remote work
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Virtual HQs race to win over a remote-work-fatigued market
In retrospect, 2019 feels like the working world’s last dance with spontaneity. The pre-pandemic past is rife with conferences, running into co-workers and post-work happy hours. Now, as companies such as Microsoft and Twitter declare remote work as the future, the very existence of physical offices is unclear for the long-term.
Yet, to a growing number of entrepreneurs in the Valley, when one physical door closes, a virtual one opens. With the goal of making remote work more spontaneous, there are dozens of new startups working to create virtual HQs for distributed teams. The three that have risen to the top include Branch, built by Gen Z gamers; Gather, created by engineers building a gamified Zoom; and Huddle, which is still in stealth.
The platforms are all racing to prove that the world is ready to be a part of virtual workspaces. By drawing on multiplayer gaming culture, the startups are using spatial technology, animations and productivity tools to create a metaverse dedicated to work.
The biggest challenge ahead? The startups need to convince venture capitalists and users alike that they’re more than Sims for Enterprise or an always-on Zoom call. The potential success could signal how the future of work will blend gaming and socialization for distributed teams.
Succulents and spatial technology
Companies within the virtual HQ world sit on a spectrum. On one end, there are the productivity companies, and on the other end, there are the video game companies. In the middle sits a mix between work and play, which is where Branch hopes to live.
There are more than 500 companies on Branch’s waitlist, and of current users, the retention has been 60% after a month of using the platform. So far, it has raised $1.5 million from investors including Homebrew, Naval Ravikant, Sahil Lavingia and Cindy Bi.
Walk through Branch’s virtual HQ and there are all the normal details you’d find in an office on Market Street: There are meeting rooms, lunch tables, a literal watercooler and, yes, succulents on your co-worker’s desk. Most employees log on for 12 hours, and for Election Day, they all had a watch party with a projected live stream in one area of the office.
The founder tells me that he’s hired people — and fired people — all in the virtual offices. Doors, he says, make a big difference.
The platform wasn’t built as a pandemic phenomenon, but in fact, was the result of years of experimentation by the founders, Dayton Mills and Kai Micah Mills. Both founders, since the age of 15, have spent time building Minecraft servers to sell to gamers, netting each thousands of dollars a month. In fact, Kai dropped out of high school to run Minecraft servers full-time, while Dayton tried at 13 to create his own game studio, even hiring an artist to do the illustrations. The game studio failed due to the fact that he was a “kid, 13, and had no money.”
“I spent the majority of my time online playing games with people. So my whole day was playing video games and having people to talk to in the background because I was on constant calls with people,” co-founder Dayton Mills said. “So for me, it’s not hard at all to use it. The question is can I get other people to think the same way?”
For now, Dayton Mills remains confident that his team’s platform will do well. After all, work is a non-negotiable place that you have to show up every day. And why not make that a little more fun?
“You can build a space where everyone comes to work,” he said. “Then after that, you can start building the spaces where they go after work. And it kind of spirals from there.”
Branch, like other virtual HQ platforms, is forced into an interesting spot of being both relevant enough to be used, but passive enough of an app to not feel like a burden. Dayton Mills says that this dynamic has made the team add features like no mandatory video or audio, and a talking icon per user to give the appearance of live interaction. The focus is to keep it casual so people can actually be online for six hours a day.
“People use Slack to work remotely but you go into a physical office and people are still using Slack, he said. The co-founder hopes the same for Branch, and has started measuring how many times people talk to each other in a given day. He says there are hundreds of chats per day, even if some are only for a few seconds.
The key technology that Branch and others are using to create spontaneity is spatial gaming infrastructure. At its core, the technology allows users to only hear people within their nearby proximity, and get quieter as they “walk” away. It gives the feeling of a hallway bump-in.
Dayton Mills thinks that the winning company in this crowded space is the one that can create a space that cultivates and sparks spontaneity.
“You can’t create the serendipity itself directly,” he said. “So create that environment.”
Gather, likely the largest virtual HQ platform out there, has embedded features to do what Mills is suggesting, such as “shoulder taps” to prompt a co-worker to chat, or pool tables where employees can circle around and start a virtual game of pool. The office tour included seeing a corgi on the desk, jack-o-lanterns and this reporter even added some floor plants to the set-up.
Gather’s main floor.
“You don’t need to worry about constantly worrying about if you’re being seen or not, but you will hear anyone who tries to come and talk to you,” said Phillip Wang, the founder of Gather.
The office design includes whiteboards and floating Google Docs to promote announcements and conversations.
Gather has been in the works for more than 18 months, since Wang and his friends graduated college. The team first tried to create custom wearables that would show you which of your friends were able to talk so you can tap into a conversation. When that didn’t work, they pivoted into apps, VR and full-body robotics. Then COVID-19 hit, and they saw an opening in the workplace.
Trillions, billions or none of the above?
Gather raised some money from angel investors, but has largely stayed away from institutional investors due to the potential of their cap table “biasing” the growth and direction of the company.
“You could easily end up in situations where the only options are ones you’re not happy with,” Wang said, of bringing VCs on at this stage. “We always want the way we make money to be aligned and incentivized to do good for our users.”
