Are Distributed Teams the new Cloud for startups?

Why now?

  • Collaboration Tools tipping point (The Slack effect): Collaboration tools such as web conferencing and cloud-based software development environments have existed for years. However, these are now reaching a level of usage and familiarity, where executing with distributed and remote teams is more seamless. Dev teams now communicate primarily using Slack, and collaborate using tools such as Atlassian, Github, and Trello. Cloud-based Docs and Sheets are staple for product management teams. Online whiteboarding solutions replicate a key element of in-person meetings for creative teams. Increasingly larger B2B sales are being done remotely using tools such as Zoom and Uberconference. And global business deals are being negotiated and sealed over Whatsapp and WeChat!
  • Necessity: Tech talent is getting extremely tight and expensive in startup hubs such as Silicon Valley and New York. Public tech companies in these locations can offer potential employees interesting work, high compensation (including liquid RSUs), a globally recognized brand, and sometimes great lifestyles too. Early stage startups can offer few of these, so hiring in these locations is not easy. Further, employee turnover can be high in an environment with numerous high-quality alternatives. Yet, having a presence in places such as San Francisco/Silicon Valley provides significant deal-making advantages across M&A, partnerships, and fundraising, along with global reach and credibility. By having the right presence in a deal-making hub with other employees spread over multiple geographies, startups can potentially have their cake and eat it too.
  • Specialization: Software is eating the world. Tech is going deeper into industry segments. Consequently, more startups are building products in places that have talent with domain expertise in vertical or functional areas. Examples include AI startups in Montreal, Robotics companies in Pittsburgh, SMB SaaS companies in India, and industrial IoT startups in Germany and France. These startups often tap tech deal-making hubs such as Silicon Valley or New York as they get to market, and their teams are thus distributed from early on. Similarly, some places have built a talent pool and reputation in a specific functional area. A great example is the Greater Salt Lake City area in Utah (aka Silicon Slopes), which became an effective hub for building remote software sales teams and is now thriving as a home to many successful software startups
  • Remote Hiring: With AI-driven recruiting platforms and SaaS HR tools, hiring, onboarding and managing remote talent has become more seamless in recent years. Services such as Terminal are enabling companies to achieve hyper growth by accelerating the build out of distributed teams outside of Silicon Valley while handling everything from recruiting to office management.

The Pitfalls

Getting it Right

  • Successful distributed teams focus on frequent communication. They heavily use messaging apps, written communication and video. Some even have video feeds open between multiple locations all day, by default. Maturation and adoption of technologies such as AR for team collaboration will make this even more frictionless. High achieving distributed teams come together for periodic face-to-face meetings and retreats. For startups that are spread over distant time zones, email and asynchronous communication can often be better than over-reliance on instant messaging
  • The role of team and location leaders is critical a distributed team structure. For startups with two or more offices, having experienced leaders that trust each other be in charge of each office often correlates with success
  • Leaders at these companies foster practices that help reduce social distance. They often have a low tolerance for organizational politics. They build consistent hiring practices that heavily leverage cloud-based assessment tools. They filter new hires for a disposition of low supervision needs, high organizedness, high communication, and high resilience. They often manage even local teams as if they were remote
  • Successful distributed teams also emphasize higher advanced planning and superior project management. Work is organized in small to mid-sized sub-teams

Distributed Team Models

In Conclusion

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Anupam Rastogi

Anupam Rastogi

Venture investments and company-building. Focused on Data/AI/SaaS