Such “fully distributed” firms were on the rise before covid-19. As national lockdowns spread, conventional ones are forced into similar arrangements. Those that have grown up this way offer lessons.
Distributed organizations are as old as the internet. Its first users 50 years ago realized how much can be done by swapping emails and digital files. These exchanges led to the development of “open source” software, jointly written by groups of strangers often geographically distant.
Today most distributed startups have open-source roots. Gatsby is one. Nearly all 1,200 employees of another, Automattic, best known for WordPress, software to build websites, work from home. GitHub, which hosts millions of open-source projects (and was acquired by Microsoft in 2018), maybe the world’s biggest distributed enterprise. Two-thirds of its 2,000 staff work remotely. Most firms that build blockchains, a type of distributed database, are by their nature dispersed.
Distributed startups exist thanks to a panoply of digital tools—most obviously corporate-messaging services such as Slack (chat) and Zoom (videoconferencing), as well as lesser-known firms like Miro (virtual whiteboards for brainstorming) or Donut (which pairs employees to forge personal bonds). Others, like Process Street, Confluence or Trello, help manage workflow and keep track of what goes on in virtual corridors—crucial when people do not share the same physical space. Firms offering organizational scaffolding for distributed firms include Rippling, which manages payroll and employee benefits, grants workers access to corporate services and sets up their devices. Much that is now done in spreadsheets could be turned into a virtual service, predicts Rich Wong of Accel Partners, a venture capital (VC) firm (and early investor in Slack).
Trust also requires transparency and explicitness—another reason documentation is key, says Michael Pryor, co-founder of Trello (whose workforce is 80% remote). Discussions that lead to a decision must be captured in writing, he explains, so everyone understands the trade-offs being considered. As a result, distributed firms favor wordsmiths, not good speakers as traditional firms do. Good writing demands clear thinking and discipline, says Mr. Friedman, who has been managing distributed teams for 20 years. VCs duly report that distributed startups tend to be better at preparing board meetings.
Still, some businesses suddenly forced into remote work will rue the experience, predicts Mr. Gascoigne. Without a learning period, they will get all the drawbacks and a few of the benefits. Brainstorming and other creative activities are possible online but take practice—and even then feel like an imperfect ersatz of an actual room. Recruiting and breaking in new employees is hard virtually. According to one recent survey of 3,500 remote workers, one in five struggles with loneliness. That is partly why GitHub and Trello operate an optional office.
Most businesses will always have to be located somewhere and need people to work side by side. But as technology improves, swathes of the knowledge economy will gradually move more functions online, thinks Venkatesh Rao of Ribbonfarm, a consultancy. New firms will erect a new virtual floor, which others then inhabit. The coronavirus-fuelled exodus to cyberspace is unlikely to be the last.