In this webinar recap, we learn about the thought process behind building a distributed workforce, whether it’s right for your startup, and the factors you need to consider to succeed.
Speakers
Watch the webinar below or read on for the full recap
What is a global, distributed workforce?
For Dan (Deel), a globally distributed workforce is a business that can have workers in any country, city, or region.
“The way that I think about it is nodes and connectors. Typically, we would have businesses with a headquarters which is a major node. Then we would have subsidiaries, essentially offices that I call micro nodes. With a globally distributed workforce, these nodes are evenly spread around the world in most cases and connect, which is really important because it provides an almost level playing field between the remote workforce players.”
For Alex (Brix), a globally distributed workforce is a competitive advantage over larger organizations.
“The remote workforce is a great opportunity for startups because we're stepping into the war on talent, fighting with big corporations in Silicon Valley year after year. I believe all the founders have a similar experience. We’ve hit out on great talent and have to convince them to drop their offer from Google, Facebook... It’s difficult.
But with the global talent pool, you can tap into more great people. And by sharing your idea and mission, you can find those people who really believe in your product and join you. And that’s giving more opportunities to startups as global talent will have a lower salary expectation than the bay area, for example. So we give the startup a good opportunity to build a very strong core team, even in their very early stage.”
For Alireza (Plug and Play), a globally distributed workforce was the by-product of the pandemic.
“One of the good things about the pandemic was that it showed everyone that it’s [remote/distributed work] doable because, before that, I and many people had doubts about whether it’s a good idea. But even if you were a local team of 50 people, 100 people, all in one city, because of the pandemic and lockdowns, you went remote. Now you have a real example and experience of that. People are people. If they want to work, they will work; if they don’t, they will not, even at the office when you’re seeing them.”
What advice would you give founders thinking about scaling remote-first companies?
Alex (Brix) kicked off the discussion. For Alex, remote working was more than a transition following the pandemic. For the past ten years, he has been exploring remote working to approach the future of work.
“Remote work allowed a company to tap into global and local talent. You can build a team with 100 times the talent you could before. Remote work is forcing everyone to work through their computing device. This way of working generates more data than traditional working methods, allowing us to build multiple more sophisticated collaboration and communication tools.”
“I believe this way of remote work will cultivate a new generation of organizations. We can find that we can build many more beautiful things upon it. From my perspective, I think it will unlock the potential for the future.”
When starting his company, Alex asked himself two questions:
- Is it easier for me to build my core team locally or globally?
- Is it more efficient for me to manage my team online or offline?
“If I get a solid answer for both questions, I go remote. No brainer.”
From an investor perspective, Alireza (Plug and Play) believes that a distributed workforce is a very attractive business model as it means less dilution and a longer runway.
“As an investor, you love runway for your startup. And a runway, if your teams are in San Francisco, for example, it’s very short. But if they are a Canadian team or in Abu Dhabi, China, or Tawan, the labor and cost of living are less. They can get paid less, so the company gets a longer runway which everyone loves; the founder has less stress to be out of money, and the investors are happy because it’s less dilution.”
Alireza added that a distributed company is more attractive to investors as it demonstrates that it is customer-focused and better positioned to serve a global customer base.
“If you have all the teams in one time Zone, It’s not going to be 24/7 company. If you have a team member in Japan, a team member in the Middle East, a team member in Europe, and beautiful California or Rio, then you are a true customer-first company.”
“If a customer comes to you, and you reply right away, you have them as a customer. If you don’t, your competition will reply to that request, and they will have them as a customer. You will lose the game if you are not a true 24/7 company.”
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Are there any company types or industries that are suited to distributed workforces?
Dan (Deel) believes that while few industries trend towards remote work, such as fintech and crypto companies, the company’s culture is most important to the success of a remote workforce.
“It’s about companies which have a culture of trust in their workforce, and being able to trust the work to trust your people, and trust that various policies and procedures are followed, and I’m not just talking about a 10, 20, 50 person company, I’m talking about an enterprise with thousands of employees. If its trust is at the core of the company’s culture, these companies adopt the remote model and tend to be clients with Deel.”
How do you build and maintain culture in a remote-first environment?
Alex (Brix) feels that culture is best maintained through asynchronous communication in the remote world.
