Are Co-Founders in the Same City Really an Advantage to a Start-Up?

YES THIS IS HUGE TRY TO BE IN THE SAME CITY.

Context: I started my company in 2005 from Ann Arbor (which quickly became Chicago) with 2 partners in NYC. Here's what we learned:

* It is very hard to get funded if you're not all in one place. Also, my previous startup, from '99-'01, relocated everyone as soon as the A round closed.

* All-hands company meetings are very hard to do, because they take the form of interminable phone calls instead of lively back-and-forths.

* Software design debates rapidly turn into a game of telephone.

* It's much harder to guage the mood of the team; we lost 2 people because they were unhappy about stuff that might have been resolved had we caught it earlier.

* Solo founders in far-flung branch offices quickly feel out of the loop, which sets up a bunch of vicious cycles involving security, assertiveness, style, and communication.

We've made it work by growing through it, painfully; we now have so many people in just two offices that there's a cameraderie and common purpose (I'm dignifying it, yes). It's still more painful than it would be if we were all in one place. I haven't said this anywhere but here, but we'd have shipped 9 months ago (as opposed to weeks ago) if we were all together.

The company I worked for between startups --- Arbor Networks (a startup, but I didn't start it, and I was employee #40something) --- has a business office in Boston and engineering in A2. This, too, was a debacle. Engineering and management are "us vs. them" in the best of circumstances.

More points:

* No rent for office space is not necessarily a win. We could all work from home in Chicago. But having an office is great, partly for the same reason some people like wearing suits in NYC --- act the part, be the part, etc.

* People are often wrong about where they're most productive. If people are unproductive in an office culture, you may just have the wrong office culture. In Peopleware, Tom DeMarco lays out a great strategy for a skunkworks-style office to house a product team. Peopleware is excellent, read it!

* You're also missing out on the social aspect. How often can you all go out for dinners? When you have a shitty day and you're all pissed at each other, can you go out for a beer? (A teammate I yelled at once brought in a six pack at 2 in the afternoon, killing the work day and resolving the problem). Yesterday was my block party; everyone in my office showed up. How much cooler would it have been if the NYC crew was there too?

* Some really excellent players simply get lonely working from their home or in a tiny branch office. Some of them know it already and won't consider you. Some of them find out after they join and quit in the middle of a cycle. Obviously lots don't, but why cut your chances at all?

Heartily agree. So much communication occurs with body-language and facial expression. Even video conferencing doesn't cut it (and it's generally such a PITA that people fall back on IM/Skype anyways).

Regarding the office space, I agree here too. My 1st business we ended up moving office spaces and had an absolute BLAST decking out the new space. It felt like our geeky clubhouse and we'd often hang out in the evenings playing games or just chatting.

All that being said-- different things work for different folks. 37s is a fine example of a distributed company that seems to work just fine.

For the last few months I've been part of a distributed team of 4-5 members. First time for me--all my client work has been remote, but It's usually just me and at most one other person.

I haven't had much trouble working with one other person, like the first poster modern communication tech does it fine for me. People complain that physically meeting only scales to as many people as can fit comfortably in a small conference room, but I'd say meeting electronically doesn't really scale past 2 or 3.

Even with just a 4-5 member team, all hands meetings are indeed phone calls that drag on (we're getting a bit better at keeping them brief).

And "software design debates rapidly turn into a game of telephone"--oh yes. I may be wrong, but I fancy I have an excellent memory for the points and outcomes of such discussions, and it's endlessly frustrating to me to recap over and over when the same thing comes up next week, and the week after, etc.. Actually I don't know if that would be improved by being closer--besides this, the largest software team I've been on was 3 in person, years ago.

On the other hand, the other four or so members of the team all are on the west coast and have met--I'm the only one on the east coast. That's a problem for scheduling meetings sometimes, but I don't feel out of the loop or insecure. Part of that, no doubt, is that I'm not a founder--just a contractor. I care about the product as something I've put substantial work into, but it's not my baby and I'm not worried about someone stealing my baby away. There are four of us contractors building the product for the two not-very-technical founders. I guess that's another hot topic.

FWIW, David and I worked together 7 time zones apart for 4 years or so before he finally came to Chicago in 2006.

David wrote the code for Basecamp in Copenhagen and I designed the interface in Chicago.

The distance was a big advantage to us. It helped us each focus on what we were good at without too much meddling. When you're close it's real easy to spend time worrying about stuff that doesn't matter. When you're further apart you tend to actually focus on the work since that's the only thing you can do.

Your mileage may vary, of course, but that was our experience.

