What will Tumblr become under the ownership of tech’s only Goldilocks founder?

This week, Automattic revealed it has signed all the paperwork to acquire Tumblr from Verizon, including its full staff of 200. Tumblr has undergone quite a journey since its headline-grabbing acquisition by Marissa Mayer’s Yahoo in 2013 for $1.1 billion, but after six years of neglect, its latest move is its first real start since it stopped being an independent company. Now, it’s in the hands of Matt Mullenweg, the only founder of a major tech company who has repeatedly demonstrated a talent for measured responses, moderation and a willingness to forego reckless explosive growth in favor of getting things ‘just right.’

There’s never been a better acquisition for all parties involved, or at least one in which every party should walk away feeling they got exactly what they needed out of the deal. Yes, that’s in spite of the reported $3 million-ish asking price.

Verizon Media acquired Tumblr through a deal made to buy Yahoo, under a previous media unit strategy and leadership team. Verizon Media has no stake in the company, and so headlines talking about the bath it apparently took relative to the original $1.1 billion acquisition price are either willfully ignorant or just plain dumb.

Six years after another company made that bad deal for a company it clearly didn’t have the right business focus to correctly operate, Verizon made a good one to recoup some money.

Aligned leadership and complementary offerings drive a win-win

WeWork S-1, building marketplaces, improving content marketing, and the demise of Tumblr

WeWork’s S-1 misses these three key points

After much discussion, WeWork finally dropped its S-1 filing with the SEC today as it makes preparations for its IPO. While the company has been producing sizable revenues the past few years, the company didn’t disclose everything I think it needed to in order for investors to make a judgment about its financial future.

It’s not as though WeWork hasn’t tried to give us some insight in its S-1. One of WeWork’s core operating metrics is “contribution margin including non-cash GAAP straight-line lease cost” (or what I will abbreviate just this one time as CMINCGAAAPSLLC). Through this metric, the company offers us a single number into the health of its business — essentially a way for investors to understand the performance of the company’s mature office locations.

[…]

What’s missing here though is that WeWork has aggregated its finances for hundreds of locations down to a summary statistic, complemented with a huge amount of text devoted to describing the evolution of a property from lease signing to mature profit-making office. At no time does the company describe the contribution margin and how it changes throughout the course of a single lease. Instead, it provides the following completely numbers-free chart showing that … it makes more money as time goes on.

How even the best marketplace startups get paralyzed

Marketplaces are hard to build. You have to generate both supply and demand, and if that isn’t bad enough, you then have to work to match both sides of the marketplace to get a transaction to clear (and therefore generate revenue).

Axios’ Dan Primack on ‘the most polarizing startup that exists’

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

This week was a bit special. Instead of meeting up at the TechCrunch HQ to record the episode, Kate and Alex met up in muggy Boston at Drift’s office, where we linked up with Axios’s Dan Primack. And since we were feeling chatty, we went a bit long.

After checking in with Primack (he has a newsletter and a podcast), we first dealt with the latest from Tumblr. In short, Verizon Media is selling Tumblr to Automattic for a few dollars. How did Verizon wind up owning Tumblr? Ah. Well, Yahoo bought it. Later, after Verizon bought AOL, it bought Yahoo. Then it smushed them together and called it Oath. Then Verizon decided that it didn’t like that much and renamed the group Verizon Media. But Verizon doesn’t want to own media (besides TechCrunch, of course), so it sold Tumblr to Automattic, a venture-backed company best known for operating WordPress.

That’s a lot, I know. What matters is that Yahoo bought Tumblr for more than $1 billion. Verizon sold it for around $3 million. Now, Automattic now has a few hundred new employees and a shot at juicing its userbase before it goes public.

After that, we lamented that the WeWork S-1 had yet to appear. This was a tragedy, frankly. We had expected to spend half the show riffing on WeWork’s financials, alas…

So we turned to some normal material, like Ramp’s recent $7 million raise to take on Brex, and, SmartNews’s recent round, which gave it an eye-popping $1.1 billion valuation.

We ran a bit long because we were having fun, fitting in some conversation surrounding the notes from the SEC regarding the now-dead and then-fraudulent Rothenberg Ventures. More on that here if you want to get angry.

And finally, Vision Fund 2. It’s been a big source of interest for everyone on the show, and we expect whatever the second-act Vision Fund winds up becoming to be a big damn deal. The fund will invest in more than just consumer marketplaces, in fact, it’s eyeing more AI businesses and even biotech. That should be interesting.

