The Present of Work: the overnight coming of age of remote work
Covid-19 has led to a mass forced adoption of remote working: c.100% of jobs suited for remote in the EU and US are currently (albeit temporarily) working from home. In just two months the adoption curve of remote work has accelerated 5–10 years, leading to a world in which every company will have to be remote(-ready), the least. This new paradigm opens up immense opportunities for tech solutions to reinvent the office experience.
I can still hear myself a Friday afternoon, a few months ago, discussing with a founder the round and the future of his business — I’m sure he remembers as well. He was eating steak (don’t ask, our encounters are always surreal, as you would expect from an exceptional outlier like him), I was making the case that you/your company might be able to grow-up very fast and go from being 5 years old to 10 quicker than anybody, but that you couldn’t just skip those years, that was not possible. Nobody could — no person, no company, no industry.
Well, it turns out I was wrong (and he was right): that rule does not apply in a world hit by Covid-19. Tell it to Zoom: the video call app, founded in 2011, has gone from 10 million active users at the end of 2019 to c. 200 million at the end of March 2020. It took Zoom 8 years to get to 10 million daily active users (DAUs) and two months to go from 10 million to 200 million DAUs (20x). To put things into perspective, Instagram took three years to go from 10 million monthly active users in 2011 to 200 million MAUs in 2013, and that was a hyper-growth story already (5x-2x-2x YoY), having been acquired by facebook in 2012.
Zoom growth story in the last few months, albeit obviously not free of glitches and challenges, is a good reflection of what is also happening to remote work, work-from-home specifically: in just two months the adoption curve of remote work has accelerated (literally skipped) years, irreversibly accelerating the arrival of , what once was, the future: a world in which every company will have to be remote(-ready), the least.
The first 20 years of remote work: internet gives birth to remote working and new technologies power a steady growth
In the past two decades, remote work (aka flexible/mobile work/WFH or telecommuting) was enabled and powered by:
1. Super fast communications and new technologies, more specifically internet, have played a key role making remote work possible: powered by a strong and fast internet, Wi-Fi and mobile devices have enabled work outside the office. New tech-enabled solutions (instant messaging, video call) have replaced in-person communication and enhanced collaboration and productivity, allowing many workers the possibility to carry out their tasks from anywhere and remain connected to their team. The power of technology as key driver of remote work will only get more and more powerful as internet connection gets faster and more reliable (5G).
2. Better access and retention of talent, especially as Millennial and GenZers dominate the workforce. For companies, hiring remote workers means access to more quantity, quality and diversity of talent, as it enables them to open untapped global pools of talent beyond their HQ city, and generally at a lower cost, especially for companies located in big expensive cities. Moreover, when it comes to not just attracting but also retaining talent, flexible working options seem to be a key decision factor for candidates/employees: 80% of workers would like to work remote, at least part of the time, 70% consider flexibility in work location a key factor when evaluating new career opportunities¹ and Millennials stay longer at jobs that offer flexible options². Why? Work-life balance, improved productivity and higher quality of life/lower cost³.
3. More competitiveness: (fully/partially) remote companies are more cost-efficient in talent but also in large fixed costs such as the office, which makes them more competitive vs. competitors. As an example, and forgive me for the rough calculations: two companies (#1 and #2) pay GBP500k/yr in rent (not that rare for Series A companies in London), #1 decides to set-up for flexible work and reduce office space need in half, freeing GBP250k and hiring 2 additional developers or sales resources, i.e. becoming, at least theoretically, more competitive than #2. We are seeing start-ups already making this sort of decisions.
4. A more sustainable planet: remote work favours the solutions to some of the key socio-econ challenges we face as a society in the next few decades, such sustainability of the planet — every mile a worker doesn’t drive improves the company’s environmental impact; and mobility and living conditions in mega cities — remote working favours a more distributed population as companies do not need to HQ in large cities to increase access to talent and, likewise, people do not need to concentrate in the big cities to access work.
