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We've tried and found that remote engineers are less effective, they miss out a lot from group whiteboard discussions, overhearing office chatter "Hey bill, service XX crashed again because of YY (and Mike overhears and says "Oh yeah, I saw YY in service ZZ too and fixed it"), and just general team cohesiveness. In theory we could hire more people for less salary if we had a remote workforce, but we're still a small company (less than 100 people) and it's a lot harder to manage a 100 person geographically spread out engineering team than a 50 person local team). Paying the San Francisco premium for salaries (and rent and everything else) is less than the cost to build and manage a distributed team. As we grow, that will likely change as we'll be able to have specialized teams and open satellite offices, but for now hiring in the Bay Area makes the most sense.

We could likely build an accomplished team in any major metropolitan area, but since our investors and board members are here (as are the other companies they invest in and manage), it makes sense to have the company here. (not entirely our choice, when someone invests millions of dollars into a company, they want to be close to it)

I have found that this says more about the ability of the management and less about the ideas underpinning remote work. Large companies figured out some time ago that they could have a large remote workforce. So it isn't just Basecamp or whoever that is doing remote work. Remote work has it challenges but (and here is the important point) they can be managed if the team knows how to manage.

FOSS proved over two decades ago that you can build complex competitive systems with people you have never met. The fact that you couldn't make it work doesn't mean that it doesn't work. It means your company could not figure out how to make it work for you.

Large companies manage to not go out of business while still having a large remote workforce.

Large companies often have a ton of inertia, not a lot of competition, and they often take a very long time to fail. Just because they've started doing it, and are getting away with it for now, does not mean it's a good idea.

I'm not saying it's NOT a good idea, I'm just saying you can't tell based merely on the fact that they're doing it. They also have lots of employees who put in the bare minimum and punch a clock to draw a paycheck. Does that fly in a smaller, less well-funded company?

Google, a very large company with nearly unlimited technical resources, continues to bus workers 40 miles down the peninsula every day because they want workers to stay on-site. Google, of all companies, could afford as much office space in SF as they need, yet they still choose to only have a relatively small satellite office there.

The experience of large companies that have large remote workforces and FOSS projects that have workers so motivated that they'll work for no pay probably doesn't translate well to a small startup that doesn't have the resources of a large company, nor the employees so motivated that they'll work for free.

Remote work, as you say, has it's challenges, and sometimes it's better to pay the money avoid the challenges than to pay the money to confront the challenges.

Hmm... it could be argued that Google's repeated failures in the social networking space are compelling evidence that it's one of the least likely companies to succeed with remote workers.

Facebook is pretty much identical to google in it's ship workers to HQ practices.

When teams have problems with remote v local employees, I've found this to be because they actively treat them differently, sometimes without realizing it.

It takes work to establish your culture to work remotely well -- if you just hire some people that you only ever hear on Skype during standup and give them work, they don't become enmeshed in the fabric of the company. Cliques form everywhere but they can be especially brutal in excluding remote workers from the 'core' teams that are seen as successful within a company.

I'm sorry to hear it hasn't worked for you. If you attempt it again, make sure you evaluate whether you've built a culture based on 'being there' before hiring people who can't be. Lots of people make this mistake and just see cheaper workers.

When teams have problems with remote v local employees, I've found this to be because they actively treat them differently, sometimes without realizing it.

Yeah, some teams like to take advantage of the far richer communication that's available in person rather than handicapping everyone to the lowest common denominator.

If you attempt it again, make sure you evaluate whether you've built a culture based on 'being there' before hiring people who can't be.

IOW, discourage informal social interactions between employees. Don't permit them to go to lunch together and talk at leisure about things.

Companies do not like spending money they don't have to. So since the Internet hasn't killed business travel, there must be a very good reason its still worth it.

"overhearing office chatter "

I honestly do not believe for one second that this is a thing, or that it's a significant thing.

This is definitely a thing that happens. Some teams also do a lot of work in hallway conversations, and this sort of accidental interaction is critical. I witness this all the time.

I would much prefer that my company let me work remotely. The Bay Area is full, seriously, and I'd be happy to work from many other places.

But denying reality doesn't help.

I think there are potential technical solutions to this problem (VR office at home), but I suspect it'll take legislation (aimed at getting vehicles off the road) to make remote work a real thing that a lot of people do every day.

That kind of smalltalk definitely happens, but where it happens varies a lot. At some places probably 80% of the idle work-related chatter happens on the IRC/Slack, while at others it happens mostly in the coffee area or hallways. Seems to be a company-culture difference in large part. Both are ok for me, but the places that use IRC/Slack a lot are easier to be remote at (or even just on a trip) without being excluded from all the impromptu discussions.

Not just easier to be remote at, but easier to remember the smalltalk/'check out this url'/minor decisions.

And easier to disseminate. Searchability is far superior with tools than with voice conversations.

That is half my job as CTO - catching snippets of conversation to help direct my staff outside of direct scrum or meeting times.

