5 reasons why your company should be distributed

I’ve noticed a new trend in Silicon Valley. More and more startups are beginning life as distributed companies, and investors and partners are starting to accept it as normal. Our company Automattic is distributed, and I’m ready to sing the praises of running a business in this way. BTW, I think distributed (“evenly spread throughout an area”) is a better description than the more commonly used virtual (“nearly real or simulated to be real”) for a company that has people working from all over the place instead of a centralized office. In Automattic’s case, we currently have over 50 employees spread across 12 US states and 10 countries.

Here are my top 5 reasons why you should consider the distributed model for your company:

  1. Your employees will love it: I can’t overstate how much quality of life people get out of working for a distributed company. You get the best of working remotely – flexible hours, no commute, a personal work environment, much more time with friends and family – without the typical downsides – guilt about being away from the office, or missing out on hallway discussions. In addition, your employees get to live where they want, not where the job market dictates. We’ve had several people join Automattic and then move to places where they always wanted to live. We’ve also had people travel extensively while working from the road. This ability to move without having to worry about getting a different job is very freeing (even if you don’t end up moving, just having the option is nice). I’ve heard from many of our “Automatticians” that they simply can’t imagine going back to a “commute & cubicle” type job.
  2. You can hire great people wherever you find them: Once your company is untethered from one physical location, your pool of available job applicants becomes the entire world. You can hire anyone who fits the culture and mission of your company wherever they live. You also get to better insulate yourself from the competition and ups and downs of a particular local job market, and you’ll automatically get better coverage of multiple time zones and languages when your team is more distributed. In our case, the first 4 employees were spread apart pretty widely. First was Donncha in Ireland, then Andy in Texas, Matt in San Francisco, and Ryan in San Jose (I was next, also in San Francisco). Those first 4 guys had already been working together on the WordPress open source project, so it was natural for them to join up and keep working remotely the way they had. And then we just kept adding people in this fashion, often working together first through an open source or consulting project, then joining forces full-time if things work out for both sides. BTW, we use AdminiStaff to deal with the payroll and tax complexities of hiring people all over the place.
  3. You will use better communication tools: Communications is a challenge for every company and one that’s amplified for distributed ones because the communication channels are more narrow – a chat conversation is simply not as rich as a real life one. But there are advantages as well. A chat conversation can be archived, searchable, and visible to the entire team, whereas in person conversations in meetings and hallways are often lost to the ether. Being distributed is a good excuse to abolish inefficient meetings, conference calls, and email silos, and get the whole team to use better online collaboration tools. In our case, IRC was our preferred tool for the first year. It’s a real-time chat room for the company that we enhanced by keeping logs (to have searchable archives) and by running bots to automatically publish things like code commit notices into the chat stream. When the team got to about 15 people, the IRC channel got too busy and we split into several channels. We then took this concept a step further and developed a real-time group blogging theme for WordPress called P2 (similar tools are SocialCast and Yammer). P2 provides an activity stream for every project going on in the company. Today, we still have our IRC channel for real-time group chat, but the majority of company communications takes place on a couple dozen P2s (Matt has a great write-up on how P2 changed our company). We also use Skype and email, but only when necessary for one-on-one communication. Anything that isn’t strictly private, we push to P2s to make sure there’s an archive of the information accessible to everyone in the company.
  4. You can still be social: Probably the biggest disadvantage to being distributed is the lack of social interaction. Online tools help make up for some of this, but most people like to spend some time together to make their work experience more enjoyable. The good news is that there are ways to compensate for this. We took inspiration from the MySQL team and started having in person meetups for the whole company every 6 months. These meetups last one week and we’ve had them in places like Arizona, Mexico, Canada, Stinson Beach and Colorado. Given how intensely we work together every day, there’s a lot of pent-up excitement by the time we meet in person and the week tends to fly by. During the initial meetups we just spent time hanging out and working our regular jobs side by side for the week. Along the way we refined the model. We now prepare for meetups by thinking up team projects that can be built and launched in a week. This turns our meetups into a kind of “hack week” with 2-3 person teams working on projects and demoing and launching them at the end of the week. We also spend a lot of time socializing, having fun excursions (hiking, golfing, go-kart racing, etc), and doing 10 minute lightning talks followed by Q&A (short talks by anyone in the company on whatever topic they feel like sharing). As we grow, we continue to look for ways to push the envelope on getting people together. We’ve started encouraging teams within the company to have their own mini-meetups, to come work from San Francisco for a while, and to congregate at various WordCamps.
  5. Your offices will be more fun: A distributed company doesn’t have one, large centralized office but there are other office options available. Team members often work from home (or really from anywhere), but if there are several people near each other that’s a good reason to start up a co-working space. The key to those spaces is that they’re not permanent offices. No one has a desk that they have to go to every day. People come and go when they want and bring whatever they need to do the work – typically a laptop. It’s a great environment for social interaction (both within the company and with the larger business community in a given area) but it doesn’t undermine the rest of the distributed company because overall company decision-making and communication still happens online, accessible to everyone. We started Automattic with no office and stayed that way for about 18 months. After a while we noticed some weird looks from larger partners because we kept asking to meet at their place or at a coffee shop. So we rented a space on one of the piers in San Francisco for meetings and events. It’s set up like a “lounge” without any permanent desks or offices. Those of us who live in or are visiting San Francisco use it as a co-working space, and we use it often for WordPress meetups and make it available to other startups and tech organizations for events in our area.