Jason, would you say that one of your major strengths is finding ways to take advantage of whatever situation you find yourself in? I'd wager that 37s would have done just fine if you'd started in the same city. So maybe the lesson to the poster should just be: stop worrying and get back to business.

I would echo these sentiments. Sachin and I worked on Posterous.com remotely (I was in Mountain View and he was in NYC) for the months before we applied and were accepted to YC Summer 2008. We could work independently for long stretches and get large pieces of functionality done fast just over IM.

In fact, we've found this summer in Cambridge that the times we've been really able to crank out code are the weekends when one of us is traveling and one of us hangs back at the ranch. Complete control over distractions = gigantic productivity boost.

As the company grows, the extra friction on communications between the two locations becomes more of a problem. My company, Kongregate, has 10 people in San Francisco and 5 in Portland, Oregon. We make it work through all the methods you describe, but the couple of weeks a year when we all gather in the same place are definitely easier.

I love you guys. Thanks for finding a business model that helps support independent game developers like whoever wrote that Desktop Tower Defense game.

You make a good case, but what I fear is that you have not really experienced working in the same location to really know the "advantages". Its one thing to hear or read the advantages, but its a whole another thing to actually experience it.

My co-founder and I tried working remotely, and although productive it is nothing compare to being in the same room. I finally decided to move to where he is for 3 months.

(Your Point #1): I sub-leased an apartment and setup shop in the living room of a 1 bedroom apartment. It's closer to his house so the commute isn't that bad, since I live here I only pay rent and not a lease on an office.

(#2): Communication techniques for remote work won't come in handy once you get funding and are asked by the VCs to move to one city. Knowing how well you work with your co-founder(s) in the same space before funding is very valuable.

(#3): Working in a productive environment is definitely key, but you have to make it productive no matter where you are since you are a startup. It could be a coffee shop if it HAS to be.

(#4): Investors want to meet the entire team, they will be concerned if you mention "we work remotely."

(#5): No one starts a global company, they start a company that goes global.

It is a strain on finances but its good to do it for 3 months at a time, specially in summer time because in big cities you can get sub-leases for short period (furnished).

Good luck!

1. It's easier to communicate, and thus easier to get things done. (But with modern communications devices, e.g. a screen recorder to capture exactly what's going on my system so that the programmer can how I produce the bug, I remain unconvinced that in-person speed of communication is anything more than a slight advantage that is greatly outweighed by the disadvantages of not being an entirely virtual company.)

That's easy to under-estimate. The best way I've seen this explained is the following: imagine that each time you have a question, there's a ten minute delay to getting an answer. In a start-up, things are constantly shifting, and the product design will need to shift with them, so chances are you'll have a lot of questions. If you have, say, 15 (serial) questions a day, that's 2.5 hours of extra waiting time a day, so more than 25% extra time added to the critical path, roughly. That could make the difference between delivering within your tight budget and failing to do so.

Even worse is the questions you choose not to ask because it's too much overhead. Those can cost you abortive work, or cause you to miss out on a cool idea because you didn't discuss it with your cofounders.

I started my first start-up with a friend in Leicester while I was in London, and while it's definitely possible, that friend is basically my best friend that I've known for ten years, and I took trips up to Leicester regularly, and still we struggled somewhat. Obviously it can be done, but it is an extra hurdle, and you should be aware of it and spend extra effort to make up for the downsides.

For my current start-up, I work from home, and we have one developer in Kansas, but our CEO/product guy is in London too, and I spend a day a week with him, and that's working alright. We don't have offices, but at least we have strong communications between the business and tech sides.

Overall, I support the idea of a completely virtual company, and that's the direction we're trying to take this company in - but you should be fully aware of the challenges of it. It seems you are, so go for it! Good luck! :-)

There are always exceptions, if it works for you, more power to ya. Just make sure it really is best, and not just you making the excuses to yourself to justify it

You're going to have to be together at some point, and if you aren't 100% sure that will work EARLY, you could be doomed. You need the brainstorming back-and-forth for new ideas and to see new market challenges. You also aren't considering the time when you need to hire more employees, all of which you want corresponding with you and giving you new ideas.

It's also easier if you all are together when times gets tough and motivation wains.

fundraising is easier if everyone's in the same spot, because raising money has to do with building relationships and that's best done (perhaps?) with people local to the team. investors get to know the team, etc, then invest in them. in the least, this is an obstacle we've faced.

for someone who is thinking of what tools available. Here is small list of webapps for collaboration http://blog.proto.in/2008/05/28/the-startup-kit-part-i/