k/yr is a massive burn rate for a privately-owned business to digest.  An incredibly massive risk for anyone to take on.

  • Passion.  We’re all “in love” with the product and our concept of being able to manage an entire business with a single cloud product.  I hired everyone because they love the product and this passion makes the distributed team work.  Nick was originally a somewhat fanatical WORKetc customer before he came to work with us.  The only time our team began to show cracks was a mistake in hiring someone that wasn’t really interested in the why of what we’re doing – for this person, WORKetc was just a job.  It didn’t work.  They left.

    Now, I’m not saying I couldn’t have found 5 passionate people in Sydney (or any other location) but I’ve been involved in enough ventures to have learnt that when you meet someone passionate, get them involved.  It just so happened that we’re flung across the globe.
  • Time zones.  This is a huge plus for a distributed team.  With customers across the globe, WORKetc is a 24/7 business.  A distributed team means that we always have someone close to customer support desk.  It also helps make product development incredibly efficient and fast paced.  New code is completed during Simon’s work day and then I have all of my work day to review and provide feedback.  Simon and I have worked like this for almost 9 years now.
  •  Lifestyle, friends and family.  I have no desire to pack up everything I own and move to San Francisco, as I’m sure neither does anyone else in the team.  Plus we’re not all nine-to-fivers.  The thought of getting in a car, driving 45 min in traffic to a beige office and spending 8 draining hours in a cubicle terrifies me.  I like my freedom; I like my space to think objectively about the business.  If growing a “big” business means everyone working from the same office, then I don’t want a big business.
Yet, for all the benefits of running a distributed team, it can also be incredibly difficult and frustrating.  I might need a critical piece of information but the only person that can help me is 13,000 miles and 10 time zones away, fast asleep.  

This is a problem we’re trying to solve with WORKetc.

The obvious key to smoothing friction is to ensure all business knowledge is accessible to everyone, all the time, in context and as self-serve.  You want team members to get what they need, immediately, without having to send out CC-all email or making that 3am phone call.  You want remote information captured and made available to everyone else.

And this can’t be done with email alone.  You can’t do this with single-purpose web apps that do just CRM or Project Management.  And of course it is inefficient to maintain multiple software tools with different data formats and multiple logins. 

So in response to all the noise around Mark’s post and before you take to heart his views on distributed teams, really think about what type of business you want and what big means to you.   Big to a VC is a $100m+ exit, but the reality is that only a miniscule percentage of start-ups ever get there. 

Big to me is $10m+ per annum turnover, freedom to live where and how I want and to be part of a passionate team building a product that we know plays a big part in helping other businesses be successful.

5 Comments

  • Greg Stace Thursday 8, July 2010 9:06 AM

    Agree on your comment about how its possible to work in a distributed environment and the issues associated with it - I guess this is where the WorkETC software could help on the various project documents management. I am in a similar situation, however, its made slightly easier having an office in one location thats in the office that can always manage the load should there be a spike in work

  • iDonny Saturday 10, July 2010 6:37 PM

    Indeed accessibility of information is way more important that people being in one place. Just think about your most notorious government department 10-20 years ago - everything was ware housed in paper and there was a fee and long delay to find even the most obvious information. With information much more 'findable' (electronic) and systems and structures in place, you do not need to have all your assets and information in one tall building in town. You do not even need to have all your departments open to access information they have.

    This easily shows cracks in the idea that physical location is crucial in the success of a venture. Some may argue that being in the office can make many of us much less productive - think about the water fountain time-wasting, group lunches, people walking to each others' desks to ask questions about stuff that should be on the intranet or document management system etc. now compare that with the ease of using a search-engine to get information without having to waste 15 minutes listening about Becky's nephew learning how to ride Arabian horses (not important to the company).

    Maybe the venture capitalist really feels insecure about not seeing a physical entity to give money to - Would he be the kind of boss that walks around cubicles at 8 AM to see who is present and who is working? That is one way of running a company, but also a sure sign of having hired people you do not consider trustworthy

  •   Sunday 11, July 2010 1:26 PM

    The "Future of work WILL BE DIFFERENT"
    Refer to:
    http://www.youtube.com/watch?v=G8Yt4wxSblc

  • Clint Wilson Wednesday 14, July 2010 2:41 PM

    Well said Dan and great looking application you all have created!

    I think all of our 215 consultants who interact with Cazoomi on various projects would agree with your passionate commentary as we have gone from 0 to 1600+ site members in our 9 months out on the web and now have the most distributed, successful start-up I know in my circles in the Bay Area.

    ~Clint
    @cazoomi

  • Jeff Sunday 5, September 2010 7:39 PM

    Great article, and I totally agree

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