Angel investor Josh Elman tells me that many VCs are interested in the product, given traction and team, but also because virtual HQs have the potential to be more than just, well, virtual HQs. While offices are one space that the technology can occupy, the same base can be applied to schools, events, weddings and more.
To show potential, Elman nodded at Hopin, an online events platform that recently raised $125 million at a $2.1 billion valuation. It seems that most VCs agree there will be a number of winners in the events space, but it just comes down to the stickiness of the platform.
With the right value proposition, it’s not hard for people to understand multiplayer online gaming. For example, Epic Games’ Fortnite threw a psychedelic Travis Scott concert and more than 12.3 million people watched.
Thus, people are smart enough to understand gaming — but what about wanting to do it every single day with their colleagues, sans music and flashing lights? The total addressable market for professional, social gaming is murky. What if these platforms are a little bit more palatable as healthy businesses, instead of betting that the upstarts are a venture-backable business that could one day become a $100 billion business?
Image Credits: Bryce Durbin
Huddle’s Florent Crivello disagrees. He thinks the market opportunity for his company, an in-stealth remote HQ, is in the trillions because it has the potential to disrupt real estate, transportation and, in a macro sense, urban cities.
“I tell my former colleagues at Uber that I’m still working on transportation,” he said. “It’s just that the future of transportation is no transportation.”
Huddle has been in private beta for six months and is used by teams at Apple and Uber. There have been tens of thousands of hours of meeting on the platform, and Crivello says that some customers have stopped using Slack or Zoom altogether.
“The mistake they’re making at Slack is that there’s a difference between seeing a list of names on the screen and clicking on a name. And there’s a difference between seeing someone in the office and saying hi,” he said. “I think there’s something very human about the latter.”
Sahil Lavingia, the founder of Gumroad, got rid of Gumroad’s office in 2016, and says that they’re never going back.
“Offices are just too expensive and not necessary 40 hours a week,” he said. “I don’t think physical offices will go away, but they’ll be vastly diminished now that people know work can happen quite effectively, remotely. It’s also much cheaper.” Lavingia invested in Branch’s seed round.
Megan Zengerle, a partner at Sweat Equity who previously had a career in HR, said that companies considering virtual HQs should think about how long-term the solution is.
“Is that truly the culture you want to build for the company? Is that something that will serve the company long term? Is it logical sense to set up that way?” Zengerle said. “Culture is living and breathing, it’s not a static thing that you set and is done.”
Zengerle thinks that virtual HQs depend largely on the scope and product of the team. Most definitely, she does not think the solution is one size fits all.
“There’re a lot of playbooks coming out of the pandemic,” she said. “But the way you vary happens across each employee in the organization, much less organization by organization.”
These are the hurdles that have limited startups in the past, including 2011 TechCrunch Disrupt winner Shaker, from attracting a large customer base.
Before the pandemic, the world was not culturally ready for widespread remote work. Then, COVID-19 forced offices closed and employees adapted. These startups are betting that with the mass adaptation will come another cultural shift, one that could bring the metaverse into mainstream.
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Dropbox shifts business product focus to remote work with Spaces update
In a September interview at TechCrunch Disrupt, Dropbox co-founder and CEO Drew Houston talked about how the pandemic had forced the company to rethink what work means, and how his company is shifting with the new requirements of a work-from-home world. Today, the company announced broad changes to Dropbox Spaces, the product introduced last year, to make it a collaboration and project management tool designed with these new requirements in mind.
Dropbox president Timothy Young says that the company has always been about making it easy to access files wherever you happen to be and whatever device you happen to be on, whether that was in a consumer or business context. As the company has built out its business products over the last several years, that involved sharing content internally or externally. Today’s announcement is about helping teams plan and execute around the content you create with a strong project focus.
“Now what we’re basically trying to do is really help distributed teams stay organized, collaborate together and keep moving along, but also do so in a really secure way and support IT, administrators and companies with some features around that as well, while staying true to Dropbox principles,” Young said.
This involves updating Spaces to be a full-fledged project management tool designed with a distributed workforce in mind. Spaces connects to other tools like your calendar, people directory, project management software — and, of course, files. You can create a project, add people and files, then set up a timeline and assign and track tasks, In addition, you can access meetings directly from Spaces and communicate with team members, who can be inside or outside the company.
Houston suggested in his September interview a product like this could be coming when he said:
Back in March we started thinking about this, and how [the rapid shift to distributed work] just kind of happened. It wasn’t really designed. What if you did design it? How would you design this experience to be really great? And so starting in March we reoriented our whole product road map around distributed work.
Along these same lines, Young says the company itself plans to continue to be a remote-first company even after the pandemic ends, and will continue to build tools to make it easier to collaborate and share information with that personal experience in mind.
Today’s announcement is a step in that direction. Dropbox Spaces has been in private beta and should be available at the beginning of next year.
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What we’ve learned about working from home 7 months into the pandemic
When large parts of the world were shutting down in March, we really didn’t know how we would move massive numbers of employees used to working in the office to work from home.
In early March, I wrote a piece on how to prepare for such an eventuality, speaking to several experts who had a background in the software and other tooling that would be involved. But the shift involved so much more than the mechanics of working at home. We were making this transition during a pandemic that was forcing us to deal with a much broader set of issues in our lives.
