For many companies that recruit in Silicon Valley, the competition for tech superstars, as well as the time involved and high cost of recruiting there, often forces them to seek alternative locations to find top talent.

In truth, there are many cities around the globe with highly talented engineers that cost you less and are less likely to leave for another company. At Cisco back in the 1990s and early 2000s, we built a massive presence in Bangalore that housed thousands of engineers, helping fuel our talent base. But as a small company, if you face this talent supply dilemma and you are considering building a team in a different city, country or time zone, make sure you go into it with eyes open. Remote teams in early-stage organizations can surface unexpected problems, including:

  1. Growing Pains: For many early stage companies, the first months and years are extremely challenging, requiring lots of work, bonding and focus. Unexpected challenges arise almost daily and your ability to work through them hinges on moving quickly. Having your whole team in one location helps with speed, focus, alignment, communication and productivity. Having your team in one place can also be highly energizing and the flow of ideas, iteration and innovation in real time is extremely valuable when you are in an early stage and growing. While some businesses can afford to have remote teams--developers in close proximity to product leaders are critical for building muscle and solving problems. The goal in an early stage company is to build capability and move fast -having teams in other countries, time zones and cities presents obstacles and may hinder growth.
  1. Distance Tax: While clearly some parts of the world allow you to pay considerably less for talent than you are required to spend in Silicon Valley, be mindful that there are many other costs to having a remote team that go beyond salary. I call this the "distance tax." The amount of infrastructure for video-conference equipment, the extra time and money you spend on airfare, the time needed to understand cultural differences, the delay it takes to form relationships and connections, the inability to solve problems instantaneously, etc.,--are all contribute to the distance tax. The question in an early stage is "Can I afford to pay that tax and what are the pros and cons of this strategy?"
  1. Time Difference -This is perhaps one of the most often overlooked elements regarding remote teams. The more people are together and collaborating, the more real time productivity. If people are not only in another physical location, but there is also a greater than four-hour time difference, you now find yourself with restricted collaboration. If you can afford this delay, then it might work, but again, in the early stages-- every hour is precious. The second element in time differences is that the HQ location will always feel that THEIR time zone is the one that should govern when meetings happen--not the smaller remote sites. I have seen this cause friction, as meeting times are debated and unproductive time ensues.
  1. Cultural Differences -Any time you have an office in another location, the culture there will be different in some ways than in your main office. While many times it is fine for there to be micro-cultures in your company, the farther away that office is from your HQ, the more likely the cultural differences will be greater--no matter how hard you try to replicate HQ. Sometimes these differences will be positive and sometimes not, but be mindful and aware especially if you are a young company looking to optimize collaboration. How and when people work matters to a young company, and if you have remote locations you need to invest the time to build connective tissue. Relationships and trust take longer to build the farther apart people are and if you throw in a national culture difference, you are just adding complexity.
  1. Communication Challenges- Success in a high-growth organization depends on clear, rapid communication. Even in small groups in one location, communication challenges surface: misunderstandings, incomplete information, lack of follow-up, etc. If you add more office locations, it just boosts the communication challenge. While there are many tools and ways to address this, there is no substitute for building a communication strategy and putting a great deal of thought into finding out how to make sure the right information is flowing in the right direction to the right people.

In summary, every organization faces challenges when setting up remote offices. Early stage companies will feel this challenge more than larger companies because there is really no margin for error. If you desire to build something great and your company is moving from crawling to walking, the closer you are and the more in-tune your team is with one another, the more capable they are of growing and learning to self-heal and course correct. While the financial reality of lower-cost talent and talent availability may cause you to seek alternate sources and locations, make you sure you keep these five points in mind so you don't wind up paying a hefty "Distance Tax."