Two engineers talking to each other will share far more useful info than they will directly.

Nothing like a noisy office space to boost productivity!

It's actually not that noisy normally, just the clatter of keyboards.... until there are problems with something, then it can become pretty active. Most people stick with Hipchat or email for routine communications like getting stuck on debugging a piece of code or where to eat lunch -- unless they are talking in one of the break rooms, or they duck into one of the conference rooms. People tend to be pretty cognizant of the open office so if you hear people talking, it's generally something worth listening to.

> I never understood why investors need to be 'close.'

It's particularly jarring given how many of the same investors are arguing we should tear town universities and replace them with MOOCs, demolish shops for Amazon, and so on and so forth. Apparently face time and interpersonal interaction is an irrelevant artefact of the old world except when it comes to their own industry.

Do as I say, not as I do.

>Making $140k per year is the San Fran equivalent of minimum wage

Is this really true? Seems far-fetched. Isn't that $20-30k higher than the Google base starting salary?

No, I don't know why people always say that. I live on less then half that. I eat out, drink, do stuff on weekends and pay my school loans and bills. Thats like 7000 a month? If you can't get by with that comfortably high cost of living is not your issue...

If you don't mind me asking, what are you paying for rent? Been considering moving out there so trying to get a feel for things.

I have an exceptional deal on my 2 bedroom in Mountain View which costs me around 2400/month. I believe the current market rate for my apartment is something like 3300.

If you're willing to live a bit further out (like Milpitas/Santa Clara), you can live somewhere for under/around 2000, which (when split with a spouse/partner/roommate) can be reasonable given the salaries in the area.

So I'm assuming you split the place with someone else? I imagine it is no trouble to find roommates out there, or am I wrong?

Looks like I'd have to live with roommates if I moved out there.

700 for a a tiny room in a house. Were talking about minimum wage style living... I could spend up to ~1900 on a apartment. Just haven't been able to find one. It's real competitive to get a place. Day to day expenses don't seem any different to me then when I lived in NY. Except wine, bottles can be as low as $4.

The comment says 'especially with a family'

Sure, a single guy can rent a single room and walk everywhere. Add in wife and kids and you need three rooms, a car, somewhere to park it. Schooling, activities, shoes and clothes, stuff...suddenly 140k isn't looking too flash anymore.

Well, let's do some calculations...

Assume you're making 140k, after 10% retirement contribution and CA taxes leaves about $6400 per month net. With the average 1 bd apartment at $3200 now that's half your take home wage. Leaving $3200 per month is $800 / week. Or $20.00 an hour at 40 hours. Given typical start-up hours and not even counting the typical food/internet/car expenses. So, if you want to look at it as an all-in after expenses, yeah, even that kind of salary can feel like minimum wage. The economics of minimum wage here in SF are a LOT worse...

Wowza! So at $140k/year the effective tax rate in CA is around 40%? (Or maybe my math is bad.)

EDIT: And some that may not all be income tax? E.g. in Ontario one pays fed income tax, provincial income tax, Canada Pension Plan, Employment Insurance, and a few other I may have forgotten. In London, UK one pays income tax, national insurance, and council tax (property tax paid by property occupiers).

At that income level, the federal tax is %28 and CA is %9.3, so about %37 yeah. Max is 33+12 = %45. There's also ~9% sales tax in most parts of california but every time you go out you better tip %20.

And for all that, we get to pay for our own health care and retirements too!

I said effective tax rate not marginal tax rate. It looks like US and CA income tax has brackets, so even if your marginal rate is 37% you won't be paying that rate on 100% of your income.

That said, I'd believe that if you include expenses like health care your net pay would be ~40% less than your gross pay. :P

Don't forget social security taxes - flat 6.2% on your first $118.5k of earnings: http://www.ssa.gov/pubs/EN-05-10003.pdf

It's an exaggeration, but there's no denying that SF is one of the most expensive cost of living places in the country.

"I never understood why investors need to be 'close.' "

Many of them want to "influence' the companies they invest in, to give them the best chance of seeing a return. They feel they can't do that as effectively if they can't hop in a car and drive to the office quickly.

"I also don't understand why most startups need an office."

Many managers, startup or not, are afraid of remote work, and feel that not being able to see butts in seats means that people are slacking off.

"As far as 'access to talent,' that's a bullshit metric as well. Remote workers can be anywhere. "

But as we've established, most of these companies are not set up for remote work. As such, remote workers being anywhere isn't relevant.

"As far as investors, who cares? If you have a product people want to buy, investors will come to you."

Ahh yes, the old "meritocracy" myth. As it turns out, simply having a good product isn't enough to succeed.

"It's a myth that proximity matters."

Except reality has not followed your logic.

"There were investors long before Silicon Valley startups were a thing. Plenty of billion dollar companies founded everywhere else."

Yes there were. But it's significantly harder to do it elsewhere given the realities of the situation.

Feel free to start your company wherever you want and show us that we're wrong. I'd be happy to have the pool of startup locations be more diverse.