Yet here we are seven months later, and surely we must have learned some lessons along the way about working from home effectively, but what do these lessons look like and how can we make the most of this working approach for however long this pandemic lasts?
I spoke to Karen Mangia, vice president of customer and market insights at Salesforce and author of the book, Working from Home, Making the New Normal Work for You, to get her perspective on what working from home looks like as we enter our eighth month and what we’ve learned along the way.
Staying productive
As employees moved home in March, managers had to wonder how productive employees would be without being in the office. While many companies had flexible approaches to work, this usually involved some small percentage of employees working from home, not the entire workforce, and that presented challenges to management used to judging employee performance based for the most part on being in the building during the work day.
One of the things that we looked at in March was putting the correct tools in place to enable communication even when we weren’t together. Mangia says that those tools can help close what she calls the trust gap.
“Leaders want to know that their employees are working on what’s expected and delivering outcomes. Employees want to make sure their managers know how hard they’re working and that they’re getting things done. And the technology and tools I think help us solve for that trust gap in the middle,” she explained.
She believes the biggest thing that individuals can do at the moment is to simply reassess and look for small ways to improve your work life because we are probably not going to be returning to the office anytime soon. “I think what we’re discovering is the things that we can put in place to improve the quality of our own experiences as employees, as learners and as leaders can be very simple adjustments. This does not have to be a five year, five phase, $5 million roadmap kind of a situation. Simple adjustments matter,” she said, adding that could be measures as basic as purchasing a comfortable chair because the one you’ve been using at the dining room table is hurting your back.
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Here’s how fast a few dozen startups grew in Q3 2020
Earlier this week I asked startups to share their Q3 growth metrics and whether they were performing ahead or behind of their yearly goals.
Lots of companies responded. More than I could have anticipated, frankly. Instead of merely giving me a few data points to learn from, The Exchange wound up collecting sheafs of interesting data from upstart companies with big Q3 performance.
The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.
Naturally, the startups that reached out were the companies doing the best. I did not receive a single reply that described no growth, though a handful of respondents noted that they were behind in their plans.
Regardless, the data set that came together felt worthy of sharing for its specificity and breadth — and so other startup founders can learn from how some of their peer group are performing. (Kidding.)
Let’s get into the data, which has been segmented into buckets covering fintech, software and SaaS, startups focused on developers or security and a final group that includes D2C and fertility startups, among others.
Q3 performance
Obviously, some of the following startups could land in several different groups. Don’t worry about it! The categories are relaxed. We’re here to have fun, not split hairs!
Fintech
- Numerated: According to Numerated CEO Dan O’Malley, his startup that helps companies more quickly access banking products had a big Q3. “Revenue for the first three quarters of 2020 is 11X our origination 2020 plan, and 18X versus the same period in 2019,” he said in an email. What’s driving growth? Bank digitization, O’Malley says, which has “been forced to happen rapidly and dramatically” in 2020.
- BlueVine: BlueVine does banking services for SMBs; think things like checking accounts, loans and payments. The company is having a big year, sharing with TechCrunch via email that it has expanded its customer base “by 660% from Q1 2020 to” this week. That’s not a revenue metric, and it’s not Q3-specific, but as both Numerated and BlueVine cited the PPP program as a growth driver, it felt worthy of inclusion.
- Harvest Platform: A consumer-focused fintech, Harvest helps folks recover fees, track their net worth and bank. In an email, Harvest said it “grew well over 1000%+” in the third quarter and is “ahead of its 2020 plan” thanks to more folks signing up for its service and what a representative described as “economic tailwinds.” The savings and investing boom continues, it appears.
Software/SaaS
- Uniphore: Uniphore provides AI-based conversational software products to other companies used for chatting to customers and security purposes. According to Uniphore CEO Umesh Sachdev, the company grew “320% [year-over-year] in our Q2 FY21 (July-sept 2020),” or a period that matches the calendar Q3 2020. Per the executive, that result was “on par with [its] plan.” Given that growth rate, is Uniphore a seed-stage upstart? Er, no, it raised a $51 million Series C in 2019. That makes its growth metrics rather impressive as its implied revenue base from which it grew so quickly this year is larger than we’d expect from younger companies.
- Text Request: An SMS service for SMBs, Text Request grew loads in Q3, telling TechCrunch that it “billed 6x more than we did in 2019’s Q3,” far ahead of its target for doubling billings. A company director said that while “customer acquisition was roughly on par with expectations,” the value of those customers greatly expanded. I dug into the numbers and was told that the 6x figure is for total dollars billed in Q3 2020 inclusive of recurring and non-recurring incomes. For just the company’s recurring software product, growth was a healthy 56% in Q3.
- Notarize: Digital notarization startup Notarize — Boston-based, which most recently raised a $35 million Series C — is way ahead of where it expected to be, with a VP at the company telling TechCrunch that during “the first week of lockdowns, Notarize’s sales team got 3,000+ inquiries,” which it managed to turn into revenues. The same person added that the startup is “probably 5x ahead of [its] original 2020 plan,” with the substance measured being annual recurring revenue, or ARR. We’d love some hard numbers as well, but that growth pace is spicy. (Notarize also announced it grew 400% from March to July, earlier this year.)
