It should be clear by now that the future of how we conduct and transact business changed forever over the spring of 2020.
A lot of those changes weren’t great, but some of them weren’t awful. One silver lining on the cloud of this global pandemic has been an acceleration of digital means of communication and transaction. Not only are we viewing digital interaction with more acceptance, but also with more trust.
That increase in trust, extrapolated out, means very good things for entrepreneurs. I’m going to walk you through how this evolution in remote work can result in startup resources that weren’t in your reach a year ago.
The Rise of Location-Agnostic Business
Let’s state the silver lining like this: Business has become location agnostic and opportunities are everywhere.
Over the last 10 years, we’ve been able to say that business “is becoming more” location agnostic, thanks to advancements in cloud computing, strides in mobile bandwidth, and an avalanche of web and mobile software geared toward digital interactivity across multiple locations.
The last remaining hurdle in moving from “is becoming more” to “has become” was an issue of trust.
Do we need to “press the flesh,” so to speak, to gain a sense of trust with someone we’re doing business with? Do we need “butts in seats” to ensure quality work is being done? Does a credit card need to be “present” for the transaction to be trusted?
From March of 2020 onward, if your answer to any of those questions was “yes,” you were no longer able to do business. The whole world shifted at once.
Here’s what that means for your startup.
Investors Are Realizing That Their Own Backyard Is Really, Really Small
It used to be like pulling teeth to get an investor interested in a startup that wasn’t within a 20-mile radius. And for most of the world, this meant Silicon Valley. The argument was that it was necessary to meet in person for the board meeting, to validate that milestones were being hit, and to get a sense of the “feel” of the company’s progress.
Investors didn’t want to have to get on a plane every three months to get that feel. Why waste a day or three every quarter checking in on a lone outlier when there were plenty of opportunities right there in their own backyard?
I used to get into shouting matches over this kind of thinking. The tools to conduct business digitally have been in place since email allowed for larger attachments — let’s say 1995. Face-to-face didn’t increase the odds of a better ROI for investors. It didn’t stop horrific and wasteful failures from happening.
Why stick to face-to-face and limit your returns by location when companies like Amazon were approaching the trillion-dollar revenue mark on the premise of never coming into contact with their customers?
I didn’t get it — that was the message from my blue-shirted, khaki-panted counterparts. You can only truly understand someone when you’re sitting across the table (conference room or chic fusion restaurant) and looking them in the eye.
But eventually, places that weren’t Silicon Valley or New York started to sprout successes that weren’t tied to West Coast money (my own Automated Insights being one of them). Trailblazing and curious West Coast investors started dropping into town.
Eventually, this led to stacking , where investors made a bet on a particularly promising startup in a place like Raleigh-Durham, and then would fly in every quarter for the board meeting. While they were in town, they would line up a dozen or so meetings with more local startups.
Some of them would invest in a couple of these additional — but perhaps not as promising — startups. When this happened, Raleigh-Durham lobbied hard for a direct flight to San Francisco and got it.
Today that plane probably sits unused or flies 90 percent empty. I don’t know. I haven’t been to the airport in a long time.
But here’s the thing. Investors are now mostly forced to Zoom in on board meetings for investments within their 20-mile radius. If that works, and it has to, why wouldn’t it work for a startup in Raleigh-Durham, or Iowa, or India?
This shift isn’t going to help you if your startup isn’t investable, of course. But if it is, an enormous physical barrier has finally been removed.
I’m not naive to the fact that there are still those folks who will argue that the West Coast is still the best place to invest, and that their lead argument is that the West Coast is where all the best talent eventually winds up.
Talent Is Migrating at a Blinding Pace
Talent is leaving San Francisco; it’s leaving New York. And it’s not coming back.
Again, when you’re forced to rely on digital means of communication and transaction, you’re forced to develop trust. I won’t be so bold as to claim that Zoom, Slack, and text are together the perfect substitute for a conference room and a whiteboard, but we’re learning how to fill those gaps.
The best talent is smart. The best talent is realizing that 90 to 150 minutes in a car each day is a complete and total waste of time and resources. So yeah, being in close proximity to your team has a lot of benefits, but we’ve seen the tipping point. It’s why some of the bigger companies are extending work-from-home policies or making them the norm. It’s not just the safety of their employees; it’s the exodus of the talent.
The writing is on the wall here. Talent is not only migrating from the urban centers to the suburbs, they’re migrating to wherever the hell they want. Because why not?
You are now free to move about the country.
This is great news for your startup on a couple of fronts. First, it knocks over the last remaining argument for physical concentration of investment into new companies. Second, if talent can now live at the beach, do they really need to work for a company that can afford to pay them the kind of money required to live in San Francisco (or more likely two hours away)?
If your startup can make a compelling case for a more satisfying job, top talent is now available.
This probably isn’t news to anyone. But here’s something you might not be thinking about.
Outsourcing Is Becoming the New Normal
Anecdotally, there has been a huge upswell in outsourcing over the last several months, leading to a new gold rush for founding and growing outsourcing firms — like development shops, creative shops, marketing shops, even sales and finance firms where you can get what you need by the hour or the project.
Why are these outsourcing firms springing up?
It doesn’t take much math to connect the phenomena together. When you don’t have to work for the Big Guys, you don’t have to spend half your career filling out paperwork, sitting in useless meetings, spending months getting approval for necessary resources, or spending years doing grunt work to climb your way up the corporate ladder.
Again, the best talent is smart. They recognize waste.
For example, tech outsourcing firms offer the developer the chance to code, right now, all the time, and on new projects every couple of months. Other functional areas are catching wind of this model and starting to form, recruit, and hire much better talent than you’d find at these firms just a year ago.
And since these firms and their talent no longer have to be concentrated in physical tech hubs, they’re becoming less expensive too. This normalization of cost will accelerate and be pushed by offshore outsourcing firms, who have been using this model for decades.
A year ago, it was a nightmare to hire good tech development in a small town. Now you don’t have to. You can hire firms anywhere in the country or worldwide.
You might be thinking that’s all fine and good for tactical tasks, but what about strategic and leadership matters?
Experienced Talent Is Adopting a Fractional Model
The evolution of remote work doesn’t just apply to tactical talent. Leadership, management, and creative functions are starting to embrace fractional roles — for the very same reasons that top tactical talent is leaving behind the long commute and the corporate bullshit.
So let’s say your startup needs a CTO. You have two options. Overreach and hire a seasoned CTO for $200-$500K a year, or promote or hire a less experienced technical person you can afford but who might have nowhere near the experience you need to get you to traction and growth.
We’re starting to see a mainstreaming of a third option: Hire a top CTO fractionally, maybe 10 hours a week, to get your startup where it needs to be until you’re ready to hire or promote your own CTO.
Two years ago, I was calling for the fractional CXO for startups. Today, that’s been accelerated into reality. It also means fractional availability for advisors, creatives, and even management. Because we’re adapting. Because trust.
If you’re not adapting and developing this trust today, you need to be. Because when we finally do get back to normal or anything that looks like it, we’re not going to back to long commutes and in-person trust falls. They just don’t make sense any longer.