The pros and cons of “digital by default”

As we all know, the pandemic has forced companies to become remote organizations virtually overnight. While some CEOs and companies cannot wait until the conditions are safe for everyone to return to the office (e.g. Reid Hastings from Netflix), others have chosen to become “digital by default.” (e.g. Shopify). 

Several companies in our portfolio have opted for Shopify’s path, and I wanted to understand what those companies have learned so far about the challenges and opportunities. Here’s what they shared about their “digital by default” experiences.  

The advantages:

  • Geography is no longer a limiting factor for accessing talent. This is especially helpful for companies located in smaller tech ecosystems where it used to be really hard to scale beyond the founding team. Now, these companies can more easily hire senior talent. The thesis of “you can START a company anywhere” has evolved to “you can SCALE a company anywhere”… 
  • Working from home means less commuting time. That leaves more hours in the day for work, or life.
  • Higher productivity…as there are fewer big (and ineffective) meetings happening over Zoom.
  • A more equitable culture: When performance assessment is more directly linked to output rather than presence in the office, the culture becomes more equitable. This can nurture a more diverse workforce (e.g. working around children, working with different learning styles, etc.)

The challenges:

  • Creativity: The best ideas are often sparked from unstructured get-togethers…those random interactions that happen in the hallway, lunchroom, etc. These types of impromptu exchanges are hard, if not impossible, to recreate in an online environment. 
  • Trust: Trust usually builds much better through in-person interactions. It’s much harder for team members to develop deep trust when they’re limited to email, chat, etc. 
  • Integrating new team members: In the work from home era, it seems harder for new employees to soak up the company’s culture and form those important early relationships with other team members.  

From what I have seen so far, the pros largely outweigh the cons for most companies and I think that a majority of tech start-ups will become digital by default companies, except for in three situations:

  • Companies that already have access to a large talent pool (e.g. companies based in the Bay Area)
  • Companies where the creative process is core to their success (e.g. Netflix)
  • Companies that are still looking for product market fit (even if some companies will figure out being remote from the earliest moments on)

But we can expect that even “digital by default” companies will start incorporating offline elements once a vaccine is available. For some, this could be quarterly or yearly in-person meetings, either with individual teams or the whole company. Some will keep offices that enable socializing, in-person meetings and whiteboard sessions (think more SOHO house than corporate office). And some will do in-person onboarding.   

It took a pandemic to challenge our assumptions for how to build and run a company. And while offices and in-person interactions will continue to play an important part, digital by default is here to stay and thrive.

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