- BurnRate.io: Acceleprise-backed Burnrate.io hasn’t raised a lot of money, but that hasn’t stopped it from growing quickly. According to co-founder and CEO Robert McLaws, BurnRate “started selling in Q4 of last year” so it did not have a pure Q3 2019 versus Q3 2020 metric to share. But the company managed to grow 3.3x from Q4 2019 to Q3 2020 per the executive, which is still great. BurnRate provides software that helps startups plan and forecast, with the company telling TechCrunch with yearly planning season coming up, it expects sales to keep growing.
- Gravy Analytics: Location data as a service! That’s what Gravy Analytics appears to do, and apparently it’s been a good run thus far in 2020. The company told TechCrunch that it has seen sales rise 80% year-to-date over 2019. This is a bit outside our Q3 scope as it’s more 2020 data, but we can be generous and still include it.
- ChartHop: TechCrunch covered ChartHop earlier this year when it raised $5 million in a round led by Andreessen Horowitz. A number of other investors took part, including Cowboy Ventures and Flybridge Capital. Per our coverage, ChartHop is a “new type of HR software that brings all the different people data together in one place.” The model is working well, with the startup reporting that since its February seed round — that $5 million event — it has grown 10x. The company recently raised a Series A. Per a rep via email, ChartHop is “on-target” for its pre-pandemic business plan, but “far ahead” of what it expected at the start of the pandemic.
- Credo: Credo is a marketplace for digital marketing talent. It’s actually a company I’ve known for a long-time, thanks to founder John Doherty. According to Doherty, Credo has “grown revenue 50% since June, while only minimally increasing burn.” Very good.
- Canva: Breaking my own rules about only including financial data, I’m including Canva because it sent over strong product data that implies strong revenue growth. Per the company, Canva’s online design service has seen “increased growth over both Q2 and Q3, with an increase of 10 million users in Q3 alone (up from 30 million users in June).” Thirty-three percent user growth, from 30 to 40 million, is impressive. And, the company added that it saw more team-based usage since the start of the pandemic, which we presume implies the buying of more expensive, group subscriptions. Next time real revenue, please, but this was still interesting.
Developer/Security
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Startup founders set up hacker homes to recreate Silicon Valley synergy
In Y Combinator’s early days, founders would move to Palo Alto, split a two-bedroom with five others to save money and trade notes around the clock with their new, like-minded roommates.
Now, as remote work continues and the pandemic persists, scores of entrepreneurs are working from home around the world. Y Combinator isn’t requiring its recent cohorts to relocate and collaboration is a screen-to-screen affair.
Now that they can work from literally anywhere, many entrepreneurs are forming homes with other founders. Hacker homes, the newest iteration of remote work adaption, feels like a nostalgic attempt to recreate some of the synergies COVID-19 wiped out. Generally speaking, it’s a nod to the digital nomad lifestyle, but in some cases, hacker homes feel closer to Hype House, a TikTok mansion laden with sponsored indulgence and wealth.
For Greg Isenberg, a growth advisor to TikTok and former head of strategy at WeWork, entrepreneur homes are a signal of what the foreseeable future of building could look like.
“The type of vibe you used to get from Y Combinator just doesn’t exist anymore,” Isenberg said, as these houses could recreate some of the scrappiness and like-mindedness that defined the incubator’s early days.
While some see founder communes as vehicles for creating a more level playing field, critics say the model perpetuates Silicon Valley cultural constructs that favor white men.
In other words, sometimes there’s a cost to after-work happy hours making a comeback.
Product Hunt, and then TikTok
Michael Houck, a former product manager at Airbnb and Uber, rented a home in Tulum, Mexico in May 2020. He put $21,000 of non-refundable money on his credit card and invited friends and people he met on the internet before hopping on a plane. Anyone who came had to be okay with a few rules: you must pay rent, launch projects and you have to be okay with building your company in public.
In all, 18 entrepreneurs, including Houck, formed The Launch House. Residents include former startup fellowship participants from On Deck, product managers and solo entrepreneurs. On the plane ride over, house founder Brett Goldstein launched its first tool.
Habitants of the Launch House use the pool for recreation and brainstorm sessions, called “pool-storms.” Image Credits: The Launch House
“How do you actually launch a consumer product? You need wide reach, influence, community and media properties all together,” Goldstein said. “I wouldn’t say we’re the next Y Combinator, but the next YC would look something like that.”
In just a few weeks, The Launch House has produced nine products, including a discovery platform for the best OnlyFans accounts, an anonymous Twitter bot that sends positive comments and tools that enhance newsletter and email reading experiences.
Launch House members described a strong focus on inclusion when populating future homes and just opened up the application process for Launch House 2. One way the house is trying to give access to other people is by open-sourcing information and projects that residents build together.
The website has a Launch Library where builders can submit their email addresses to access resources on how to build anything from a podcast to a clothing brand to a community.
“There’s this sort of veil of mystique that surrounds a lot of entrepreneurs and founders,” Goldstein said. “The curtain has been lifted, and now you can get a social media perspective, and inside look at what it takes to start and launch a company.”