All that and we have a lot more good stuff coming. Thanks for listening to the show, and we’ll be right back.

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple PodcastsOvercast, Pocket Casts, Downcast and all the casts.

Automattic acquires subscription payment company Prospress

Automattic, the company behind WordPress.com, WooCommerce, Longreads, Simplenote and a bunch of other cool things, is acquiring a small startup called Prospress. Among other things, Prospress has developed WooCommerce Subscriptions, a recurring payment solution specifically designed for WooCommerce.

Given that physical and digital subscriptions are taking over the e-commerce world, it makes sense that Automattic wants to own WooCommerce Subscriptions. Charging customers on a regular basis is one of the most painful challenges when it comes to payment.

Prospress also works on a marketing automation tool to remind customers that they have abandoned their carts, follow up, cross sell and more. The company also has a tool to test your checkout functionality before going live. After the acquisition, the Prospress team will keep iterating on its own products and join the rest of the WooCommerce team.

This is a strategic acquisition more than anything else. Prospress has around 20 employees, so it’s not going to change the face of Automattic and its team of 900 people. But it’s an important move so that Automattic can own a bigger chunk of the (e-commerce) stack.

WooCommerce competitor Shopify doesn’t provide subscriptions out of the box. You have to use third-party products, such as Bold or ReCharge.

Like WordPress, WooCommerce is an open-source project — it integrates directly with WordPress. It means that anyone can download WooCommerce and host it on their servers. And the WooCommerce ecosystem is one of the main advantages of WooCommerce compared to obscure e-commerce solutions.

Many WooCommerce users probably host their e-commerce website on WordPress.com. But by controlling the payment module, Automattic can also generate some revenue if WooCommerce users choose to use WooCommerce Subscriptions as their payment solution.

WordPress says iOS app bug exposed account tokens to third-parties

WordPress said it’s fixed a bug in its iOS app that inadvertently exposed account tokens to third-party sites.

In an email to customers seen by TechCrunch, the content management giant said it “uncovered an issue with the WordPress iOS application with how it handles security credentials.” The company has disconnected affected accounts from the app “as a precaution.”

The company’s Android app was not affected, nor were self-hosted WordPress installations.

Although no usernames and passwords were involved, the app in some cases inadvertently sent sensitive account tokens to third-parties.

These account tokens are small bits of code that allow you to stay logged into an app or service without having to enter your password every time. But if leaked or stolen, an account token can give anyone access to your account without needing your password.

After reaching out to Automattic, the company’s parent, we’ve gained some additional clarity. In short, the bug was found in how images were fetched from private WordPress.com sites hosting images by other sites. If a private WordPress.com site had a post or a page with an image hosted on Flickr, for example, the app would send along a WordPress.com account token to Flickr when fetching the image.

That’s not how it’s meant to work. That meant account tokens could appear in the logs of third-party companies, which could expose unscrupulous individuals to target WordPress.com accounts. That said, the risk to accounts is minimal and users shouldn’t be overly worried.

All WordPress iOS users with private sites had their account tokens reset — so there’s no need to change your password.

“Our engineers discovered this bug in the iOS app and we have no indication it was ever exploited,” said an Automattic spokesperson in an email to TechCrunch. “The first affected version was released in January 2017, and version 11.9.1 released on March 15, 2019 fixed the issue.”

WordPress didn’t immediately say how many customers were affected, but mobile insights company Sensor Tower said in an email that the app was installed 9.3 million times on iOS since 2012, with about 1.3 million installs last year.

Users should update their app as soon as possible.

WordPress.com parent company launches work collaboration platform Happy Tools

Automattic, the company behind WordPress.com, WooCommerce and Jetpack, is launching a new suite of products focused on the future of work — Happy Tools. Automattic is a remote company with over 850 employees working from 68 countries. And the company has built a bunch of products over the years to communicate, collaborate and work.

With Happy Tools, Automattic plans to turn those internal tools into actual products. The first product is Happy Schedule, a scheduling service that Automattic is using to deliver 24/7 customer support.

“Ideas about releasing our internal tools have been kicking around Automattic for years, but it’s been about finding the right moment and the right product to lead with,” Automattic product lead for Happy Tools Matt Wondra told me. “When we started building Happy Schedule a year ago we realized that designing a tool for our own scheduling needs also filled a clear gap in the [workforce management] landscape.”

“No other product out there gave us the flexibility and visibility we needed to comfortably schedule a globally distributed team. Since it was a greenfield internal project, we could engineer it from the ground up with public release in mind. And it just made sense to launch Happy Tools first into an industry we know so well — customer support.”

