For a small company, I'd say the time/cost of hiring a few good engineers is way more than a few months rent. You'll certainly pay a respectable headhunter quite a bit.
Many of the really amazing labor pool members are recognized as being amazing and are compensated and rewarded in such a way that it will be difficult to draw them away.
Then those that are looking are being courted by every other company.
The converse can be true - it can be much easier to get very high quality talent somewhere that there is not a massive labor pool. You'll attract the people who don't want to live in SF or NYC, or want a certain lifestyle, or to be close to where they went to college, etc. etc.
I'm not saying that starting a company not in SF is inherently better, but that "insurmountable advantage" is also one of the biggest disadvantages about SF. Your mileage may vary.
I live in the South of France in a big house that costs me $800 per month. I am about a 10 min walk from the TGV station that can take me to Paris in just over 2 hours. My kids are in French pre-k, I have top notch medical insurance that costs $139 per month to cover the whole family beyond the government insurance and I don't have to worry about my wife getting harassed by urine soaked homeless people at BART stations.
I can't speak for all engineers but given that there is an entire word outside of San Franscisco, I can see zero advantage to living there. Talent is there because they have to be. I'm sure a huge percentage would rather be working from a beach in Thailand or Tulum.
As far as investors, who cares? If you have a product people want to buy, investors will come to you. It's a myth that proximity matters. There were investors long before Silicon Valley startups were a thing. Plenty of billion dollar companies founded everywhere else. At this point, San Fran and the valley are prestige locations as opposed to offering any competitive advantages.
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)
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.
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.
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?
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.
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.
I honestly do not believe for one second that this is a thing, or that it's a significant thing.
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.
And easier to disseminate. Searchability is far superior with tools than with voice conversations.
Two engineers talking to each other will share far more useful info than they will directly.
Is this really true? Seems far-fetched. Isn't that $20-30k higher than the Google base starting salary?
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.
Looks like I'd have to live with roommates if I moved out there.
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...
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).
And for all that, we get to pay for our own health care and retirements too!
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
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.
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.
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.
http://recode.net/2015/07/29/yelp-admits-the-unicorn-bubble-...
For some reason it has only occurred to them now that hiring for offices in cities other than San Francisco might help them get talented developers.
They're not opening up new offices, they're looking to hire where they already have offices like New York and Phoenix.
We'll see. Perhaps it really will be an exogenous event which will halt the San Francisco craziness.