Are Co-Founders in the Same City Really an Advantage to a Start-Up?

My co-founder and I seem to work very well at a distance. Frankly, I don't see the advantage to being in the same place.

Sure, very occasionally there are things that would go faster if I could draw them on an actual whiteboard instead of a virtual one. But these moments are rare.

Basically, I think virtual communication is something you learn how to do. Since we're not in the same location, we're very used to using tools and communication styles that provide the same advantage as being in a room together.

And there are many, many advantages for us to start an entirely virtual company. Primarily, when we do have to grow our company we're going to be able to hire the best people in the world (as long as they have a good Internet connection.) This seems like a huge advantage over Google, who can only hire the best people within an hour's drive of Mountain View. It opens up an entire new pool of talent for us.

Other advantages:

1. No rent for office space and no commute. 2. We can hone our communications techniques so that we're ready to scale when we inevitably need to have people in multiple cities working together. 3. People get to work in an environment where they're most productive. 4. We cover more of the world so one of us is usually close to an investor or customer that wants to have an in-person meeting with. 5. Since we cover more of the world the company as a whole has more perspective.

As to arguments on the other side, the only one I can think of is:

1. It's easier to communicate, and thus easier to get things done. (But with modern communications devices, e.g. a screen recorder to capture exactly what's going on my system so that the programmer can how I produce the bug, I remain unconvinced that in-person speed of communication is anything more than a slight advantage that is greatly outweighed by the disadvantages of not being an entirely virtual company.)

Are there other advantages to in-person interactions that I'm not thinking of?

Context: I started my company in 2005 from Ann Arbor (which quickly became Chicago) with 2 partners in NYC. Here's what we learned:

* It is very hard to get funded if you're not all in one place. Also, my previous startup, from '99-'01, relocated everyone as soon as the A round closed.

* All-hands company meetings are very hard to do, because they take the form of interminable phone calls instead of lively back-and-forths.

* Software design debates rapidly turn into a game of telephone.

* It's much harder to guage the mood of the team; we lost 2 people because they were unhappy about stuff that might have been resolved had we caught it earlier.

* Solo founders in far-flung branch offices quickly feel out of the loop, which sets up a bunch of vicious cycles involving security, assertiveness, style, and communication.

We've made it work by growing through it, painfully; we now have so many people in just two offices that there's a cameraderie and common purpose (I'm dignifying it, yes). It's still more painful than it would be if we were all in one place. I haven't said this anywhere but here, but we'd have shipped 9 months ago (as opposed to weeks ago) if we were all together.

The company I worked for between startups --- Arbor Networks (a startup, but I didn't start it, and I was employee #40something) --- has a business office in Boston and engineering in A2. This, too, was a debacle. Engineering and management are "us vs. them" in the best of circumstances.

More points:

* No rent for office space is not necessarily a win. We could all work from home in Chicago. But having an office is great, partly for the same reason some people like wearing suits in NYC --- act the part, be the part, etc.

* People are often wrong about where they're most productive. If people are unproductive in an office culture, you may just have the wrong office culture. In Peopleware, Tom DeMarco lays out a great strategy for a skunkworks-style office to house a product team. Peopleware is excellent, read it!

* You're also missing out on the social aspect. How often can you all go out for dinners? When you have a shitty day and you're all pissed at each other, can you go out for a beer? (A teammate I yelled at once brought in a six pack at 2 in the afternoon, killing the work day and resolving the problem). Yesterday was my block party; everyone in my office showed up. How much cooler would it have been if the NYC crew was there too?

* Some really excellent players simply get lonely working from their home or in a tiny branch office. Some of them know it already and won't consider you. Some of them find out after they join and quit in the middle of a cycle. Obviously lots don't, but why cut your chances at all?

Regarding the office space, I agree here too. My 1st business we ended up moving office spaces and had an absolute BLAST decking out the new space. It felt like our geeky clubhouse and we'd often hang out in the evenings playing games or just chatting.

All that being said-- different things work for different folks. 37s is a fine example of a distributed company that seems to work just fine.

My co-founder and I tried working remotely, and although productive it is nothing compare to being in the same room. I finally decided to move to where he is for 3 months.

(Your Point #1): I sub-leased an apartment and setup shop in the living room of a 1 bedroom apartment. It's closer to his house so the commute isn't that bad, since I live here I only pay rent and not a lease on an office.

(#2): Communication techniques for remote work won't come in handy once you get funding and are asked by the VCs to move to one city. Knowing how well you work with your co-founder(s) in the same space before funding is very valuable.

(#3): Working in a productive environment is definitely key, but you have to make it productive no matter where you are since you are a startup. It could be a coffee shop if it HAS to be.

(#4): Investors want to meet the entire team, they will be concerned if you mention "we work remotely."

(#5): No one starts a global company, they start a company that goes global.

It is a strain on finances but its good to do it for 3 months at a time, specially in summer time because in big cities you can get sub-leases for short period (furnished).

Good luck!