Now, more than 1,500 people are on the Launch House waitlist. Multiple investors have approached the group to sponsor internal and external events and some companies have even asked for the right to do product placements.
The concept has surely brought in an audience, and copycats: an unaffiliated group called The Rocketship House posted a trailer on Twitter in October:
Welcome to
. pic.twitter.com/tnp9MQ03V7
—
When reached via e-mail, organizers of Rocketship House declined to answer specific questions about the launch, or as they put it, “blast off.” The group confirmed that it is funded by a few unnamed large investors based in Beverly Hills, and includes a mix of marketers and influencers that invest in social media. It is currently accepting applications, drawing itself as similar to a TikTok mansion.
“Similar to Sway House [a residence for TikTok personalities], we will be making fun and dramatic dope bro content, centered around launching startups. We all live exciting lives, and there’s plenty of drama, so we’re excited to showcase that,” the e-mail from Rocketship House read.
Not all entrepreneur homes are following suit in terms of strategy, for more reasons than one.
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Tech must radically rethink how it treats independent contractors
Adam Jackson is the CEO of Braintrust, the first user-controlled talent network that connects organizations with world-class tech talent. He also co-founded telemedicine company Doctor On Demand and blockchain-focused digital asset management company Cambrian Asset Management.
Despite a surging stock market and many major tech players having record quarters, we’re still seeing layoffs throughout tech and the rest of corporate America. Salesforce recorded a huge quarter, passing $5 billion in revenue, only to lay off around 1000 people. LinkedIn is laying off 960 people one day after reporting a 10% increase in revenue.
These layoffs may seem like a contraction in size for these huge enterprises, but it’s actually the beginning of something I call The Great Unbundling of Corporate America. They still need to grow, they still need to innovate, they still need to get work done and they’re not simply canceling projects and giving up on contracts.
Just as COVID-19 has accelerated the move to remote work, our current crisis has accelerated the trend toward hiring independent contractors. Back in 2019 a New York Times report found that Google had a shadow workforce of 121,000 temporary workers and contractors, overshadowing their 102,000 full-timers. ZipRecruiter reported in 2018 that tech, along with its record employment growth, was showing an increasing share of listings for independent contractors.
A study from the Bureau of Labor Statistics found that between 6.9% and 9.6% of all workers are now independent contractors, and according to Upwork, that may be as high as 35%. Mark my words — companies are using this time as an opportunity to swing the pendulum toward independent contractors and trimming the fat, justifying it with a vague gesture toward “an unprecedented time.”
That’s why, in my opinion, you’re seeing the NASDAQ hitting record highs despite everyone’s turmoil — depressingly, investors can see that large companies are tightening up and cleaning up waste, while finding an affordable workforce at will. As they have unbundled themselves from our physical offices, large enterprises are going to unbundle themselves from having to have a set number of employees.
When Square allowed its entire workforce to work remotely permanently. It wasn’t just because they wanted them to feel more creative and productive, but was likely a move away from having quite as much expensive, needless office space.
Similarly, if there is work that a full-time employee does that could be done by a flexible, independent contractor, why not make that change too? And it’ll be a lot easier to make without as many people at the office.
The argument I’m making is not anti-contractor, though.
I can’t think of any point in history where it’s been better to create a freelance business — the startup costs are significantly lower, and as companies move toward remote work, you can theoretically take business nationally (or internationally) like never before. Companies’ moves toward replacing W-2 workers with contractors is an opportunity for people to create their own miniature freelance empires, unbundling themselves from corporate America’s required hours, and potentially creating a way to weather future storms by taking away any single company’s leverage on their income.
The rush to remote work is also likely to push more workers into the freelance economy too. By having to create a remote office, with a remote presence in meetings and having to manage and organize our days, the average worker has all but adjusted to the life of a freelancer.
Where some might have gone to an office and had things simply happen to them, the remote world requires an attention to your calendar and active outreach to colleagues that, well, models how one might run a freelance business. Those with core skillsets that can be marketed and sold to multiple clients should be thinking about whether being a wage slave is necessary anymore, and with good reason.
That said — corporate America, and especially tech, has to treat this essential workforce with a great deal more empathy and respect than they have thus far.
Uber and Lyft were ordered to treat drivers as employees in part due to the fact that they never treated their contractors like parts of the company. Other than the obvious lack of benefits (paid time off, health insurance, etc.), Uber, like many large enterprises, treats contractors as disposable rather than flexible, despite them being the literal driving force of the company. When Uber went public, they gave a nominal bonus for drivers that had completed 2500 to 40,000 trips, with a chance to buy up to $10,000 of stock — at the IPO price. These drivers, that had been the very reason that many people became millionaires and billionaires when Uber went public, were given the chance to maybe make money, if they sold the stock quickly enough.
It’s an abject lesson on how to not build loyalty with independent contractors. It’s also a lesson on what the next big company that wants to build themselves off the back of the 1099’er should do.