Happy Schedule is a modern web app and it should feel more like Google Calendar instead of some SAP product. For instance, you can click and drag your mouse to create an event — no need to input a start time and an end time.

But this is just a start. Automatic plans to launch more products over time so that you can work more efficiently as a remote team. The company is using a software-as-a-service approach and it costs $5 per user per month to access Happy Tools.

It’s interesting to see that Automattic is promising a suite of products from day one. It won’t just be a bunch of different products. When you subscribe to Happy Tools, you should be able to access multiple products that work together, just like a G Suite subscription lets you access Gmail, Google Calendar, Google Drive, etc. This strategy will improve engagement and stickiness over time.

Remote workers and nomads represent the next tech hub

Amid calls for a dozen different global cities to replace Silicon Valley — Austin, Beijing, London, New York — nobody has yet nominated “nowhere.” But it’s now a possibility.

There are two trends to unpack here. The first is startups that are fully, or almost fully, remote, with employees distributed around the world. There’s a growing list of significant companies in this category: Automattic, Buffer, GitLab, Invision, Toptal and Zapier all have from 100 to nearly 1,000 remote employees.

The second trend is nomadic founders with no fixed location. For a generation of founders, moving to Silicon Valley was de rigueur. Later, the emergence of accelerators and investors worldwide allowed a wider range of potential home bases. But now there’s a third wave: a culture of traveling with its own, growing support networks and best practices.

You don’t have to look far to find startup gurus and VCs who strongly advise against being remote, much less a nomad. The basic reasoning is simple: Not having a location doesn’t add anything, so why do it? Startups are fragile, so it’s best to avoid any work practice that could disrupt delicate growth cycles.

Airbnb, Automattic and Pinterest top rank of most acquisitive unicorns

It takes a lot more than a good idea and the right timing to build a billion-dollar company. Talent, focus, operational effectiveness and a healthy dose of luck are all components of a successful tech startup. Many of the most successful (or, at least, highest-valued) tech unicorns today didn’t get there alone.

Mergers and acquisitions (M&A) can be a major growth vector for rapidly scaling, highly valued technology companies. It’s a topic that we’ve covered off and on since the very first post on Crunchbase News in March 2017. Nearly two years later, we wanted to revisit that first post because things move quickly, and there is a new crop of companies in the unicorn spotlight these days. Which ones are the most active in the M&A market these days?

The most acquisitive U.S. unicorns today

Before displaying the U.S. unicorns with the most acquisitions to date, we first have to answer the question, “What is a unicorn?” The term is generally applied to venture-backed technology companies that have earned a valuation of $1 billion or more. Crunchbase tracks these companies in its Unicorns hub. The original definition of the term, first applied in a VC setting by Aileen Lee of Cowboy Ventures back in late 2011, specifies that unicorns were founded in or after 2003, following the first tech bubble. That’s the working definition we’ll be using here.

In the chart below, we display the number of known acquisitions made by U.S.-based unicorns that haven’t gone public or gotten acquired (yet). Keep in mind this is based on a snapshot of Crunchbase data, so the numbers and ranking may have changed by the time you read this. To maintain legibility and a reasonable size, we cut off the chart at companies that made seven or more acquisitions.

As one would expect, these rankings are somewhat different from the one we did two years ago. Several companies counted back in early March 2017 have since graduated to public markets or have been acquired.

Who’s gone?

Dropbox, which had acquired 23 companies at the time of our last analysis, went public weeks later and has since acquired two more companies (HelloSign for $230 million in late January 2019 and Verst for an undisclosed sum in November 2017) since doing so. SurveyMonkey, which went public in September 2018, made six known acquisitions before making its exit via IPO.

Who stayed?

Which companies are still in the top ranks? Travel accommodations marketplace giant Airbnb jumped from number four to claim Dropbox’s vacancy as the most acquisitive private U.S. unicorn in the market. Airbnb made six more acquisitions since March 2017, most recently Danish event space and meeting venue marketplace Gaest.com. The still-pending deal was announced in January 2019.

WordPress developer and hosting company Automattic is still ranked number two. Automattic  href="https://www.crunchbase.com/acquisition/automattic-acquires-atavist--912abccd">acquired one more company — digital publication platform Atavist — since we last profiled unicorn M&A. Open-source software containerization company Docker, photo-sharing and search site Pinterest, enterprise social media management company Sprinklr and venture-backed media company Vox Media remain, as well.

