The Case, and the Plan, for the Virtual Company

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Step 6: Consider Your Culture

This step is the hardest step of all, because it's more or less incompatible with everything else about breaking free from the office. It involves costs and benefits that are unknown and difficult to predict; it has very little to do with new technologies or improved managerial techniques; and it can't be solved by any amount of communication. Instead, it means asking yourself big questions about the kind of company you have, the kind of company you want to have, and why you became an entrepreneur in the first place.

At its most basic level, going virtual means moving away from a culture of collaboration by a group of competent generalists and toward one based on specialists who are cheap, efficient, and good at meeting deadlines. To the hard-nosed operator, this probably sounds good -- who doesn't want a cheap, efficient staff? -- but to those entrepreneurs who think of their employees as extensions of their own family and who are skeptical of the ability of strangers to work well together -- which is to say, to most entrepreneurs -- it might sound a little bit scary.

Indeed, management theory says that companies exist because collaboration creates more value than individuals working on their own. So if a virtual company can't figure out a way for dispersed workers to add to one another's efforts, there is a risk it will cease to create value and will fail. "There's a danger that a company that goes virtual will stop being an organization and turn into a market," says Wiesenfeld, the NYU professor. By that she means that workers, feeling increasingly disconnected, will be more inclined to make decisions based solely on their self-interest.

To be sure, there are entire companies built on the premise that treating one's business like a market is not a bad thing. oDesk, for instance, is a Menlo Park, California–based start-up that has fashioned itself as an eBay for virtual companies. The company sells software that allows you to manage the hiring, firing, and payment of employees the same way you might buy office supplies. Potential hires are listed in a Web-based directory -- on a recent search I found a journalist who claimed to do the same job I do for a lot less than I earn. Once employees are hired, oDesk's software monitors them throughout the workday. It logs the frequency of their keystrokes and mouse clicks and even takes pictures at random intervals using a webcam.

oDesk is popular -- to date, businesses have spent $128 million using the company's platform -- but the company isn't virtual itself. It rents an 8,000-square-foot space that costs $300,000 a year, and most of its 32 full-time employees come to work four days a week. I called oDesk's CEO, Gary Swart, on a Tuesday, which was supposed to be his work-from-home day, but I found him in the office. "I think I get more done here," he confessed.

This is not to say that it's impossible to create a strong culture outside of an office -- the CEOs mentioned in this story are confident that they have done it. But most virtual companies build their cultures from scratch, hiring the sort of people who want to work remotely, who don't want to be friends with their co-workers, and who like being a long distance away from their bosses. Virtual companies are also, crucially, run by CEOs who are able to derive a sense of personal fulfillment from this arrangement. Many entrepreneurs speak of the flush of pride they feel when they walk into their offices and see the people they have created jobs for and the culture they have fostered; Matt Mullenweg gets that same rush from looking at a map and seeing his employees scattered across the world.

As we returned to the office on March 1, a month after our departure, I wrote an e-mail to the staff asking them this: If you had to choose, would you stay virtual or return to the office?

A handful came down firmly in favor of working from home. Our copy chief, Peter McLaughlin, who was among the most skeptical before our experiment began, changed his mind completely. "I would, without a shadow of a doubt, choose to work from home full time," he says. "Not only would it save me $300 a month in commuting costs, it would allow me to roll out of bed at 10 a.m., walk 20 feet, and be at work." Some begged for a middle ground -- a hybrid approach with a smaller office, less commuting, and the flexibility to work where one is most comfortable. That is probably the model that will be adopted by more companies as technology improves, as our economy becomes even more globalized, and as concerns about the environmental impact of commuting grow.

But most Inc. employees said that, although an office in the abstract sounds like a rather depressing place to spend the majority of one's adult life -- easy to mock, difficult to love -- they had nonetheless found room in their hearts for this peculiar institution. "I liked the freedoms that working from home presented, but I felt like my life became less dynamic," wrote Travis Ruse, our photo director and the guy who conceived of the pictures in this article. "My job really became just about my job. I missed the distractions and surprises that my co-workers bring to the day. Part of working is the social aspect of doing something collaboratively. I missed that very much."

Travis also wrote this: "I missed my friends," which, when you think about it, is probably the most powerful argument of all in favor of sticking with the office, one more or less immune to number crunching or prognosticating or anything else.

As we finished the issue you are reading and started working on the one we hope you will read next month, it was a relief to settle into our old rhythms and to catch up with our old friends. It also was a relief to know that, if pressed, we could survive without our ridiculously nice offices and still make a magazine. But mostly, it was good to be back.

Max Chafkin is Inc.'s senior writer.

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Senior contributing writer Max Chafkin has profiled companies such as Yelp, Zappos, Twitter, Threadless, and Tesla for the magazine. He lives in Brooklyn, New York. @chafkin