What I’m suggesting is a radical rethinking of freelance contracting. I want you to see independent contractors as a different kind of worker, not as a way of skirting getting a full-time employee. A freelancer, by definition, is someone that you don’t monopolize, and someone that you should actively give agency and, indeed, part of the network you’re building. One of the issues of corporate America’s approach to freelance work is an us-versus-them approach to employment — you’re either part of us or you’re simply a thing we pick up and put down. What I’m suggesting is treating your freelancers as an essential part of your strategy, and compensating them as such. Freelancers should own equity and should have skin in the game — they may be working with you on a number of projects and take literal ownership of vast successes throughout your history.
Contracted work has only become mercenary through the treatment of the freelance worker. Where tech has succeeded in creating hundreds of thousands of independent contractor positions, it also has to lead the way in reimagining how we may treat them and reward them for their work. And corporate America needs to take a step beyond simply seeing them as a cheaper, easier way to do business. They’re so much more.
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Unicorn layoffs prompt more startups to consider acqui-hiring
Alex Zajaczkowski was just months into her role at Toast, a restaurant point-of-sale software company, when she was let go during COVID-19 layoffs. Toast, last valued at $5 billion, cut 50% of its staff through layoffs and furloughs.
Zajaczkowski said she started applying for jobs within a week.
“I think I got on the boat a little bit quicker than others because I wanted that security a little bit faster,” she said. She and former Toast colleagues formed a Slack to communicate about layoffs, their job searches and what lay ahead. Toast created an opt-in spreadsheet for recruiters that listed laid-off employees.
The sheet brought Zajaczkowski to Stavvy, an online mortgage startup also based in Boston, for an interview. Today, a majority of Stavvy’s team are ex-Toasters, including Zajaczkowski.
“I think one of the benefits of recruiting from an organization that is sort of an iconic Boston company, is that you know what the hiring practices are,” Ligris said. “There’s been a level of vetting that has occurred.”
Stavvy’s onboarding of former Toast employees suggests that the layoffs which rocked startups in March could be an opportunity for smaller startups to scoop up star talent that already has chemistry. While acqui-hiring is not a new concept, it has new weight in an environment reeling from mass layoffs and a shift to remote-first work.
Stavvy co-founders Kosta Ligris and Josh Feinblum, though, say hiring a pod of employees can backfire without proper diligence.
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3 views on the future of geographic-focused funds
For many investors, the coronavirus has effectively taken geography out of the equation when it comes to vetting new opportunities.
While this dynamic opens up startups to more investment opportunities, venture capital firms that focus on a specific region are in a thornier spot. The competitive advantage they once had when raising — the notion that they’re focused on an area no one else is — is potentially threatened.
Natasha Mascarenhas, Danny Crichton and Alex Wilhelm of the TechCrunch Equity crew discussed the future of geographic-focused funds given the uptick of remote investing:
- Natasha: Early-stage regional funds can win if they remain focused
- Alex: Geo-focused venture funds will be weakened, but won’t die
- Danny: Geo-focused venture funds are dead (and should never have existed)
Natasha: Early-stage regional funds can win if they remain focused
Since 2014, Steve Case and his team have made an annual bus trip across the country to meet startups in emerging startup hubs. Five days, five cities and at least $500,000 of investment dollars given to startups. Case would even offer to fly out promising and hard-to-reach startups to have them join the trip.
The Rise of the Rest fund, with more than $300 million in assets under management, has invested in over 130 startups across 70 cities, including Austin, Chicago, Detroit, Los Angeles, New Orleans and Washington, D.C.
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The H-1B visa ban is creating nearshore business partnership opportunities
Andrés Vior
Contributor
Contributor
Andrés Vior is the VP and country manager for Argentina at intive. A computer engineer who graduated from the University of Buenos Aires (UBA), he is also a member of the Chamber of Software and Computer Services Companies of Argentina (CESSI).
In June, President Donald Trump signed an executive order temporarily suspending work visas for H-1B holders, which includes skilled workers like software developers.
Considering that 71% of workers in Silicon Valley and other tech hubs are international, the order poses a number of logistical and business challenges for startups.
While nearshoring was an option before the virus struck, the urgency to nearshore due to the visa ban, combined with the remote revolution taking place, has meant companies are reconsidering it as a solution. As a result, the suspension presents an opportunity for companies to bring on board software development capabilities from abroad.
Nearshoring is a way to hire teams in locations that share similar time zones and are easily accessible. Nearshoring also enables U.S. companies to utilize services from close locations, where the talent, working conditions, and salaries are more favorable. In fact, it can save businesses up to 80% on costs, while providing employees with flexibility, autonomy and better career development pathways.
Not only is nearshoring a pragmatic response to the visa ban, it has the potential to be a long-term hiring alternative for businesses. Here’s how:
Laying the groundwork for remote teams
Amid the pandemic, demand for developers has remained high, no doubt due to companies needing teams to build, maintain and optimize digital platforms as they transition to online services. The visa ban means that businesses in foreign markets can help meet such demand, particularly as tech talent from other countries comes with a fresh, different skill set that empowers companies to solve problems in new ways.
In the past, moving to the U.S. and living the American Dream oriented many foreign businesses’ professional paths. However, the trend has changed. The appeal of the United States was slipping prior to the virus — it ranked 46th out of 66 for “perceived friendliest to expats” — and post-COVID-19 may be even more detrimental.
