Years ago, Matt Mullenweg used to listen to other founders fret about the tight talent market in San Francisco and feel an urge to climb to the nearest rooftop and shout about the solution he was experimenting with: building a team that's 100 percent remote, in order to snatch up the best hires from anywhere in the world.

Today, Mullenweg's company, Automattic, a major open-source contributor to WordPress, has grown to 700 employees working in 62 countries--with zero square feet of HQ space. "It's a bittersweet victory," the founder and CEO jokes. "I'm happy everyone knows about this recruiting secret, but it also means more of that global talent is connecting to other companies."

Inc. sat down for a roundtable discussion with six CEOs who have figured out how to set up and get the best out of a remote workforce:

  • Joel Gascoigne  CEO of Buffer, social media management
  • Jason Fried  CEO of Basecamp, project management software
  • Jesse Mecham  CEO of You Need a Budget, personal finance software
  • Jake Goldman  President of 10up, digital strategy and web design
  • Brandon Griggs  CEO of Knack, data management
  • Matt Mullenweg  CEO of Automattic, publishing platform
 

Let's jump right into the money stuff. What expenses are unique to distributed teams?

Joel Gascoigne: You're paying more for travel. One of our biggest expenses is our annual retreat and getting dozens of employees to Sydney, Thailand, Iceland, for a week. It costs up to $400,000. But that balances out against what we'd be paying for an office, especially in a big city. I think it still works out to be less expensive.

Matt Mullenweg: Teams host in-person meet-ups once or twice a year from locations all around the world. We also have a $250 monthly co-working stipend if people want to work from a co-working space or a coffee shop--whatever's most productive.

How do you figure out how much to pay, when one person lives in Tulsa and the next lives in Tulum?

Jason Fried: Everyone's salaries used to be Chicago rates, because we have more people in Chicago than anywhere else. Then last year we switched to San Francisco rates, because we decided to match our salaries to the best in the business. We don't have a single employee who lives in San Francisco, but we don't want someone ever to leave just because they could get more money in a different ZIP code.

Jake Goldman: We have a general range for each position, but it's intentionally broad, because we don't think we should have to pay someone living in a really remote position the same amount as someone living in Manhattan. We may have to pay more for their travel to events or client onsites. There are costs you might not think about, and that does influence the compensation package for us.

Speaking of time zones--isn't that a giant hassle?

Goldman: If someone's more far-flung, we'll talk to them about time shifting--at least for six months, while they're getting oriented. But in general there's the expectation that everyone's available, accessible, and responsive during core business hours of roughly 9 to 5 your time zone.

Fried: We make sure there are at least three or four hours of overlap with other people on your team. If you're a brand-new designer and 12 hours apart from the rest of your team, that's not going to work. But most of our teams are in three or four time zones, so team members are six hours apart. What we don't want is anyone working the night shift, because that doesn't feel sustainable.

How do you sniff out red flags that someone will be miserable working remotely?

Jesse Mecham: We did have one misfire. We hired someone who thought she could do it, and it turned out she missed the energy from an office situation. So we've learned you have to be really upfront. If someone hasn't worked remotely before, ask if they derive energy from people, and make sure they have a plan to get out and get that energy. It's pretty easy to solve, but they have to go into the role with eyes wide open.

Goldman: We place immense value on the interviews. If someone's connection is choppy or there is a ton of background noise or they're just really slow to respond to emails and messages during the process, that's a good signal they don't know how to make remote work well. Also, during the interview, I'll say something to the effect of, "Some people think remote means less work. Let's disabuse ourselves of that notion right now. You will be judged by your output, and I don't want to have a hard conversation in three months."

Brandon Griggs: Written questionnaires and face-to-face hangouts are perfect for validating remote communication skills. Even if a candidate was my next-door neighbor, I'd still insist on both.

How do you get new hires integrated into the team from a distance?

Fried: In some ways, remote elevates the work over culture fit, because the work speaks for itself. You can't charm your way past bad work. But there is a risk that people will not like one another because they misread some interaction or just had a bad interaction and never had the chance to go to lunch and get over it. Things can fester a bit--that's a bigger risk. So it's important to see one another as humans. Those meet-ups matter.

Another thing we do is something called a 5x12. Every month, one person picks five people from different departments--some new, some old--who get five minutes of advanced warning, and are told to get on a Google Hangout for an hour. There's no agenda, except we can't talk about work. We talk about our lives, our kids, whatever. People get this really rich, fun experience, and then it's transcribed and shared with the whole team. That helps bridge the gap between those in-person meet-ups.

Sounds like video chat is a no-brainer.

Gascoigne: We have a general commitment to do everything via video. With video, you just get a lot more from people's facial expressions. You can tell in a micro-second when someone's confused. We used Google Hangouts for a long time, but now we use Zoom.

Mullenweg: We like Zoom a lot. The other thing that's a lifeblood for us is P2, this set of internal blogs that we use instead of email. Slack and P2 are common across all teams. Other than that, if one team wants to use Trello and another wants to build its own bug tracker, they can do whatever they want. It just has to have an interface for the rest of the company to either read it or submit things to it.

What if I already have a local office but want to start recruiting for remote workers--any words of wisdom?

Goldman: I do think you have to pick whether you want the team co-located or remote. We started remote and then opened a physical office in Portland for 10 percent of the team, and it was really clunky. Tacking on a few co-located workers is as awkward as tacking on a few remote workers. If you want to optimize your team, you need to pick one.

Fried: You don't want to build a local culture and a remote culture. The earlier in the business cycle you go remote, the easier it will be to just make it part of the way you work. But if you're looking to transition later, my advice would be to spend six months allowing local people to work from home. That will give you practice on what it's like to not all be together--to figure out the communication, the tools, whatever. So the next employee you hire, who's all alone in Omaha, doesn't feel like a guinea pig. She'll feel welcome.

From the June 2018 issue of Inc. Magazine