In the 5 years I’ve been running Simplifilm, we’ve had a lot of successes, and our share of (normal) setbacks.

I can say — without any reservation — that the biggest (non-hiring) mistake we made was trying to move a remote team to a centralized office.

It was a total loss that put Simplifilm back a year or more.

It seemed, at the time, like a “logical next step,” or like “graduation.” We’d done millions of dollars in revenue, and so building a team that could be together for productivity’s sake felt like a “must do.”

After all, who would take us seriously if we were just some dinky “out of your house” team. (Hint: the 300+ clients like HP, Arianna Huffington and Penguin Books and more that already did.)

Instead, what having an office did was nearly ruin a good thing. Each individual action seems reasonable. As an aggregate, you’ll get clobbered without truly understanding what’s happening.

Now? I’m back to working remotely — — and we will lap our competition.

Reason #1: Focused, Deep Work Is Way Harder In An Office

Our clients pay us to think, to work hard, and to take on complex technical challenges. We design beautiful work to make that happen. This requires focus and thought. That is our product.

In our office setup there are more distractions. We watch people come in and out of the office there are an exponential number of distractions.

When there are just eight people in the room, and, each of them uses the restroom each 90 minutes, that means there’s an interruption to focus every 5.6 minutes (considering that there’s always a return trip). Conversations between people add to this. So does lunch (mmm, that french onion soup smell).

Someone could be in “the groove” and choose to go to lunch because it would be impolite not to go.

In sales, it might be that you feel “on display,” when making calls and don’t want to have the rest of the team hear your pitch. I know I was immediately relieved — and sales went up — when I left the office.

When your job requires focus, focus. Harvard Business Review wrote an article about how the best workspaces support solitude.

Great work is rarely done by committee.

Reason #2: Financial Risk Is Underestimated

At the time, our rent was just 2.4% of our revenue. Seems reasonable, right? A rounding error, or an optimized merchant bank relationship wold cover it.

Except that it wasn’t just that.

When you have an office, you feel like you have to furnish it. And office furniture — good stuff that outsiders can see — is expensive. Even used it’s costly, think $1500/person in the office when you factor in a fridge, conference tables, and break rooms.

So our expenses:

Rent: $2,000 a month
Furniture: $16,000
TVs: (we had to have some) $2,000
Macbooks: $10,000
Insurance: $50 a month
Wifi: $160 a month
Other Utilities: $200 a month

These expenses add up quickly. It’s hard to say no to any of them, on the surface they are reasonable. But they eat away at your margins and make things harder on yourself.

These expenses ate into profit in a big way, and they kept beating down. Saying that you can’t back revenue down or strategically pivot away opens you up to the innovator’s dilemma.

Plus, when you’re spending money, it’s emotionally impossible to say no to the “sunk cost” fallacy. “Well, we’re paying for this office, and we might as well use it.”

Reason #3: You Dramatically Diminish Available Talent, Making Great Work Harder

Having an office made it really hard to do top quality work. Portland is hip and trendy. There are great designers here.

But there are more designers everywhere else than exist here. And, there was no “magic gain of efficiency” by being local. And of the folks that are local, few talented people are available at any given moment. The people that we’d have to pick from is low.

Alex Turnbull of Groove hinted at this challenge, but it is more substantial than you think.

Reason #4: Centralizing Introduces Unnecessary Friction

“If you judge me tonight, judge me by the songs I write, that’s who I am to you.”
-Dan Bern

We have another problem where we have to commute somewhere. When we moved we had ample parking. Just a few months later the Central East Industrial District was booming and parking was soaked up by the neighborhood. The commute and parking added unnecessary stress that was borne daily by all of us.

It was so bad coming on I-84 that I got an apartment close by so I could avoid the commute. I imagine that the rest of the team dreaded the commute and they’d have to battle through dread in order to get to the office, setting off a chain of emotional events that made it harder to be a top performer.

Personal friction was another part of it.

Salespeople are weird. Designers are weird. The weirds don’t overlap that well.

When weirds clash, it becomes a cultural problem. We want to respect the fact that we’re working hard, but nobody likes to see exactly how the sausage is made, or who makes the sausage. Salespeople come off like Dwight Schrüte. Designers come off as fragile flowers.

Putting them in a box made them evaluate one another on irrelevant things like personality quirks, appearance, mannerisms. Not just the work, and the work is the reason the team is together.

Reason #5: People Drift Towards Being Employees

This is a subset of the financial reasons. But having an office in many areas may compel you towards a different set of business relationships. Having employees is generally less flexible than having contractors. In borderline scenarios it’s often somewhat harder (legally) to claim someone was a contractor when they came into the office and did work on your machines. (Check with lawyers.)

A bias-towards-employees creates overhead where none was necessary. You want to do the right thing and support your people and bring them in — often earlier than is warranted.

A contractor-based system can allow you to scale and shrink at will. It’s more flexible and it’s a better situation for most people.

Reason #6: Quality of Life

Right now, I have a nice home office with my desk, and my things. I was up today writing this post at 5am. My wife left for her job a few minutes ago. In a few minutes, I’ll wake my kids up and make them breakfast. I’ll have 3 or so hours to work myself, then I’ll go to the gym.

That’s not possible — it’s not easy — when you’re working around others. The stiff peer pressure to “look busy” prevents you from doing things like taking time at the gym, reading books, or doing anything else. Even though, often, the best thing that you can do for your team is to develop yourself.

This is a good life. Making a contribution around the people that love you.

Conclusion: I’m Remote For Life.

I love the idea of being remote. I love the concept of working in my house and

We have to unwind some of the wounds we inflicted upon ourselves by going centralized. However, we’re not fighting the nature of this company.

Further Reeding:

Groove Blog

This post originally appeared on Simplifilm.
Remote by Jason Fried & David Heinemeier Hansson