Thoughts on remote working

This tweet by my old boss went viral last week. We've all heard plenty of arguments for and against remote work at this point. These are the main thoughts I have on the topic:

1. WFH works well for software engineering but poorly for most everything else, so it's important to distinguish between the two and being careful about drawing conclusions about WFH productivity based on the experiences of software engineers

2. The relative appeal of WFH depends significantly on housing costs, our current housing market is highly inefficient, and WFH acts as a 'patch' over a dysfunctional housing economy

3. WFH leads to companies becoming commoditized and reduced to salary and perks

Technical versus non-technical roles

Firstly, remote work can work very effectively for programmers. Software engineers have been working remotely since the 1980s, when IBM first allowed engineers to "telecommute". Programming is a solitary job, probably about the most solitary job you can do, and insofar as it requires communication with other people the most efficient way to do that is usually through the internet and instant messaging. Personality-wise, engineers tend to be introverts who care about freedom and efficiency, so WFH is likely to appeal to them; they're also a hot commodity on the job market (and continue to be in 2024, despite constant claims that AI is going to make human engineers redundant any day now), so companies need to compete to offer them good perks.

Amazon announced recently that they want their employees to go back to full-time in-office work. Their (prospective) engineers aren't happy about this:

Since engineers have plenty of options, it's likely that Amazon will lose quite a chunk of technical talent through this move.

The thing is that while remote work can be pretty effective for engineering (and probably also product and design): it's not good for most other kinds of job. If you're in sales, operations, marketing, etc, working remotely is worse than if you're in-person. Why? Because those jobs are normal jobs; engineering is a special kind of work that is more like a lifestyle or craft than it is a typical white-collar job. Until 2020, if you asked 100 people on the street what the best thing about their job is then I bet the most common reason would be the people that I do it with make it worthwhile; if your job relies on relationships rather than craft, then in-person is better.

Aside from just better appealing to the preferences of engineers, it's obvious that being a remote company offers lots of other forms of upside for attracting technical talent; you can hire people from anywhere and don't need to worry too much about timezones, since technical people work mostly asynchronously and they don't need to worry about working in specific geographic territories as salespeople and marketers do.

In the past this was a more prominent competitive advantage for some companies - e.g. companies like Gitlab were able to hire better talent than they would have otherwise by demonstrating their commitment to hiring remote workers. Today that advantage has been significantly eroded, but it's still huge - I have a friend who lives in Nigeria and pulls in $150k a year working for Silicon Valley startups. It's fair to say that he's not likely to go job-hunting in Lagos anytime soon, nor is it likely that American tech companies are going to stop hiring outsourced dev teams out of Poland and Ukraine.

So I think that a primary concern for weighing the tradeoff between being WFH and in-office is the extent to which your company can derive a competitive advantage through hiring remote engineering talent. I'm not sure whether this is more relevant to startups or bigger companies. On the one hand startups are more cost-conscious and might be able to better leverage cheap overseas talent; on the other hand being located in the same building seems more potentially more impactful when working on something mission-driven that requires a lot of hours rather than something that's "just a job". Big companies like Amazon might not need ultra cracked engineers anymore and can get along fine with their steady pipeline of top CS grads, and they can afford to pay the rates of SF or NYC engineers rather than needing to hire from abroad anyway.

Probably the move here is to just have a hybrid policy whereby your team is basically in-office, but you make exception for senior engineers that are worth making exceptions for.

WFH and housing costs

There are several ways that WFH policies patch over excessive housing costs:

• Living in big cities is very expensive, which means that people can't afford to live near their work. This means that in-office work is currently synonymous with 'commuting', but if housing markets were more efficient this wouldn't be the case and many more people would simply choose to live near to their workplace. Since that's not possible, WFH becomes much more attractive than it would be otherwise. That's unfortunate because cities are good for productivity: it's good to have lots of productive people clustering together in one place and experiencing agglomeration effects.

• In addition to affecting the cost of living generally, expensive housing makes it difficult to have children (since having kids requires more space + childcare, the latter of which is expensive mostly due to housing costs). Currently, WFH works as basically as an additional form of child benefit; it's much easier to look after kids if you can be at home with them while working at the same time. The downside though is that this probably has net negative consequences for company productivity: looking after small kids is extremely difficult and demanding and it'd be hard for that not to affect your ability to do your job. Personally I think family should always be a higher priority than work so I'm fine with that tradeoff, but if housing were cheaper it'd be unnecessary: families could more readily afford larger houses and childcare, and they wouldn't need to juggle WFH with childcare to compensate.

WFH and company commoditization

Trung Phan had an interesting longread recently about the recent financial decline of Starbucks as a company - basically their founder and former CEO put the current exec team on blast after they missed earnings last quarter.

The TL;DR is that Starbucks initially had a really strong brand based on an emotional connection with its customers - compared to coffee chains of the day it had better interiors, nicer staff, as well as interesting drinks and free wi-fi. That led to Starbucks becoming people's 'third place' which they'd associate with hanging out with their friends, it wasn't just a coffee vendor.

In recent years, Starbucks invested heavily in a mobile-first strategy; customers could order coffee on their phone and pick it up ahead of time, and were encouraged to load up their account with starbucks rewards ahead of time. This strategy was wildly profitable, since it allowed for more efficient operations and making free money through 'breakage' (customers adding money to their account but not using it)

So for a while this worked really well. The problem was (in Phan's view) that this efficiently led to Starbucks commiditizing their brand. Their customers didn't have an emotional connection with the store anymore, they were just another coffee vendor. Phan argues that this is a similar story with many luxury brands in recent years that have embraced technology enthusiastically at the expense of hard-won brand and reputation, citing also Nike's recent strategy to prioritize e-commerce over in-store operations.

So why am I bringing this up? Because I think that WFH is basically the same kind of phenomenon: it leads to companies becoming commodities in employee eyes, who are reduced to nothing more than a list of salaries and perks. When that's the case, employee retention is gonna be difficult.

Joining and leaving a remote-first company is a bizarre phenomenon. It's basically joining and leaving a groupchat. Doesn't feel particularly meaningful.

The core advantage of in-person for companies is culture. You have the opportunity to build a unique culture and enable close relationships between co-workers. Of course those relationships can emerge remotely, but they're likely to be weaker than they would be if they weren't remote.

Future

As it stands, I expect more companies will follow Amazon's example and want to go back to working in-person. At the same time, housing costs are going to continue to be pretty high for the foreseeable future and more and more employees will be attracted to the option to working remotely to cut down on their cost of living.

Who might do well:

• Companies that have already invested in commercial real estate prior to current housing market. Google's investment in creating a great in-person environment now looks like a much smarter bet than Amazon's historic culture of being stingy in that regard.
• Small remote teams formed of highly independent operators who can keep burn rate really low
• Y Combinator and other seed stage VCs: housing is expensive and raising VC makes it a lot easier for aspiring founders to live in NYC, London or SF

Who might struggle:

• Young people. It's a classic boomer line but I think it's very true that working in-person is worthwhile earlier in the year so you can learn better soft skills, get mentorship etc. The modern world is full of ways that make it easy to spend time alone, and WFH is one of the main ones.
• Companies in the middle: very wealthy companies can afford large offices, very small ones can base themselves in someone's garage. But the median company might end up in an unhappy middle where they need to offer something like 3-days in office to retain office staff, and end up being less productive than they would be with a full-time work week but also not able to compete for the best remote talent.

Thoughts? DM me on X.