The Remote Work C̶h̶a̶l̶l̶e̶n̶g̶e Opportunity as a Foreign Founder in Silicon Valley
Being a European founder in San Francisco can be incredibly challenging but also an advantage — especially when it comes to manage, motivate, and retain a remote team.
When you plan to build your startup in San Francisco, it’s tough to get your whole team in the same room. You need to face different types of challenges at the very beginning, but one of the main issues you need to solve is finding enough talented engineers to help you build the product. San Francisco and Silicon Valley, in general, are stuck with talents coming from all over the world to be part of the next big thing. Usually, though, they all have ten more new job offerings in their email every single week, and so it’s improbable that your job offer is in the founder’s shortlist. Things can be a lot worse if you are a foreign startup founder. The idea and the founding team might be great, but if your product traction isn’t astonishing, you will have a hard time to attract interest and hire locally.
The opportunity
👓 Observing startups in Silicon Valley in the last three years — when we started LombardStreet Ventures — , I can honestly say that the remote work approach is the smartest way to build your company. Unless you’re one of the few to attract capital and talent thanks to the results achieved with previous initiatives, remote work is the best opportunity you have to get the right people aboard.
I’ve met many founders who approached San Francisco’s local community, all seeking the first engineer to hire. Most of them moved to a remote team strategy eventually, but not before they wasted $150,000 trying to hire a mediocre software engineer in San Francisco. The city is full of high-skilled developers, but with no local track record, trust, or network, the only people you might hire are the ones with a lot less talent and determination than you need to take off your company. Also, hiring someone in Silicon Valley doesn’t mean you’ll be able to keep them in your company for more than six months. There are always exceptions, of course, but typically people get other job offers very quickly.
In summary, trying to be the exception in a world where talented people quickly climb the corporate ladder can be extremely expensive to prove otherwise. On the other hand, coming from outside the USA, you have an excellent opportunity to attract best-of-breed engineers in your own country and hire them to work on your new startup. You could take advantage of your university network, post jobs to local developer groups, and use your team’s connections to find people you wouldn’t be able to attract in Silicon Valley.
One important thing you need to remember is that if you want to build a startup in Silicon Valley, you should set up your headquarters in the Valley. Then hire a good immigration lawyer and start working with him on your work visa.
This model based on a dual-company is often known as the “Israeli model” — I will talk more about that later.
The challenge
Obviously, managing a remote team doesn’t make your life any easier, and you should prepare yourself to face many different challenges.
The first challenge you have to face is how to make people who work remotely feel the same level of urgency and commitment that you perceive in the Valley. Building a company is always a marathon, but when you go looking for venture-capital money, they expect you to have a natural obsession with creating a big company fast. Time is a critical variable for the business of venture-backed companies, and the Bay Area is no exception. You have to get tangible results even quicker. If you don’t drink the Silicon Valley Kool-aid every single day, it’s not easy for you to understand what I’m talking about here. Building a high-tech company in the Bay Area ten years ago was an entirely different matter. Today you need to prove traction soon, everything gets measured, and your next round can be deeply tied to the growth rate of your company.
As an international founder, you have a secret weapon, though: your awesome and cost effective remote team. Their burn rate will be considerably lower than the one that you have in San Francisco. Very often one third, but sometimes one fifth than the Bay Area standard salaries. Delocalizing part of the team in your country allows your business to last longer, and that buys you more time. That extra time you get is not just for building the product, but also for laying the foundation of a solid corporate culture. This way, everyone will feel the same level of urgency and perfection that you perceive while living in San Francisco. Setting up a remote team doesn’t mean to let everyone manage her workday without any rule — like, I want to ride my bicycle every day for two hours after lunch. Managing a team spread between two continents requires a lot more discipline than having all your people in the same room.
For this reason, it’s important to define a set of rules that everyone needs to follow. They aren’t necessarily strict rules but for sure clear ones. For example, everyone has to be online on a specific time window. That typically means for you in the Valley to wake up very early in the morning and for them to work until late in the evening — if they live in Europe. Three to four hours of overlap should be enough to get everyone on the same page.
The second important thing is to be very clear about the product deadlines. Meet a deadline is harder if you don’t have your engineering team altogether. So, don’t think that everyone knows how to manage their time or what activities need to be done before the product can be released. Be very clear about how you want to organize things. A small startup at the very beginning is typically a flat organization. However, when you include remote workers into the equation, you need to quickly learn how to delegate remote team coordination to someone who is in the same time zone as your people. Otherwise, you risk chaos or at least performance below expectations
“With great power comes great responsibility.” and you better be a little bit paranoid about how you want things to get done 😺. In the long run, this strategy will pay off.
I’ve seen too many promising startups miss the momentum for the lack of the right people at the right time, and a remote team can be your best ally.
Founders should get used to this model because top-tier VCs are already. We are a small rising star in the VC business, but we share the same approach. We created LombardStreet Ventures for this reason:
To invest in distributed teams with business and marketing — and founders eventually — in the Valley.
Marc Andreessen, founder at Netscape, LoudCloud and Andreessen Horowitz — also known as a16z — , interviewed by Stripe said:
Although we have occasionally invested in particularly special startups based outside the US, such as Transferwise and Improbable, we generally invest either in startups based entirely in the US, or startups that use what might be called the “Israeli model” of building R&D in their home country but building SG&A (sales, marketing, finance, legal, etc.) in the US.
The “Israeli model” or “dual-company model” is very well known in Silicon Valley, and today it’s widely adopted:
As suggested by the name, some of the best Israeli startups have been executing this model for the last 20–30 years; more recently, we [at a16z] are seeing founders from many other countries (Canada, China, Brazil, Argentina, Pakistan, and more) pursue the same model.
A final thought
Building a successful company in San Francisco using the “Israeli model” is not a simple task. Finding startups sharing their experience in their early days is even harder. I don’t mean companies now successful and that once — years ago — were a small distributed team between Silicon Valley and Europe. It would be a lot more interesting if someone in the middle of this journey could share his or her experience with all of us.
If you have any lessons learned or are in the middle of managing such a startup, give us a clap 👏, share this post ✉️ to friends and help us with your comments. Share your experience with us.
I would be happy to chat with you on this topic again!