The coming of age of remote work: Covid-19 leads to mass forced adoption of remote working
Adoption of remote work up until 2020 was underpinned by strong tech, job and sustainability trends though it remained steady but slow. It’s estimated that 30–50% of jobs in developed economies could potentially be done remotely —the typical job suited for telecommuting requires a college degree and pay salaries of +$50k, i.e. it’s in the upper 70th percentile of all jobs ⁴. But pre-Covid only c.3.9% of the (US) workforce worked remotely half time or more, with work-at-home growing 173% in the US from 2005–2018 ⁴. That’s 11% faster than the rest of the workforce (15%), but far from exponential growth of digital phenomena.
Truth is that the state of technology solutions was good enough to enable the possibility of remote work but not to drive the required behavioural changes for mass adoption (e.g. the video call experience was far from ideal, the promise of technologies like VR was far from becoming a reality, etc.). Up until Covid-19 hit us and there was no choice anymore. The outbreak of Covid-19 has led to a mass forced adoption of remote working: close to 100% of the jobs that could potentially be done remotely in EU and US are currently (albeit temporarily) fully remote, working from home.
The anti-trend: remote doesn’t work
The long-term impact of Covid-19 on the adoption of remote work, after weeks of mass adoption, is yet to be seen. Some voices anticipate a backlash, claiming that working from home will have made it ever more obvious that remote work doesn’t work, highlighting its traditional challenges: communication, team/culture building and productivity.
1.Communication is, according to The Remote Work Report 2019, the number one challenge for fully remote work. Indeed, communication is not the same over video than face-to-face: it is scientifically proven that the more eye contact people have during a conversation, the more in sync they are with one another. But the current state of video calls, in which you stare at a tiny dot that is the camera in your computer/phone to make it appear that you’re looking someone in the eye, cannot replicate that experience. And Zoom´s attendee attention tracking tool flagging to your boss that you’ve been on another tab for more than 30 seconds doesn’t either. But technology (and privacy rules) will get there. And our perception will get there, too.
2. Team/culture building in remote environments is also being questioned. Loneliness and isolation is actually the third biggest concern for remote workers⁵. As the social creatures we are, research has proven that people eventually miss the interactions around the office — they make them feel they are connected and belong to something bigger. Hence, it could be argued that a strong community culture could be more difficult to build over video. However, companies with strong culture such as like GitLab, Sketch, Zapier or GitHub are mainly remote. And again, technology will get there. Plus, the office doesn’t necessarily need to disappear, it will just be reinvented in form, size and user case.
3. Productivity of remote workers vs. those in the office has also been consistently questioned. But data speaks loud and clear: remote workers are more productive — 85% of over 15k global businesses confirmed that greater location flexibility lead to an increase in productivity and companies with flexible working options can claim 41% lower absenteeism, 40% fewer quality defects, and 21% higher profitability⁶. In terms of time, a Londoner spends 40 working days/year commuting to work (I know, 1h 20min/day!), i.e. if he/she (or me) would work from home half of the days…you do the math⁷.
But I agree, those challenges are real. I have been working remote for the last three years as we are a distributed team with offices in London, Paris and Madrid. We know these challenges well — I have felt the pain of a disaster Zoom call during an IC where I was presenting a deal or the inability to actually hug a team member after he got engaged (and we had helped him choose the ring!). Even the feeling of going from desk to bed, day after day. But we also know, because we have seen it, that these challenges can be overcome. Obviously, it’s easier and quicker for a team like ours — small and young, born remote and in a forward-looking industry— than it will be for other type of organisations/industries. But these past few weeks have proven that it can be done.
The future: in the post-Covid-19 world, every company will be remote (-ready)
In my (VC) view, the forced mass adoption of remote work we are experiencing today will have a lasting impact in how/where we work: it will make it obvious that remote work (and specifically work-from-home) is possible, not perfect but possible, and that the wins outweigh the losses, at human/employee, company and planet level, accelerating adoption. But it won’t translate into the office fully disappearing either.