“You cannot count on everyone to come together, meeting every day, as people are distributed in different time zones. So we always encourage our employees to document everything."
“When everyone comes to work, they are just like a bunch of Instagram friends. They check Everyone’s updates every day, know what’s going on, and are involved in whatever they want to be involved in; they know the direction of the company.”
“By doing this, people feel they are engaged. They can evolve into the community. They can do whatever they want; it’s more like an online family, like a Facebook group. I think that gives a comfortable culture to a lot of remote workers.”
What lessons have you learned working with remote-first companies?
Alireza (Plug and Play) has witnessed many failures as an investor. He believes that it’s essential that remote-based companies invest in building strong relationships to keep an investor relationship alive.
“When you are not in their [the investor’s] eyesight, when you don’t have them with you, I don’t have to regret lunch with them. They may help you less. But having some regular face-to-face meetings, it changes everything.”
“You are human. You are not a machine. Everybody knows what they should do. That’s true. But that glass of wine, that dinner, that lunch strengthens and brings a better way of getting to know each other. “
“You don’t document how many kids you have? You don’t document your kids’ birthdays?? Those are the missing parts of the remote work that we should mimic and create to some extent again.”
Dan (Deel) agrees. He explains that a good way to build a strong remote culture is to assign a budget to enable workers to connect outside work.
“One of the things we’re doing at Deel is giving those nodes of people — essentially the small groups in various cities or regions around the world —a budget to meet and go for dinner and get together and encourage that type of interaction.”
“The results of this are the forms of media and the photos the team chooses to share in our company forums and the communities that form.”
“The brilliant thing about this is that we don’t hire specific teams or people in specific areas. So you have cross-pollination between teams and seniority in the given area, similar to a traditional corporate headquarters hub and spoke model.”
How do you set expectations and maintain accountability across a distributed workforce?
Alex (Brix) explained that developing a remote work tool kit is essential to helping people understand their most effective working mode.
“When people come to work, and they log on, we check in on their activities, and we’ve left some notes on their daily work, and once they get off, they just log off, and we will have some data to analyze.”
“What will be the most productive time and less productive times? We can arrange our meetings and work fairly and more authentically. We also find out some potential issues and understand what the team is doing so we can provide better support.”
“As an organization, we still need clear rules. How do we encourage and promote people? How do we award people? And what rules in remote areas should be supported by data. It can become weird in a remote culture if you don’t give people clear data on why I promote this person, for example.”
“The last thing I would mention as a failure we’ve experienced in remote work is that I know a lot of companies like a result-driven style, but that can create a brutal culture.”
“From our practice, a really smart guy can work 3, 4 hours a day and then take the rest of the day off. And some guys working 12 hours, working really hard, are less productive. Without a driven culture, the second group of people will be less appreciated, and that’s what we experience, and it’s not satisfactory for creating a productive culture.”
How can founders navigate the legal and regulatory issues of a distributed workforce?
Alex (Brix) shares his experiences navigating international labor laws, explaining the challenges around compliant hiring and firing and protecting the startup’s intellectual property.
“When it comes to cross-border hiring, legal infrastructure is very expensive. My suggestion for founders is if you have any tools you can use to handle labor regulations, compliance, taxes, use those tools.”
“We have people from four countries, and we actually set up the legal infrastructure by ourselves in these four countries for direct hiring, and that almost burnt us out. It was very, very expensive.”
“I suggest the startup founder be aware of the risk of global hiring. No matter what tool you’re using…you should always do your homework about labor law because different countries have different rules regarding terminations, severance pay, etc., and you don’t want to get a huge bill after you lay off someone, for example.”
“We hired someone in China for two to three months, we fired them, and then later, we get a layoff penalty for three months’ salary.”
Alex also touches on the importance of protecting intellectual property (IP) as a remote and distributed startup.
“Protecting IP in remote work can be a little bit tricky. When a lot of startups hire someone, the most straightforward way to protect IP is to put the IP agreement in the employment contract, but if you directly sign the contract across borders, it can be harder to protect your IP."
"What we do, whenever we recruit someone, we either have agents in that country or we have our own entity in that country and use that entity to sign that agreement ensuring the IP is protected by both the local and US government.”
