Just about a year ago, when I was laying the groundwork for a new company, PeopleAnswers Inc., I learned quickly that the talent we needed wouldn't necessarily be found down the street and around the corner from the office we opened in Dallas.

A smart, top-of-the-line field industrial psychologist that we wanted to hire, for example -- our company develops software for analyzing personality traits to assure better matches between candidates and jobs -- lived in Portland, Oregon. He wasn't game for moving. Nor would we have been game, even if he were, for waiting for him to transfer and settle in a new locale.

We never did hire him. In fact, we changed our business model somewhat so that we are now drawing creative talent from two universities -- Rice and Texas A& M -- in order to leverage through our professor-advisors the best of their top students. But one thing hasn't changed: the fact that we are more likely to draw talent from elsewhere. And that, in turn, has meant that we have become what is a growing reality for today's startups: a "virtual" company.

The Culture of Working Separately

As a virtual company whose five top executives work at five different addresses in two cities, whose advisors are scattered around the country, and whose technical subcontractors are located around the globe, we have also become a virtual "culture." Such a culture, I am learning, is dependent upon the communications technologies of the past decade. And it differs in subtle but critical ways in a psychological sense from those grounded in physical space.

Only one of our top five executives -- our chief technology officer -- works out of our main office. I work mostly from my home office; another works in Austin 200 miles away. A key advisor -- the head industrial psychologist for Victoria's Secrets -- hails from Columbus, Ohio. And as for the tech teams, think California, Boston, Houston, and India.

All of which means that we are thoroughly dependent upon email, voice mail and, increasingly, instant messaging, as well as older technologies, such as the telephone and fax machine. In fact, were it not for the communications advancements of the past decade, we could not be a virtual entity or have a virtual culture.

Being dependent upon those instruments means knowing how best to use them and for what objectives. And that is where the more subtle changes intrinsic to "virtual" come in. A virtual culture is one that demands that the individuals involved be self-motivated, which, of course, is likely the case for people engaged in company building. So far so good. But it also means that whoever is in charge must work constantly to create what I call "a sense of urgency" -- about goals to be reached, tactics to employ, tasks to be handled. Working virtually allows for the potential for too much to fall between the cracks.

In an even more subtle way, a virtual culture becomes one that is more results-oriented than entities gathered in physical spaces. The personal chemistry that is a part of everyday face-to-face encounters is significant reduced, bringing the achieving of results more prominently to the forefront.

Email As the Pillar, Instant Messaging As the Glue

The matter of chemistry between people is reduced -- but not eliminated. A large part of the work of determining the right use of the communications media involves putting the personal back into the virtual organization. And that means categorizing different communications devices for specific uses.

Email, for example, is the pillar, without which we at PeopleAnswers could not function virtually. Yet it is not for the casual exchange. For every time a person needs to use it (as with the telephone), he or she needs to break mental concentration from the work at hand, think about the something else to compose for the message and physically tackle that job. It's a stop, interrupt medium.

And so, email is best used for documenting the formal, meaty stuff: the correspondence with attorneys and accountants and the product specifications for the tech teams. It creates a historical record, an extremely valuable contribution. It backs up the telephone conversations that, for example, we five executives conduct every day. And I've learned the hard way that it is a must for dealing with the techs; it helps avoid miscommunications that cause work to be done incorrectly.

Yet email alone isn't enough. We've learned recently to add instant messaging, which we consider the glue for our virtual culture. IM is the substitute for the dropping-by-cubicles and gathering-at-water coolers that occurs in offices. Because it doesn't require that workers interrupt tasks, as does email, it enables the casual chitchatting so necessary for producing good work: How should I handle this problem? Well, what do you think? Don't know, do the best you can.

See what I mean? IM, in short, creates the culture that otherwise wouldn't exist when people work remotely.

Not by Virtual Alone

Is IM enough? I don't really think so. At PeopleAnswers, we've built in a mechanism for meeting face to face every quarter. It is critical, I believe, to the intellectually demanding work of building a company to understand people's perspectives in their entirety -- and that includes body language, facial expressions, gestures, and, yes, even the personal background that is a part of each individual.

Tackling that issue has led to us meeting at the Rice University in Houston, a location that is central for us all. The "us" includes we five executives and our five advisors, as well as spouses. Our gatherings include social time together: we fly in the night before to have dinner. Our business meetings take place the following day and last into the late afternoon.

While these face-to-face encounters help sustain a virtual culture, even they won't enable it to endure indefinitely, at least not for a company such as ours. As we enter this critical year, which will be a time for building relationships with customers to establish the market for our product, I believe it will be necessary for us to be together in an office.

Customers for products such as ours -- innovative offerings that aren't yet understood -- need to develop a relationship with an organization, not a disparate collection of individuals. I myself sometimes wonder -- and remember that I am forward thinking about the matter of working virtually -- about our tech team in India. I've never met them. So who are they, where do they work, how do they do what they do? Removing nagging barriers such as these from prospective customers is our objective for this year.

In our year of working virtually, we have accomplished a lot: a test product just began shipping, our cash is on tract for turning positive by the end of the summer, and our revenue for 2002 is likely to be in the half million dollar range.

Using today's communications technologies astutely and understanding how the psychology differs has made for a productive virtual culture. Though it may cease to be in the year ahead, it has served its purpose during our startup phase.

So, entrepreneurs take heed: when virtual has to be, it can be -- if you understand and proceed intelligently about the culture that evolves.

Gabriel P. Goncalves founded Dallas-based PeopleAnswers Inc. in 2001, and currently serves as president and chief executive officer. The company develops software for analyzing personality traits used for matching job candidates and positions.

& copy2002 Kauffman Center for Entrepreneurial Leadershipat the Ewing Marion Kauffman Foundation. 4801 Rockhill Road, Kansas City, MO 64110. All rights reserved.

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