Who’s new?

There are some notable newcomers in these rankings. We’ll focus on the most notable three: The We CompanyCoinbase and Lyft. (Honorable mention goes to Stripe and Unity Technologies, which are also new to this list.)

The We Company (the holding entity for WeWork) has made 10 acquisitions over the past two years. Earlier this month, The We Company bought Euclid, a company that analyzes physical space utilization and tracks visitors using Wi-Fi fingerprinting. Other buyouts include Meetup (a story broken by Crunchbase News in November 2017) reportedly for $200 million. Also in late 2017, The We Company acquired coding and design training program Flatiron School, giving the company a permanent tenant in some of its commercial spaces.

In its bid to solidify its position as the dominant consumer cryptocurrency player, Coinbase has been on quite the M&A tear lately. The company recently announced its plans to acquire Neutrino, a blockchain analytics and intelligence platform company based in Italy. As we covered, Coinbase likely made the deal to improve its compliance efforts. In January, Coinbase acquired data analysis company Blockspring, also for an undisclosed sum. The crypto company’s other most notable deal to date was its April 2018 buyout of the bitcoin mining hardware turned cryptocurrency micro-transaction platform Earn.com, which Coinbase acquired for $120 million.

And finally, there’s Lyft, the more exclusively U.S.-focused ride-hailing and transportation service company. Lyft has made 10 known acquisitions since it was founded in 2012. Its latest M&A deal was urban bike service Motivate, which Lyft acquired in June 2018. Lyft’s principal rival, Uber, has acquired six companies at the time of writing. Uber bought a bike company of its own, JUMP Bikes, at a price of $200 million, a couple of months prior to Lyft’s Motivate purchase. Here too, the Lyft-Uber rivalry manifests in structural sameness. Fierce competition drove Uber and Lyft to raise money in lock-step with one another, and drove M&A strategy as well.

What to take away

With long-term business success, it’s often a chicken-and-egg question. Is a company successful because of the startups it bought along the way? Or did it buy companies because it was successful and had an opening to expand? Oftentimes, it’s a little of both.

The unicorn companies that dominate the private funding landscape today (if not in the number of deals, then in dollar volume for sure) continue to raise money in the name of growth. Growth can come the old-fashioned way, by establishing a market position and expanding it. Or, in the name of rapid scaling and ostensibly maximizing investor returns, M&A provides a lateral route into new markets or a way to further entrench the status quo. We’ll see how that strategy pays off when these companies eventually find the exit door .

Geoengineering could solve our climate problems if anyone allowed it

This weekend, I finished reading Oliver Morton’s The Planet Remade (thanks to reader Eliot Peper for recommending it). Morton has a multitude of goals with the book, but there were two I think are deeply valuable. First, geoengineering is a plausible approach to solving our climate problems this century, and second, engineering the climate generates tough policy challenges, but also opportunities to make the planet more equitable.

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First and foremost: the book is mind-expanding in the best way possible. Morton confronts an extremely contentious issue with judicious facts and supreme insight gleaned over many years of studying geoengineering. Whether you are a dedicated acolyte of cloud seeding and veils or a committed opponent to any tampering of earth’s environment, he has developed a book that forces us to think about our actions and ultimately what the consequences of those choices are.

Frankly, those choices offer stark consequences. Morton describes the challenge of climate this century:

The world’s population is expected to grow from seven billion today to more or less ten billion by 2100. By that time the number of people enjoying rich-world energy privileges should also reach ten billion. So the challenge is to achieve for an extra eight billion people in the twenty-first century what was achieved for two billion in the twentieth century. Meeting that challenge implies a lot more energy usage.

Morton is a staunch environmentalist and deeply concerned about environmental justice and the inequities of the planet. But he is also a “climate realist” — he understands that our current solutions to climate change are not really solutions at all, since they either lack the scale required to solve the problem, or will continue to exacerbate existing inequities between different people of this planet.

For example, take emissions-free nuclear power, which is brought up as a panacea to our fossil fuel-driven economy. Morton writes:

If the world had the capacity to deliver one of the largest nuclear power plants ever built once a week, week in and week out, it would take 20 years to replace the current stock of coal-fired plants (at present, the world builds about three or four nuclear power plants a year, and retires old ones almost as quickly).

Sure, nuclear power plants are a literal solution, but most definitely not a pragmatic one since the scale required is just not there.

