Yes, you certainly read that title correctly.
And no, I promise this isn’t clickbait — it’s genuinely what I believe will happen.
From running a growing (and global) remote-first startup to interacting with other founders, I stick by my bold prediction that in the next five years 90% of startups will begin remote-first.
That may even sound a bit absurd at first too, considering the overwhelming headlines of companies pushing for return to the office or that remote work is dead.
But before you dismiss this idea based on the title, I’m going to break this down further as to why I’ve come to this conclusion.
90% of Startups Will Begin Remote-First
Startups are facing more interesting challenges.
From AI, to the overwhelming amount of new software, to the tightening up of readily available venture capital money — the tech space is constantly evolving.
And that means founders need to consider options when it comes to how to operate their startup. One of those is launching the business as remote-first.
Here are the two key reasons:
Office Costs and Budget
SurveyMonkey’s quarterly small business survey published in May 2024, found that just over one in three (37%) of small business owners view inflation as the biggest threat to their business.
And according to Crunchbase, not only are investors raising fewer new funds; they’re securing less capital to deploy to businesses.
That then trickles down to startups, who may be getting lower amounts of capital to build their business. Or even raising additional rounds becomes more challenging, maybe even near impossible at times.
Of course, this can go in waves as just a few years ago startups were valued insanely high and investment rounds were flowing with very large dollar amounts.
All that leads me to this: one major reason startups will begin remote-first is to avoid unnecessary office costs that drain their budget and better deploy that money on talent.
It's an especially big hurdle for smaller startups (like those bootstrapped or with funding rounds of under $10M).
And office costs are going back up again, especially with the rise of inflation and larger organizations heading back to the office. This increase includes rental costs, renovations, and utilities to keep the office running.
Why burn through capital, just to try to centralize everyone in one location? Don’t get me wrong, I enjoy collaborating in person, but does that outweigh the office costs?
In my opinion, no.
I’ve also overheard other venture capitalists who encourage founders to build the company in-person only. But I think times are changing and many remote-first companies (like our own) prove that getting a fancy office with one central location is generally unnecessary in those early stages.
Expanded Talent Pool
Startups need the best talent around, period.
But many are often limited because they are based in one specific geographic location.
Yet, some of the best ways to foster innovation and scale a business faster is by opening up the talent pool — whether that is anywhere in your specific state, country, or by going global.
You can say I’m a bit biased here being that my co-founder and I launched RemoFirst in this global employment space.
But we truly believe in the impact and we are seeing it firsthand as we’ve efficiently grown this business while being completely remote.
The impact for startups:
- Accessing a larger and more diverse talent pool beyond a specific location.
- Faster adoption and acceptance into new international markets that allows your company to gain a competitive advantage.
- Accelerates company valuation and diversifies your revenue streams from new markets.
- Ability to have coverage around the clock as employees or contractors are based in different timezones.
- Provides more freedom for employees to live and work where they deliver their best results. This reduces turnover and also leads to higher productivity.
And some of the best talent in the world is looking for remote opportunities.
Various surveys and data points support that. For example, about 83% of recruiters say they believe remote work has improved the quality of the applicants they attract.
Yet, Those Startups Will Then Pivot
Oh, you thought my prediction was set at 90% of startups remaining remote-first? Not quite, there’s still a bit more to it 😊
Here’s what I think will happen to those 90% that transition into the next phase of their business.
We will see a split between those startups:
- 50% continue to be remote-first
- 50% move into a hybrid model
Hybrid is particularly interesting, because it still allows startups to have an office, but also expand globally if they choose.
“Leaders can expect that hybrid work will only continue to evolve heading into 2025,” says Peter Miscovich, an executive management consultant who leads the Global Future of Work practice at JLL, a global real estate services company. “And that ‘will require this flexible, agile-learning mindset,’ he says.” (Source).
What About the Other 10%?
I wrote about the 90% so far and you might be wondering about the remaining 10%. It’s simple, I think they will be in the office five days a week.
There will always be founders that prefer being in the office and building a team that will go to the office every day of the week.
And that’s okay, it’s certainly their prerogative to do so! Not everyone loves remote work, nor does every company need to be remote or even hybrid.
Those startups that have an office right from the start can also find success.
But for startups to really become capital efficient, more innovative, and find a faster growth lever in the rapidly changing tech world — a remote-first approach can be a significant advantage.
Final Thoughts
A few weeks back, I also posted this topic to my LinkedIn to see what reactions might occur and found some good engagement and comments from others who agreed or are focused on hiring remotely.
Regardless, I’m fairly bullish on my prediction. And there are other data and research points that lead me to believe I’m on the right track here.
Here are two interesting insights from an Inc article:
- “Since the pandemic, various studies have emerged indicating some compelling advantages to remote work. One relates to diversity, Choudhury says. A paper published this year from professors at the Wharton School of the University of Pennsylvania found that when technical and managerial jobs were listed as remote, applications from women and underrepresented minorities increased by 15 and 33 percent, respectively.”
- “Another paper, co-authored by Nick Bloom (Stanford economist and WFH expert) and released this year, found that at a large technology company in China, hybrid schedules led to increased job satisfaction and reduced quit rates compared to fully in-person work, supporting their notable recruitment and retention advantage, Bloom argues.”
Time will tell if my view is fully correct, but indicators are telling me that this is the future of tech startups in the coming years.
There will always be some startups fully in the office right away or those starting in the hybrid model, but the key thing will be to make their investment dollars go farther.
And that will be done by cutting unnecessary office costs and accessing more unique talent to be cost-efficient and bring innovation to the market by having a team of diverse backgrounds.
Are you a startup looking to hire globally or remotely, whether full-time employees or contractors? We make it incredibly easy to compliantly employ and pay your global team. Learn more and schedule a demo with us to get all your questions answered.
