When Twitter CEO Jack Dorsey announced in May that employees would be able to work from home—or from wherever they’d like—indefinitely, it marked a major change in the tech industry. Soon, other Silicon Valley companies, including Square, Slack and Upwork, followed suit, announcing their own plans to shift to a remote model. And as COVID-19 continues to spike in California, more tech giants are likely to do the same.
While the current pandemic may have hastened the process, remote work was always going to be the future of Silicon Valley. And despite what you might have seen others saying, from my perspective, after having coached dozens of founders to turn their scrappy startups into sustainable businesses that they’re proud of, that’s a good thing. Yes, it’s true that many of the collaborations which made Silicon Valley what it is today were forged in person, but that was before the new normal, and there’s no going back.
Let’s take a look at some of the key ways remote work is poised to change Silicon Valley—and the technology industry as a whole—for the better.
Remote Work Is Cheaper
You can’t talk about any major shift in Silicon Valley without talking about how that shift will impact the bottom line. With COVID-19 driving down revenues and making VC investments harder to come by in Silicon Valley, finding effective ways to cut costs has never been more important.
Airbnb is the perfect example. The short-term rental powerhouse started 2020 strong, with a highly anticipated IPO slated for later in the year. But then the pandemic hit and, with travel across the globe grinding to a halt, the company slashed projected revenues to less than half its 2019 earnings—which prompted layoffs of about 25 percent of its workforce.
Airbnb CEO Brian Chesky remains confident that the disruption to the travel industry is temporary. “Traveling is an innate human need. Travel will come back,” he said in an April interview with NPR. But once people start traveling again, Airbnb could dramatically increase their chances of survival by shifting to remote work once it starts replenishing headcounts to pre-COVID levels.
That’s according to calculations furnished by Ilit Raz, CEO and co-founder of automated diversity recruiting solution Joonko, who took available data pertaining to Airbnb’s San Francisco office–which laid off about 450 employees–to determine the potential cost savings the company could experience by shifting to a remote model.
Using an average salary of $140,000 and 100 square feet of office space per employee at the average San Francisco rates of $80 per square foot, the money spent on those 450 San Francisco employees totaled $6.3 million in salaries and $3.6 million in office space costs. That’s a whopping $9.9 million in expenses—before taking any of the standard Silicon Valley perks, like catered meals and commuting vouchers, into consideration.
“Compare this to average salaries in Denver or Atlanta, where most employees’ salaries are 50 percent less and the reduced space you need for a smaller in-house team,” Raz said. “The savings that Airbnb could realize by switching to a remote model run into the millions of dollars, to the point where it becomes senseless not to do it.”
Going Remote Increases Productivity, Too
While shifting to remote work can help companies in Silicon Valley cut costs—it can also impact their bottom lines by increasing overall company productivity.
According to data from FlexJobs, 85 percent of companies reported increased productivity after adopting more flexible work options—and that increased productivity can directly translate to increased profits.
A recent survey from Airtasker found that employees are 7 percent more productive when working remotely versus working in an office. And while 7 percent might not seem like a huge figure, that rise in productivity could easily increase a company’s profitability by millions—particularly Silicon Valley giants like Facebook or Google.
Remote Work Helps Companies Retain Top Talent
Allowing teams to work from home does more than help companies save money—it will also help them reduce employee churn.
The data shows that offering flexible work options—namely, remote work—helps companies attract and retain top talent. According to the 2019 State of Remote Work report from Owl Labs, 71 percent of workers say the option to work remotely would make them more likely to choose one company over another, while companies that offer remote work have a 25 percent lower turnover rate than companies that don’t.
If companies want to attract and retain tech’s brightest talent, offering continuing remote work options is more important than ever—because tech workers simply aren’t ready to go back to work. A TrustRadius survey from May 2020 found that 49 percent of tech workers wouldn’t feel good about returning to an office until October or later—and with the increasing number of COVID-19 cases in California this summer, that number has surely increased.
“Over the last few months, many tech companies have made the logistical transition to fully remote workforces,” notes John Ferguson, a TrustRadius researcher. “These investments in infrastructure, software and processes may have also reduced the need for workspaces to rush to reopen in the same way as the service sector.”
What’s more, shifting to a remote model sends a clear message to the talent that their employer is invested in their safety, comfort and overall work satisfaction, which will make them more attractive to top candidates—and give them a more competitive edge in the market.
Geo-agnosticism Paves The Way To True Diversity
When Silicon Valley companies require employees to work in the office, they’re severely limiting their talent pool. That not only prevents them from recruiting the best, brightest and most qualified candidates, but makes it nearly impossible to create a truly diverse, inclusive workforce. “When a company is locked into a certain geographic area for most of their recruitment, they make it harder to find that richly diverse pool of applicants, especially in tech positions,” said Joonko’s Raz.
For example, the cost of living in the Bay Area is simply out of reach for most people—including tech workers pulling in six-figure salaries—which means that Silicon Valley companies looking to fill in-office positions can only consider candidates who already have the cash necessary to live there. That requirement immediately excludes a huge percentage of the tech population, including talent coming from a lower socioeconomic background.
Embracing remote work allows companies to widen their talent pool, recruiting from a variety of schools, areas and backgrounds, making it significantly easier to create a D&I-focused culture.
Shifting to remote work is also important because, as Raz said, “it’s about making a true commitment to diversity by providing equal opportunities to talented tech professionals who simply can’t afford to live in Silicon Valley.”
Clearly, shifting to a remote work model is key if tech companies want to stay profitable and competitive moving forward. And this remote future for Silicon Valley? It’s the best thing for companies and workers, no matter how you look at it: from a financial, talent and recruitment, or a diversity and inclusion perspective.
Victor G. Snyder has served as a leadership coach for startup founders and executives since 2003. A regular contributor to authority publications including Entrepreneur, Maddyness, Digital Leaders and Small Business Trends, he founded BossMakers in 2014, empowering entrepreneurs to filter out the noise, to achieve flow, and to tackle the challenges that allow them to own success.
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