He also spends significant time deconstructing recent climate negotiations, finding that the focus on carbon has been something of a red herring (many other emissions are far worse than carbon and less directly connected to the modern industrial economy). Instead, they have been driven by the alignment of different environmentally-concerned parties:

Carbon dioxide suited scientists because it seemed like a straightforward measure of the problem. It suited greens because it was a pretty good proxy for the industrial society against which their movement was a reaction. The international negotiations that set up the UNFCCC showed that it suited developing countries because it was primarily a developed-country issue; at the time of Rio, the vast majority of all the industrial emissions since the the eighteenth century had come from Europe and America.

Carbon is of course a problem, but it has become a tagline, a brand, a cri de coeur of the international climate movement. Yet the challenges facing the planet are so much deeper than just carbon.

To avoid that narrow focus, Morton argues for a complete reframing of the climate debate toward solutions that can actually repair the climate, and even improve it for diverse populations around the world.

Now, the term “geoengineering” brings with it a bag of Hollywood-induced imagery of nuclear winters and globe-spanning hurricanes. Morton addresses those risks across his chapters, noting that geoengineering can indeed go wrong.

Even so, he convincingly argues that there are geoengineering techniques designed around key climate processes that can be high leverage, reversible, testable, and that have the scale required to actually solve climate challenges in a sustainable way. These processes aren’t speculation — we (mostly) understand the science today, and have pathways toward the technology required to execute a strategy.

The real challenge — as it always is — are humans and their governments. Morton notes that climate change has a huge deleterious impact on nations such as Maldives, but that it can also benefit certain regions by transitioning them from colder to more temperate climates.

That means that any geoengineering solution is going to face the prospect of creating winners and losers. Any international agreement is going to have to contend with those politics, and design mechanisms to ameliorate their effects.

Much as Morton calls for a planet remade, he sees an opportunity for geoengineering to trigger reflection among governments on their own interests:

Much better, rather than treating geoengineering as a technocratic way of avoiding politics, to use it as a way of reinventing politics. Exploring the potential of geoengineering could spur and shape the development of a new way of making planetary decisions. The aim should not be the development of a thermostat alone; it should be the development of a new hand to use it.

Environmentalists may balk at the idea of allowing humans to have their hands on any part of the earth system. But we are here, all seven billion of us, and we already have our brutal hands on the system. The question is whether we can start to use our hands in a far more productive way that can make the earth sustainable for centuries to come. As Morton notes, “The planet has been remade, is being remade, will be remade.” Geoengineering technologies offer solutions, if we can agree in how to use them.

Share your feedback on your startup’s attorney

My colleague Eric Eldon and I are reaching out to startup founders and execs about their experiences with their attorneys. Our goal is to identify the leading lights of the industry and help spark discussions around best practices. If you have an attorney you thought did a fantastic job for your startup, let us know using this short Google Forms survey and also spread the word. We will share the results and more in the coming weeks.

Stray Thoughts (aka, what I am reading)

Short summaries and analysis of important news stories

Why Gutenberg can still recognize the book

Craig Mod wrote a compelling piece in Wired on the future of the book, and why today’s books essentially look the same as when the printing press was first invented. Despite the prognosticators expecting books to have moving pictures, interactivity, and dynamic narratives, almost nothing in that direction has actually occurred as readers continue to enjoy the traditional format. Instead, where the real innovation has taken place is on the business side, where new models from crowdfunding to email subscriptions have transformed the economics of book publishing.

Automattic’s Newspack to drive revenue for smaller publishers

While content management systems have been around for decades, almost none of these systems are designed to create revenues for their users out of the box. WordPress doesn’t have any subscription features or advertising networks built-in, which means that sites that want to make money have to spend a lot of dollars just to get setup and started.

So the announcement this morning that Automattic, the owner of WordPress.com, is going to offer a new platform combining content management with revenue called Newspack is both interesting and definitely needed. It’s a proper extension of their existing platform, and a reminder for product managers that the sustainability of their customers is critical for long-term success.

Huawei sales executive arrested in Poland

We have been following Huawei’s travails in the West for some time. One major point of contention is whether the company spies on behalf of the Chinese government. Western governments have argued that it does, but as China has repeatedly noted, they have never provided any proof.

On Friday in Poland, a Huawei executive was arrested for alleged espionage, which could provide the first public evidence of collusion between Huawei and Beijing. The company subsequently fired the executive and claimed that his actions were unrelated to the company. Poland has since called on NATO countries to remove Huawei equipment from their telecommunications infrastructure. Huawei equipment is widely installed in Europe and European governments have so far evaded calls by the U.S. to boycott the company. As the largest telecom equipment manufacturer in the world, Huawei’s response could have vast repercussions for the deployment of 5G networks.

