Founding a company? My nudge to choose to be co-located (vs distributed).

Pre-COVID, a lot of companies that were already scaling got forced to be distributed when shelter in place first hit, and then it was close to impossible to put the genie fully back in the bottle because talent moved everywhere, so they embraced being a distributed team.

One consequence of this is that these companies are our current success stories. This creates a perception that you can be distributed from the beginning, ignoring the fact that our current success stories started co-located. I'd be very curious to see data on how the cohort of pre-scaling early stage companies did (perhaps YC would have this?) -- I'd bet they aren't fairing as well vs prior in-person cohorts.

I'll confess now, if you are an early stage company (particularly a pre product/market fit company), if a founder tells me that they are all together in one office, subconsciously, all things held equal, my view on the probability of that company reaching escape velocity shifts higher than if the company were distributed.

Collaboration, cadence, trust, communication, the creativity that emerges from hallway conversations, employee community and engagement — these are all highest when you are together in person. And I'm talking way higher.

For an early stage company where these elements are critical, being distributed at the early stages can be like trying to sprint while pulling a parachute strapped to your back. You have to be way stronger as a team to neutralize the cost of being distributed when you are subscale.

Of course, there are exceptions. There are some teams out there that are crazy strong, experienced managers, and they can run laps around other startups despite the parachute. All the power to you. But for vast majority of founding teams, I wouldn't choose distributed from the start.

As a company scales past product market fit and finds its rhythm, the value of being colocated fades to the opportunity to access the global maxima of talent. In an ideal world, I still think it'd be better to be co-located, but the world isn't ideal. It’s hard to resist hiring that CFO you’ve been recruiting for 6 months who is in Seattle even if your team has mostly been based in LA.

This is when the compromises start and for most, it's an inevitability with tons of trade-offs to consider. There comes a point (and if you are outside of a tech center like SF, this point comes earlier), when you need to lean in on making remote teams work. At this point, rest assured, the probability curve in my head of reaching escape velocity if you are distributed vs co-located starts to converge given noise on both sides. :)