In a more connected world, businesses and individuals can reap the benefits of U.S. opportunities — top technology stack, access to exciting companies and world-class research — without having to actually live in the country. In this respect, nearshoring means foreign teams have the best of both worlds: the comfort of home and ties to an international powerhouse.
The remote shift is demonstrating that teams can function well at a distance; some studies have even revealed that employee productivity and happiness benefit from remote work. In the global remote shift, nearshoring is being seen as an accepted and advantageous model. Companies that opt to nearshore in response to the visa ban can take advantage of the changing tides and use this time to lay the groundwork for best practices within remote teams. For instance, by devising policies for things like communication, tracking progress, vacation and development plans according to the new conditions and specific mission statements. As a result, businesses can seamlessly build professional partnerships.
Another advantage of nearshoring is that the flexible teams contribute to a ready-to-scale model for startups. By having development partners located in different countries, companies can network on a wider level and grow faster among local markets. Rather than start from scratch when expanding, nearshoring gives companies a presence — no matter how small — across regions, which can later be built upon.
Attracting fresh investment
Similar to having a readiness to scale, the H-1B visa suspension positions nearshoring as a viable way to strategically partner with foreign development studios. In contrast to offshoring, nearshored businesses are often more vested in the projects they work on because they share time zones and are thus able to work more closely and with greater agility. Within startups, such agility is essential to continuously test, iterate and pivot products or services. Outsourced teams often have defined outputs to achieve, while freelancers are split across several projects, so aren’t completely ingrained in companies’ visions.
With nearshoring, startups can target partners that have experience in a particular area of business or with a specific tech feature and accelerate their time to market. Instead of building systems from zero, they can launch into version 2.0 because the wider choice of experts means there’s a higher chance of partnering with teams who already understand how the industry functions. Nearshore partners also have vast knowledge across industrial fields at a level that is impossible for direct hires to have. Companies therefore don’t have to tackle the difficulty of curating a great team, because nearshore partners are an already solid pairing.
When it comes to funding, this synchronicity, agility and preparedness indicates that a startup has momentum. For investors, nearshoring shows that the company has on-the-ground insights about potential markets to disrupt, and that the business model can thrive using remote teams. As the world braces itself to go fully digital, startups that have already adopted remote processes that catalyze growth will no doubt catch the attention of investors.
Promoting greater diversity in teams
Latin America is a clear choice for U.S. businesses looking to nearshore. The region’s proximity, increasing internet penetration, and impressive number of highly skilled developers are all a significant draw.
It’s also worth noting that diversity plays a core role in nearshoring. Currently within tech, Hispanic workers are noticeably underrepresented, making up a mere 16.7% of jobs. Despite the physical distance, nearshoring in Latin America can bring people from different social and economic backgrounds into companies, boosting their visibility in industries as a whole, and setting a firm foundation for equality.
Studies also show that diversity influences creativity among teams, as well as increases company revenue.
Moreover, nearshoring accelerates diversity in a manner that isn’t disruptive. Foreign team members don’t have to sacrifice their home, friends and family to further their professional career. Relocating to the U.S. can be daunting for people who haven’t previously worked abroad, especially when factoring the change in living costs and new culture norms. Nearshoring means teams can work from locations they’re familiar with, so need less time to get up to speed on business processes. They additionally have the emotional support of their social circles nearby, which in the current climate is important for employees’ personal and professional wellbeing.
Leveraging the right partnership
Research is key to successfully find a nearshore company, and startups don’t always have the time and resources to conduct an in-depth analysis of locations and their ecosystems. The most practical manner to nearshore the right talent is with a nearshoring partner that is responsible for scouting, vetting and communicating with foreign developers.
To find an appropriate partner, ensure that they have previous experience in your industry and positive testimonials from startups in your location. They should also have a clear presence in the regions they operate in; try checking online for their press releases, events they sponsor and general content that validates they are active and respected.
Once you’ve found an appropriate nearshore partner, rely on them to know what teams in your preferred locations need in terms of culture. Nearshore partners will essentially be your development partner — you can leverage them to be your whole Research and Development department. They can guide you on the tech side of your business, advise you on the right team at the right time, give you direction on stack and methodology, and curate the right environment for the team to be productive. In contrast, hiring freelancers comes with risks because you won’t necessarily know the specific needs of the location they’re in. Be aware — if there’s a cultural disconnect, you risk not finding a partner, but a vendor that’s buying into a superficial version of your startup, as opposed to your real startup vision.
Once you’ve settled on a well-fitting nearshoring partner, ensure you have detailed contracts with all team members, as well as nondisclosure agreements. Nearshoring requires a level of mutual trust, however, at such an early stage of your company’s lifecycle, you need to know that your processes and data will not be revealed to competitors. Check that your nearshore partner’s financial status is secure and sufficient for a long-term model. Correspondingly, service level agreements will set the parameters for job responsibilities and deliverables. After all the formalities are covered, you can focus on curating fruitful, long-term relationships.
Acclimatizing in the new normal
The COVID-19 crisis has made recruitment a remote-dominated sphere. Traditional modes of hiring are being reassessed, and companies are realizing that teams don’t have to be in an office to be productive. In fact, not having to cover visa and administration fees for foreign employees is much more cost-effective for companies.