So there it is. I know that the distributed model feels very strange to business people who are used to the traditional, centralized way of running a company. But I’m here to tell you that it works. It might even work a lot better than the traditional model for certain types of businesses. After all, distributed systems tend to work well in general (the internet itself being a prime example). If you try this model yourself, I think you will see clear benefits in employee happiness and hiring, and I recommend these core strategies that have worked for us: Have frequent company and team meetups to address the social challenges, use co-working and event spaces instead of traditional offices, and fully embrace new real-time, activity stream inspired communications tools like P2. Good luck!

PS: If the idea of a distributed team excites you, please take a look at our jobs page.

Update 6/2013: Three years after writing this post, Automattic is still going strong. We’ve grown from 50 to 180 people. What I wrote above all still applies. We’re still fully distributed, we hire globally, our communications are centered on P2s, we do lots of meetups and events. Our hiring has evolved a little, we now do 3-8 week trial projects with all applicants before hiring someone and every one who joins Automattic starts their job with a three week rotation in customer support (this is working very well for us). We’ve organized the company into 6-8 person teams that are designed to be as self-sufficient as possible (i.e. able to build and launch products on their own). I recently gave a talk with more updated info about “the secrets behind managing a distributed team”: http://www.wptavern.com/toni-schneider-automattic-as-a-distributed-work-force

122 comments

  1. Derrek Cooper

    SPOT on post! I work for a company that is very distributed and I think we thrive in the environment. We have an HQ and about half of the folks in the US work there, but the rest of us in the US and international all are distributed (good word, I normally say virtual).

    Keywords to being distributed – productive, inspired, happy, challenged, happy, creative happy..

    you get the idea..

  2. Gary

    Brilliant post. Some forward-looking corporates here in Australia use a 'semi-distributed' model where they have a few offices however the majority of staff work wherever they want. This certainly seems to result in far great staff 'turnover' (happier staff).

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  4. Jay Gilmore

    I've been over a year at a distrubuted organization and think it is the ultimate in bootstrapping for startups. With communication tools such as Skype, IM, Collaboration tools and screenconferences there is little need to limit your organization to a physical location. Need great talent? It's everywhere.

  5. Eoin

    Great post Toni. It is the future for many types of businesses as infrastructure grows and improves and business attitudes evolve.

  6. Jeremy Zawodny

    Hey, Toni.

    Good to hear how well this model works out for you guys. I've been working remotely ~4 days a week for the last year and a half. Having a good supportive culture at work and an active chartroom makes a big difference for us.

  7. David Coveney

    I used to do a lot of work for multi-nationals on accounting and payroll systems – consequently I'm not quite so positive about the idea. Here's why:

    You're dealing here with ten different legislatures, each with completely different employment rights, benefits, tax regimes and so on. If you hire your staff as self-employed or as contracting companies, then that's not so bad, because the laws are a lot simpler… but if they're actual employees then it gets tough.

    Take one example – maternity/paternity leave. In some countries you can take a year as the father, in others just a couple of weeks, and others none at all. How do you reconcile that into your procedures?

    What about the right to a sabbatical for French staff, or 401K contributions in the US… it goes on and on.

    So, while I like the idea of running a distributed company the legal minefield is scary if you get things wrong.

    However, I do agree that being able to hire the very best staff regardless of location is a Very Good Thing indeed. And distributed companies save an awful lot on relocation fees. I'd be interested to know more on the legal aspects of Automattic's hiring process – but I suspect that's not information that'll be shared.

