It is not just the larger corporations that are increasingly locating across multiple locations. Smaller startups and Internet-emergent-fueled companies are also increasingly located across multiple places, especially technology startups, and because early-growth-stage companies are heavily involved in R&D which is increasingly multi-locational. For example, an early leader in online collaborative software, 37 Signals, famously announced that it does not require employees to work in the same location, and has successfully recruited talent from across the globe, in cities where professionals want to remain; it has 36 employees located across many locations, 28 different locations since their beginning in 1999.[1] Their effort to recruit the best ‘talent’ pool prompted this diverse set of locations. Clearly this multi-locational strategy demonstrates their core product’s strength, but also illustrates a broader trend as founders and talent want new professional opportunities, but more often do not want to relocate for various personal, family and professional reasons, and they do not need to.
Although the companies may incur costs for some additional travel, and digital technologies to connect their employees regularly, they are also able to gain expertise and the best fits for their organization that boosts their productivity. These are not just firms with satellites, but truly multi-locational entities, with a variety of activities happening in each location, and key leaders dispersed. However for certain tax or legal reasons they might need to define a ‘headquarters,’ however this is ‘in name only.’ Although startups, or digital technology companies may have more tendency to operate ‘multi-locationally,’ it is not exclusive to these sectors. All industries and all scale companies are experiencing further geographic dispersion, sometimes organized around functional areas, but as outlined in further sections, this trend is also in transformation.
The cofounders of the multi-locational startup firms Hadapt (based Cambridge and New Haven) which provides large commercial scale big data processing capacity, and Bottlenose (Amsterdam, Los Angeles and Silicon Valley) a symantec web company, are physically located across regions/eco-systems although the cofounders developed relationships with each other when located in a single place such as while at university or an earlier job. Personal and professional reasons may have pulled them to different locations, but the strategic decision to remain as a company was supported by increased connectivity, and more importantly, by the advantages of being based in multiple locations. These startup cofounders recognize that they can pick and choose particular advantages like different locations, and dividing work functions to align with workers’ backgrounds and interests, and select eco-system support structures, cost structures, and even time/focus advantages. Certainly, they come together, and incur some costs to be face to face. However these firms may find advantages to having a foot in multiple markets.
Bottlenose however, must straddle multiple time zones and mobility schedules to connect both virtually and physically. However, as reported by the Amsterdam-based cofounder, a software developer, this ‘distance’ often creates better productivity and focus on core activities. Given the industry they are in, a semantic web for a global marketing services clientele, the distributed organization works well, more effectively than it might in another type of industry. In fact, CTO Dominick Heide has suggested that he is more productive being remote from the organizational management and more connected to other colleagues in the industry (many in Amsterdam).
This is a common theme throughout the emerging technology space, and current financing and development support tools, both public and private, influence decisions made by these co-founders. For example decisions about financing, where to file business incorporation activities, what promotes ease of travel and access is driven by what is most advantageous to the company from multiple dimensions, not by what economic development policies are in place.
However, to further unpack growth of these companies, it would be beneficial to eliminate some of the additional hurdles that are put in place by political jurisdictions (states)–such as tax filing requirements, insurance and in some cases political will vying to tug the company from one place to another. In some cases public financing tools, such as the very successful program Connecticut Innovations, require business residency of a certain size to qualify–without regard to what makes most sense for the company . Even private finance such as venture capital make locational decisions for the companies, often what makes most sense for the venture capitalist’s preferences, despite what might make sense for the founders.
[1] David, 37 Signals Blog: Signals and Noise, November 2012
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