No more remote work. Preparing for the return of working from office era
Everyone has been talking about remote work. But post-COVID, I predict we will work from the office more than we think and this is not good news for remote collaboration tech startups
Starting in 2020, lots of people started working from home. Even after everyone gets vaccinated and the world is re-opened, many people hope to continue to work remotely at least a few days a week. In fact, lots of tech companies are trying to accommodate it. For example, Google seems to be testing the idea of a 'flexible workweek' allowing employees to work from home two days a week(link). Revolut, the UK's most valuable fintech company announced that their employees will be able to work abroad up to two months a year (link). However, I don't think people won't be able to work remotely as much as they wish. And, that isn't a good thing for startups whose product is a collaboration tool for remote work. The rationale follows as below.
First of all, companies want their employees to come to the office. Although companies like Google, Revolut, and Facebook seem actively embracing remote work, it is a little nuanced. In the announcement, Facebook said they will shift toward a remote workforce over the next 'decade' implying it will be a very slow process (link). For the workers at Revolut, yes, they can work 2 months abroad. But on the flip side, they still need to work from the office for the remaining 10 months. I would say, it is a very smart marketing strategy.
While Google is testing the flexible workweek concept, they also plan to invest $7B in the data centers and US offices (link). The role of the office will be changed toward spaces for more in-person discussion and collaboration instead of individual working space, though the bottom line is that the company still wants their employees to come to the office.
Netflix CEO Reed Hastings wasn't shy at all about his stance on remote work. He called remote work 'a pure negative' during an interview with WSJ last year. He claimed it is harder for debating ideas when people are working remotely (link).
The second rationale is around the employee side. Currently, remote work is working because everyone is working remotely. Now, let's imagine you are working home or even abroad while everyone else in your team is working in the office. You find out some colleagues had an additional discussion on a topic you were involved in during lunchtime. One time is fine. But if it happens a few times over time, you will start feeling left off. Yes, when some people start working from the office, people who are not in the office could increasingly develop FOMO, or Fear-Of-Missing-Out. Now they have a reason to go to the office more.
In 2020, startups that provide technology for remote work have proliferated. For example, from 2019 to 2020, the number of deals and the total capital raised in the Virtual Event category increased from 11 to 44 (400% up) and $43.68M to $523.57M (1,199% up) respectively, according to PitchBook. This is just one category, and there are hundreds of startups if we include all adjacent categories.
Now, if the demand for remote work slows down, those startups will be competing for the pie that isn't growing as quickly as they anticipated in 2020. Plus, those tools are rapidly commoditized. Take Zoom. When literally everyone from Google, Microsoft, Slack, to Facebook is providing video conferencing solutions, it is quite a smart move for Zoom to focus on API for everyone who wants to provide video conferencing solutions in their tech stack.
The bottom line, I predict we will see a slew of those startups get acquired a lot sooner, pivot their product offerings, or just fail. According to a 2020 research from the University of Chicago, only 34% of U.S. jobs can plausibly be performed at home (link). Also, I talked about mostly the tech industry. But remember the number of workers under the Information category of the Bureau of Labor Statistics only accounts for 1.7% of 163M total employment in the US (link). After all, we should avoid a fallacy of generalization.
References:
Google Delays Return to Office and Eyes ‘Flexible Work Week’ - Link
Revolut, the $5.5 billion fintech startup, says it will let its 2,000 staff work abroad for 60 days a year - Link
Facebook to Shift Permanently Toward More Remote Work After Coronavirus - Link
Google to spend $7 billion on data centers and office space in 2021 - Link
Netflix’s Reed Hastings Deems Remote Work ‘a Pure Negative’ - Link
With much of U.S. staying at home, how many jobs can be done remotely? - Link
Employment by major industry sector by Bureau of Labor Statistics - Link