Soon (if not already), workers and companies will start to reevaluate the office as we’ve known it — workers will have built the habit of not commuting (telecommuting) and meeting over video calls and might start rethinking how (and even why) they go to the office every day; and companies might realize that productivity is up rather than down and that they could potentially access more and better talent and have big savings if some (or all) their workforce went remote. Already pre-Covid-19 it was estimated that by 2030 there would be c.$4.5 trillion in savings per year in the US alone as a direct result of remote working reducing fixed overheads (office as driver of 51% of the savings), improved productivity and increasing agility⁴.
And yes, communication might not be perfect but we are getting used to it and humans are quick in building habits. After weeks locked down at home, video is becoming the new normal, for work, for family and friends — it’s not just substituting sitting across each other on a board room but even team drinks. Even investors will start investing over Zoom — I joined Samaipata after a process fully run on Zoom so I have no doubt about this one, we all will (much sooner than later) figure out the way to assess founders and build trust over video. Wait and see.
Last but not least, these few weeks of 100% penetration of work- from-home in developed economies are already making it ever more obvious how remote work contributes to building a more sustainable planet: work-from-home is responsible for a significant part of Barcelona’s 83% decrease in pollution in the past weeks. Same can be said about other major cities like London or Madrid.
And whether any of the above ends up being true or not, what is obvious to me is that companies will not want to take the risk of being hit unprepared by the next Covid-X. The cost has just been too high the first time around.
I believe that regardless of each company’s policy around flexible working options, what will for sure happen is that in the post-Covid-19 world, every company will have to be remote-ready, i.e. to the extent possible given the industry and the organization, every company will need to be prepared for workers to be able to work remotely from home. And that, by itself, represents a huge opportunity for new start-ups, as we will need (a lot) of tech to make it possible.
The opportunity: technology to make the world (working and communicating) more human
A world in which every company is remote(-ready) will need much more (and much better) technology solutions for the digital workspace, all the way from communication, collaboration and productivity tools to the back-office, i.e. managing the digital workspace and the remote workforce, and cybersecurity. New tech solutions for a new paradigm.
Some interesting areas I have been exploring beyond the obvious ones, mainly borrowed from conversations with founders and by no means exhaustive: decentralizing the office (CAPEX as a service for working spaces at home, co-working spaces becoming digital marketplaces that provide access to membership perks); HR, admin & payroll tools for remote workers, especially cross-border; and the all in-one: a one-stop shop platform for remote working, managing everything from the CAPEX, the tech-stack, digital and physical on-boarding, training, and admin/payroll of remote workers.
In all these and any other spaces, we will be looking for companies that use tech to reinvent, not just replicate, the offline office and human experience. In somebody’s words⁸: The thing that has to get solved on the tech side is that the tech needs to kind of disappear so that you believe that you are in the room. Tech will humanize the digital workspace and, after all, at Samaipata we invest in tech solutions that make the world a bit more human. So, ping me if you are a founder working on this space and #letsdothis!
Samaipata is a pan-European VC fund investing in digital platforms and marketplaces at pre-Series A, from our offices in Paris, Madrid and London. If you are a founder launching a platform, get in touch!
Sources:
[1] State of Remote Work 2019, Owl Labs
[2] The Deloitte Millennial Survey Report 2018, Deloitte
[3] Global Remote Working Data & Statistics (Q1 2020), Merchant Savvy
[4] Latest Work-at-home/Telecommuting/Mobile work/Remote work Statistics, Global Workplace Analytics, 2020
[5] State of Remote Work, Buffer, 2019
[6] Is Working Remotely Effective? Gallup Research Says Yes; Gallup, Jan 2020
[7] TUC analysis of figures from the ONS Labour Force Survey, using the latest figures for 2018; Nov 2019.
[8] The Coronavirus Is Making Us See That It’s Hard to Make Remote Work Actually Work, Time, March 2020
[9] The Rise of Remote Working, Chris Herd, October 2018
[10] How coronavirus stalled climate change momentum, Financial Times, April 2020