    • Toni

      Yes, the taxes and rules overhead is very real. It's just overhead though, and we're always working to get more efficient at it. Right now we use AdminiStaff for everyone in the US, and we deal with each country on a case by case basis (using self-employment in a lot of them). We also try to keep our policies and benefits as simple as possible so they can be more universally applicable. Overall I feel that the benefits of being distributed are well worth the extra HR and legal overhead.

    • Toni

      Most VCs I know are comfortable with a distributed team. What helps is if some or most of a company's leadership team is nearby (near their customer, partners, and investors).

    • Mark Atwood

      Find a smarter VC.

      VCs that insist that they need to be able to manage a company by physically visiting are making the same mistake that old school managers make when they say that they have to watch their staff work to make sure they are working.

      If your company doesnt perform or you staff wont work if you are not watching over people's shoulders, then it won't excell even if you are doing so.

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  10. Chris

    Great write-up Toni! Very cool model! I could imagine there are some additional benefits…for example, having folks in various locales may allow for a chance to be closer to the customer. Silicon Valley is sometimes accused of having a bit for a bubble mentality and having folks out and all over the globe may give you better access and a better understanding of your customers and should allow you to better tap into interesting regional/int'l trends and understand local markets better.

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  12. Mark Atwood

    I started working at a distributed company when I was hired at MySQL. It was a great draw, and a great reason for great people to work there. In the transition to Sun, the distributed work environment continued. Now I work for Gear6, and I still work this way. I cannot imagine wanting to work in a cubicle or even a corporate office, ever again.

    Some things to note about distributed work. You have to hire good self-motivated people. You have to anyway, but the reasons become stark here. Also, do not think that being distributed means you can just save money by not having office space. The money you don't spend on office, you have to spent on travel, because every team needs to meet face to face at least once a year, and everyone in the company should meet at least once a year.

  13. Dan Kligerman

    Very interesting read. I think a lot of these benefits and techniques can be applied to distributed teams within larger organizations. Of course, not everything applies, and there is not as much flexibility as in an entirely distributed startup. That said, as someone working in a large corporation which is slowly moving towards a more distributed model, I can see things like better communication tools and in-person week-long events having a very positive impact.

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  17. Yogesh

    We are a group of 10 working distributed on HR, IT, and Power sectors in India. We all work from our homes or where ever we are. This is really excellent working like this and reduces your lot of infrstructure cost. Nice to see that people have achieved altitude of success through this.

    we are more detemined now.

  18. Numpty

    I've worked this way for ten years, and it's certainly not a bed of roses. For example, those "hallway discussions" that "nobody misses" don't tend to happen at all, or at least not in nearly as productive a fashion, and that's a very bad thing.

    • Jon Stephens

      At MySQL, we've always used IRC chat as our 'virtual office/hallway' and this seems to have worked well for us. It's a tried-and-true technology that provides excellent real-time group and 1-on-1 interaction. And unlike the case with some other collaborative apps, I can't think of any operating platform that doesn't have (at least) several IRC clients to choose from.

      Most teams have their own channels on our dedicated IRC server; we also have a number of ad-hoc channels for specific topics/projects. And since it's exclusive to employees, you don't have to worry much about administrative overhead, 'Can I have ops?', etc. For MySQL Support staff, presence on our IRC is required during core working hours; for others, it's optional but expected. Many of us stay connected even when not working; this makes it easy to catch up on what your team-mates were discussing while you were away.

  19. Tim Dysinger

    +1 We went 100% @ home engineeing from the beginning in 2007 @ Sonian and haven't looked back. It's awesome. We have adapted our workflow for work-at-home and it's working great.

  20. TropicalGringo

    Great write up. I am just ecstatic that all the tools are coming together so companies can work with talent wherever it is. I for one am building a technical team in Latin America and am sure the opportunity will arise where our team will become part of a multi-country startup.

  21. Glyn Normington

    I worked in distributed teams for many years. Not bad if you don't mind lots of phone calls. But recently, I've been a part of a small local team and it's so much more efficient. Decisions take minutes rather than hours or days and productivity is to much higher. In summary, you can survive in a distributed team if you have to, but you wouldn't design an organisation that way if you care about programmer productivity.

    • Toni

      I agree that phone calls are inefficient for distributed teams. Using something more immediate and scalable like IRC or chat is crucial.