Dan (Deel) explains that Deel has spent a lot of resources researching, operationalizing, and productizing all compliance aspects for companies, including compliant terminations and IP agreements.
“When it comes to hiring, managing, onboarding, paying, providing benefits, all those elements of the HR lifecycle, Deel ensures compliance.”
How have you picked your locations for hiring?
Alex (Brix) focuses on regions that provide a competitive advantage, which is determined by what type of industry you want to engage in.
“When we pick the location, we’ll first focus on what this region is good at. When we build our software, we will find out where the software has been built before and where we can find the most efficient talent. If you want to build e-commerce software, I will probably go to China because a bunch of e-commerce software is being built there. If I want to find someone for a Web 3 gaming project, I will probably go to Eastern Europe. If I want to build my customer service tools, I will probably go to Canada because that’s more cost-efficient.”
“I will mostly focus on the regional competitive advantage and where I can find the most efficient team.”
For Deel, time zone coverage and talent are important considerations when choosing locations to hire; however, finding the best person for the role is also a priority, explains Dan.
“We look for the best talent and the best person, and they can be located anywhere. Looking at our 2022 global hiring report, LATAM was the region companies wanted to hire from the most on our platform. Argentina was the country hired from the most. Software engineers and product managers dominated those hiring rankings.”
Do you hire junior talent remotely, and if so, how do you onboard and maintain engagement?
Starting his tech career at 21, Dan (Deel) is particularly passionate about providing opportunities to junior talent.
“We’ve onboarded a number of very young and experienced people here at Deel, and making sure that those people succeed is something that I’m personally very passionate about."
"I’ve seen those people do incredibly well, and now they own programs and manage teams. Some are even managing large teams, and I think it’s about attention and giving the young person the time that’s required to get them ramped up and ensure that they’re fully able to learn.”
“When you get into the enterprise segment, and you’re a few 1,000 people or a few 100 people, that level of attention may not be possible. So it’s about enablement, and it’s about learning materials and having a very good robust learning and onboarding programs.”
Alex (Brix) agreed, highlighting that training junior talent remotely can take extra effort. He suggested that founders recruit as senior as possible for the first 30 - 50 hires.
What tools, practices, or tips does the panel have for founders running a distributed team?
For Dan (Deel), the concept of “show me” is a very important practice when problem-solving among remote teams.
“Say we have somebody that’s stuck on a problem. That could be a software engineer, a product manager, or whatever role. But the point is, they’re stuck on this problem. We have a concept of asking the person. Hey, could you show me? Share your screen. Walk me through the problem you’re stuck on, and we will work together and solve it. And that concept has proved very valuable to us at Deel.”
How can remote teams stay connected?
Alex (Brix) emphasizes the importance of connection in a remote environment and how remote companies must intentionally create a work environment where people can feel part of a community.
“The working space is not only a place for us to work, but also a place for us to make friends, to connect with each other, to feel ourselves, but remote work has deprived us of that part.”
“I really like a company called GitLab. They have about 15,000 engineers. That’s 15,000 employees globally, and they’re creating great community cultures. Because when people feel socially disconnected, they want to feel connected somewhere else.”
“You want to find a way to engage people inside a company through a BBS, a Slack group, or Discord. You need to find a way to connect people, not just through their work but also through their habits, involvement, and connection with their personal lives.”
What does the future hold for remote work?
Dan (Deel) and Alex (Brix) believe AI and other innovative software developments will significantly shape the remote work landscape.
“AI will be an important element of the future of work. Our vision at Deel is that AI must be coupled with a person, a human. And AI coupled with that person can extend that person’s productivity up to four or five times. We don’t believe that people can be replaced with AI; it’s more that AI will be an extension and allow people to learn more.”
In particular, Alex acknowledges AI’s advantages to globally distributed teams to support cross-cultural communication and how software solutions such as Deel help startups navigate the legal and compliance aspects of doing business across borders.
“AI plays a very important role in the remote world because it will dramatically reduce the communication gap. For chatGPT, we find that it’s efficient to help us communicate, not just for translating but for crossing a culture gap and to deliver a message clearly.”
“I believe in the future, with the tools we have today, we have a lot of SAAS to cross the barrier of legal, regulation, translation, and culture. Now we can focus on exploring the next wave of organizations.”
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