As time passes and businesses develop habits best-suited to remote work, nearshoring will become increasingly popular. People are prioritizing joining teams where their career development, well-being and ethics are protected, all of which nearshoring can offer with the added benefit of not completely upheaving workers’ lives.
Startups who embrace nearshoring early on could find themselves competing with top tech firms that struggle because of recruiting limitations. With the end of the pandemic unknown, and thus no hard deadline for the visa ban, tech companies have to look at alternative modes of building teams. Startups have the advantage of revising their remote product development approach without disturbing workflows too severely. They are also known for pioneering fairer and more innovative workplaces that are enticing for a broader scope of employees.
Nearshoring is mutually beneficial because developers don’t have to give up their culture for a great employment opportunity, and businesses can reap the benefits of diversification. Ultimately, the H-1B visa suspension could stimulate true globalization in tech, where companies can achieve their best performance using global resources.
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Six Toronto VCs discuss COVID-19 and the post-pandemic era
As North America’s fourth-largest city, Toronto is one of the world’s top startup ecosystems.
After spawning companies like Eventbrite and Crowdmark, Ontario’s capital has attracted international talent that complements its homegrown population of entrepreneurs and technical talent.
Six investors we surveyed who work and live in the area said they believe Toronto will continue to thrive after the COVID-19 storm passes. Some of them focus exclusively on the region, while others invest elsewhere as well. As they explained, the city has a lot going for it: It’s diverse, has access to locally trained engineering and business workers, and the area has already fostered many companies that are doing very well.
Investors expect Toronto to remain a fintech hub
Fintech is one of the city’s top industries, and the investors in this survey expect this to continue. Stephanie Choo, head of investments at Portag3 Ventures, said “fintech continues to see massive tailwinds from the fallout from COVID-19 as incumbents struggle to fully digitize their offerings.”
Ameet Shah of Golden Ventures listed fintech as one of Toronto’s key industries. Eva Lau of Two Small Fish Ventures agreed, adding that “blockchain has also been doing well because many blockchain-related technologies or companies were started in Toronto.”
Other investors point to fintech business leaders in Toronto like CEOs Mike Katchen of Wealthsimple, Daniel Eberhard of Koho, Andrew D’Souza and Michele Romanow of Clearbanc and Kirk Simpson of Wave Financial.
Diversity is one of Toronto’s strengths
Nearly all of the surveyed investors cited diversity as a key reason to live and work in Toronto. Probal Lala, chairman of Maple Leaf Angels, says, “Beyond having a vibrant technology ecosystem, Toronto has one of the most diverse communities in North America and is not only a great place to find the intellectual horsepower and funding to build a great global startup, but also the mosaic of social communities that makes it a great place to live and raise a family.”
Choo said the United States’ current battles over immigration could benefit Canada. “Small, nimble teams that need to move fast may still choose to co-locate in person — and many will still want access to amenities that only a large, vibrant and diverse city like Toronto can offer.”
She also pointed to Toronto’s claim of being one of the most diverse cities in the world. “[This] not only makes the city interesting but also very welcoming for those who relocate from elsewhere; a strong startup and tech scene, and, lastly, a vibrant cultural and food scene, especially through the lens of cost-of-living compared to comparable major cities.”
Shopify’s executives are key players in Toronto’s ecosystem
Several VCs listed Shopify executives as local leaders, while others acknowledged the growing unicorn’s impact. Ameet Shah of Golden Ventures says, “Toronto has traditionally been strong in fintech, B2B SaaS, crypto and AI. The explosion of Shopify should also benefit companies focused on e-commerce and supply chain solutions.”
Adam McNamara and Ameet Shah, when asked about local business leaders, both listed Satish Kanwar. Kanwar is GM and VP of Product at Shopify after the company purchased Jet Cooper, a startup co-founded by Kanwar. McNamara also points to Farhan Thawar, Shopify’s VP of Engineering, as a local leader.
Who we spoke to:
- Probal Lala, chairman, Maple Leaf Angels Capital Corporation
- Stephanie Choo, head of investments, Portag3 Ventures
- Adam McNamara, founding partner, Ramen VC
- Ameet Shah, partner, Golden Ventures
- Matt Golden, founder and managing partner, mGolden Ventures
- Eva Lau, founding partner, Two Small Fish Ventures
Probal Lala, Maple Leaf Angels Capital Corporation
How much is local investing even a focus for you now? If you are investing remotely in general now, are you filtering for local founders?
Prior to COVID-19 hitting, a requirement for the majority of my investments was a face-to-face visit with the founding team. For the most part, this meant founders spending time in Toronto. As we primarily invest in seed and pre-seed, this usually meant local founders.
When the pandemic hit, we shifted our process to primarily Zoom meetings (including due diligence) and as a result the mix of founding teams has expanded beyond our typical catchment area (two-hour drive from the city) to a broader base. Investment cycles appear to have slowed a bit due to the remote approach but our reach to founding teams has expanded to a broader base of geographically distributed founding teams (Mostly Canadian although we have recently seen a number of international opportunities).
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