      • Numpty

        IRC and chat programs are very inefficient compared to face-to-face (or voice-to-voice) chat, though, and they really *aren't* scaleable– as soon as more than two or three people try to talk together, you spend half your time typing over each other and subsequently trying to figure out who's talking to whom about what, and the other half in long periods of unproductive Bergmanesque silence. Been there, done that (and still do, most days).

        • Dan Kligerman

          This is an interesting debate. I am thinking the efficiency of working remotely or in the same office differs depending on role (programmer versus other), but also that the best situation may be to have people work remotely some of the time and together some of the time. Of course, this negates some of the benefits of being completely distributed, such as hiring people from anywhere in the world.

  22. LenZ

    Great post! I agree to all of your points. I've been working in this environment for almost 8 years now (I joined MySQL in 2002). The regular face-to-face meetings are key, especially for new employees. Back when I joined the company, I was invited to attend a staff meeting in St. Petersburg in my first week, to meet all of the ~40 employees back then. These personal contacts really helped me a lot to find my way around and get started and they are still valuable nowadays.

    The distributed work model also works best if you grow with it from the very beginning and everybody is in the same situation. It's much harder to move to this model when a company already has an office and established procedures and practices. It's easy for the few remote workers to fall off the radar screen and be out of the loop – discussions and decisions that have not been documented or communicated, etc.

    Having IRC logs and mailing list archives is nice, but they are no replacement for proper documentation (e.g. meeting summaries). A Wiki turned out to be an excellent tool for that, but it needs to be properly maintained, structured and kept up to date.

    Work/life balance is another interesting topic. It's easy to fall into one of the extremes of not working at all (goofing off) and working too much. Having a social background (e.g. a family or partner, hoobies) is a very important aspect for every employee. It's easy to burn out or fall into a black hole when you're on your own for too long.

    I've been giving talk about this topic at some events last year – here are the slides and videos: http://www.slideshare.net/LenzGr/working-for-a-vihttp://ftp.stw-bonn.de/mirror/froscon/2009/prerelhttp://de.sevenload.com/sendungen/next-conference

      • zmicer

        Hi, Lenz!

        Yes, life balance is very important. At the office of company you almost always know where to go home, and when you go from office you are switching into another background, then you return home and could be not programmer or whoever but just friend, farther etc.

        But when to set at home – yes, it needs some practice and analysis of own mistaken.

        Concerning my experience. I have left my last company 3 years ago, and starting from that time I worked as programmer at home/or at my locations. Now I am moving into 2 directions: first one is organizing local scrum dream team – small team with talented local people. Another is organizing distributed team. As for local team – that is great to have an appropriate surrounding here, when working, and that is great to be involved into local life. Distributed team provides a framework to hire people around the world and travel by myself a lot, and allow my team members to travel and do what they want.

        For these 3 years I understood, that it is necessary when working remotely:

        1) have linkage with local environment – some local place related project/initiatives/business

        2) to have a separate working space from a living space

        3) constantly train self-discipline

        In my experience I had overtimes at my distributed life more often then when I worked for companies (especially when you work for company for along time and could allow yourself not to have overtimes).

        Your Dzmitry

  23. Jeremy

    So how does this work for people who have family commitments and can't commit to a week away? That's a lot of great people who you're immediately discounting.

    • Toni

      We make exceptions for family commitments, and we pick the dates for our meetups well ahead of time so people can plan for them. In general, I think it's OK to ask for 2 weeks of company travel when the other 50 weeks are totally open.

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  25. Tashacres

    Great post. We're just in the process of implementing a distributed model for our design company, wow creative. We also set odbody.com up like that. There is a word of warning and that is it's a lot easier to start a company and develop the culture from the beginning than it is to change into this model. Existing staff can feel they are missing out on the team feel and they have to be prepared to embrace new technologies. All that being said I think the benefits far out way the negatives and it's such a progressive way to work – I'm much more creative not stuck in the same 4walls.

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  28. John

    Is there anywhere that lists distributed companies that are hiring? This type job would really fit my current situation.

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  30. Michael Hsu

    very write article. I first learned about Automattic's distributed office when I visited Pier 38 and fell in love with the idea. I am implementing this idea for my accounting business right now so we'll see how this work out (so far, 2 people in LA, 2 in Detroit and 1 in Davis). I'm very excited.

  31. John Sostak

    Toni, great post and compelling. You are inspiring me to give it a try. I have had problems with home based partners. Communication, missed deadlines, stuff that happens in an office, but you are less inclined to think the "partner" was job hunting or laying on North Avenue Beach.

