These days, it is entirely possible to run a thriving business out of a dozen different cities – with no central office. We talked to many smart CEOs who have ditched formal digs in favor of online communications between employees, periodic productivity check-ins, and a lot more flexibility. They shared lessons they've learned along the way, and pointers on how to make a virtual company grow and thrive.
Graham Hill Founder, TreeHugger
"There's a lot of pressure to have an office, but if you can trust your employees and if you don't have a lot of physical stuff like prototypes, then it's a great model. You're going to save a bunch of money on real estate, and it's going to be good for the environment, because you're not commuting, and you're not using an office. You can also live anywhere in the world. I conceived of TreeHugger while I was living in New York, but I fell in love with a Spanish girl and ended up founding the company in her apartment in Barcelona. It was all contractors for the first two and a half years. Writers were paid per post, with bonuses based on traffic. Every two weeks, they'd send me an invoice, and I'd pay them with PayPal. While I ran the company, I lived in India, Argentina, and Thailand. I'd get my laptop set up with an Internet connection and sublet a furnished apartment. I didn't have a lot of friends in these cities, so I'd get a lot of work done. I was a total workaholic, but then I'd get to go out for lunch in Bangkok. I could have just stayed in New York, and maybe it would have been even more successful, but I wouldn't have had such an interesting experience."
Matt Mullenweg Founder, Automattic
"For most things we use P2, which is sort of like a private version of Twitter that we developed. The rest is over instant messaging and e-mail. The danger in communicating this way is that it's really easy to misinterpret someone's tone - for instance, thinking that they're angry when they're really just busy. We almost never talk on the phone or do video chats, but those are things I think we need to do more. Once a year, the entire company gets together in person. During the day, we split into teams of three, and each team works on something they wouldn't normally work on with people they don't normally work with. The idea is to get some cross-pollination and to get people to make personal connections. In some ways, seeing your co-workers once a year is better than seeing them every day, because if you're only going to see someone for a week, you try to be nice, even if you don't like him or her. We don't get the passive-aggressive stuff that builds in an office."
Kevin Hale Co-founder, Infinity Box
"We try to keep things really simple. Every night, our employees open up a shared text file and write down anything they did that took more than a half an hour. Then, on Friday, we meet at 2 p.m. at someone's house and review what everyone accomplished and how it compares with what they said they were going to do. It's hard to slack off when you have to face everyone else. The other four days of the week, we don't have meetings. I might do some short video chats or a burst of instant messages, but anything that takes more than 10 minutes needs to be tabled until we meet in person. One of the great side effects of this system is that it causes people to sleep on things. And it causes us to focus on accomplishing things instead of talking about things."
Mike Sappington CEO, gloStream
"We've gotten too big to be a virtual company. By the end of the year, we'll have 100 employees in the U.S. and another 100 in India. Setting up a conference call or arranging everyone's schedules for a meeting started to take an enormous amount of time. Face-to-face collaboration is essential when you want to get something done quickly in a large organization. That said, I'm doing this reluctantly. Our people enjoy working virtually, and we want to maintain the culture that we built. We're still going to use all the technology we used before, and we're continuing to be flexible about work schedules. Some folks are expected to come into the office every day to collaborate. But if you want to leave at 3 o'clock to pick your kid up from school, I understand."