    I see you have a huge thread, so if you can't reply, I get it. What is the key to keeping the employee motivated each and every day? It is obvious with open source and wordpress, your community is the best. Passionate. Can this translate to online marketers, that have a different job description and skill set?

    No one likes to talk money, but it is significant. How do you pay? I have been a victim of employees doing freelance, on Arcade time.

    What are the benefits that you offer, or would offer that keep employees loyal?

    Thanks a ton, John

    • Toni

      Hi John. Having a lot of control over your personal work environment is they key difference in this model. So it's important to find people who are turned on by that. We look for people who are very self-directed. They might have done consulting before and liked it a lot. They can take a small amount of information and run with it. They communicate online easily and concisely. By using tools like P2 and IRC you can tell pretty quickly if someone is not participating (and might be freelancing or goofing off). Depending on the job there are other measurable indicators of how engaged someone is, like code check ins for software developers, or answered tickets for customer support people. Those are some of the patterns we look for. Having a way to work together on a trial or pilot project first is very useful to see if the distributed setup is working for someone and if their passion for the job comes through. As far as salary and benefits, I think they are the same in a distributed model as in a traditional one. Personally, I think top of market salaries, stock options (or some form of company ownership), and health insurance (US only because of the weird health insurance setup) are motivators. The rest (bonuses, 401ks, company gyms, etc) are only marginally useful (I'd rather pay someone extra and let them make their own benefits decisions).

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  36. Flo

    Great idea, however a bit too avant-garde for Europe I should think, and especially Britain where I work at the moment.

    And you haven't really answered David Coveney's post (3:16 pm on March 9, 2010 )

    ——————–

    You’re dealing here with ten different legislatures, each with completely different employment rights, benefits, tax regimes and so on. If you hire your staff as self-employed or as contracting companies, then that’s not so bad, because the laws are a lot simpler… but if they’re actual employees then it gets tough.

    Take one example – maternity/paternity leave. In some countries you can take a year as the father, in others just a couple of weeks, and others none at all. How do you reconcile that into your procedures?

    What about the right to a sabbatical for French staff, or 401K contributions in the US… it goes on and on.

    ————————-

    And holidays allowance? Is it OK for employees in one country to have more than those located elswhere? How can you keep the policy there as 'minimum'?

    or pension benefits? or redundancy packages?? …. Indeed the list goes on.

    How do you solve this?

    (Don't get me wrong, I am not negative, I'd just like to know!)

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  46. mattnish

    Hey Toni,

    Great post! I just sat down with you at the round-table meeting on UCSB campus. It was great hearing your thoughts, and I really appreciate you taking time to meet us.

    About being distributed, I completely agree. Cutting out the crap in long meetings, and allowing people to work without office distractions is definitely beneficial. And they can work at their own pace, on their clock.

    I think it also helps a company grow at the proper speed as well. Over-hiring is unlikely because people have individual roles with monitored progress. If someone isn't doing enough, it's obvious.

    Thanks again Toni. I'll keep up with your posts.

    Matt Nish

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  50. João Almeida

    Does having a distributed company means some of the costs, namely internet and other communication related costs, are somehow shared between the company and each worker?

    • LenZ

      Hi João, I guess that depends on how the company prefers to handle that. They could let the employees pay for these costs by themselves and compensate for this with a slightly better salary. Or they reimburse them individually, asking them to submit these expenses. It can become tricky, if the same phone/internet line is used for private purposes as well (which is likely for home office scenarios). In this case you need to have some kind of agreement in place that covers personal/private usage, both from a financial point but also when it comes to accepted use cases.

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  52. Pankaj

    Great article. having worked out of India for my US based organization for the past 3 years, with colleagues from Argentina, Philippines and across India, I can vouch that distributed work is here to stay.

  53. zmicer

    Hi, Tony!

    Thanks for the sharing your experience with us.

    Which management method do you use with developers? Scrum, Agile, XP or something like bazaar?

    How do you track tasks are done (unit testing or some kind of managing – for sure another option could be to hire such people which do not need some kind of overseeing but I do not believe it is so easy even at your case)?

    Thanks, your Dzmitry

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  67. Zebediah

    If the glue of work groups and communities is trust built on non-verbal honest signaling then distributed teams will be a challenge until we have computer input devices (EPOC) that can capture and convey them.

    If going distributed is good now, then it will be superior with such tools.

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