PG&E – oh boy

Silicon Valley’s (and much of California’s) gas and electric utility is going bankrupt following massive liability claims against the utility due to its equipment sparking wildfires over the past few years. California may lead the world in innovation, but it seems to always be on the precipice of disaster when it comes to infrastructure.

What’s next & obsessions

  • I am reading The Color of Law by Richard Rothstein
  • Arman and I are interested in societal resilience startups that are targeting areas like water security, housing, infrastructure, climate change, disaster response, etc. Reach out if you have ideas or companies here.

Distributed teams are rewriting the rules of office(less) politics

When we think about designing our dream home, we don’t think of having a thousand roommates in the same room with no doors or walls. Yet in today’s workplace where we spend most of our day, the purveyors of corporate office design insist that tearing down walls and bringing more people closer together in the same physical space will help foster better collaboration while dissolving the friction of traditional hierarchy and office politics.

But what happens when there is no office at all?

This is the reality for Jason Fried, Founder and CEO of Basecamp, and Matt Mullenweg, Founder and CEO of Automattic (makers of WordPress), who both run teams that are 100% distributed across six continents and many time zones. Fried and Mullenweg are the founding fathers of a movement that has inspired at least a dozen other companies to follow suit, including Zapier, Github, and Buffer. Both have either written a book, or have had a book written about them on the topic.

For all of the discussions about how to hire, fire, coordinate, motivate, and retain remote teams though, what is strangely missing is a discussion about how office politics changes when there is no office at all. To that end, I wanted to seek out the experience of these companies and ask: does remote work propagate, mitigate, or change the experience of office politics? What tactics are startups using to combat office politics, and are any of them effective?

“Can we take a step back here?”

Office politics is best described by a simple example. There is a project, with its goals, metrics, and timeline, and then there’s who gets to decide how it’s run, who gets to work on it, and who gets credit for it. The process for deciding this is a messy human one. While we all want to believe that these decisions are merit-based, data-driven, and objective, we all know the reality is very different. As a flood of research shows, they come with the baggage of human bias in perceptions, heuristics, and privilege.

Office politics is the internal maneuvering and positioning to shape these biases and perceptions to achieve a goal or influence a decision. When incentives are aligned, these goals point in same direction as the company. When they don’t, dysfunction ensues.

Perhaps this sounds too Darwinian, but it is a natural and inevitable outcome of being part of any organization where humans make the decisions. There is your work, and then there’s the management of your coworker’s and boss’s perception of your work.

There is no section in your employee handbook that will tell you how to navigate office politics. These are the tacit, unofficial rules that aren’t documented. This could include reworking your wardrobe to match your boss’s style (if you don’t believe me, ask how many people at Facebook own a pair of Nike Frees). Or making time to go to weekly happy hour not because you want to, but because it’s what you were told you needed to do to get ahead.

One of my favorite memes about workplace culture is Sarah Cooper’s “10 Tricks to Appear Smart in Meetings,” which includes…

  • Encouraging everyone to “take a step back” and ask “what problem are we really trying to solve”
  • Nodding continuously while appearing to take notes
  • Stepping out to take an “important phone call”
  • Jumping out of your seat to draw a Venn diagram on the whiteboard

Sarah Cooper, The Cooper Review

These cues and signals used in physical workplaces to shape and influence perceptions do not map onto the remote workplace, which gives us a unique opportunity to study how office politics can be different through the lens of the officeless.

Friends without benefits

For employees, the analogy that coworkers are like family is true in one sense — they are the roommates that we never got to choose. Learning to work together is difficult enough, but the physical office layers on the additional challenge of learning to live together. Contrast this with remote workplaces, which Mullenweg of Automattic believes helps alleviate the “cohabitation annoyances” that come with sharing the same space, allowing employees to focus on how to best work with each other, versus how their neighbor “talks too loud on the phone, listens to bad music, or eats smelly food.”

Additionally, remote workplaces free us of the tyranny of the tacit expectations and norms that might not have anything to do with work itself. At an investment bank, everyone knows that analysts come in before the managing director does, and leave after they do. This signals that you’re working hard.

Basecamp’s Fried calls this the “presence prison,” the need to be constantly aware of where your coworkers are and what they are doing at all times, both physically and virtually. And he’s waging a crusade against it, even to the point of removing the green dot on Basecamp’s product. “As a general rule, nobody at Basecamp really knows where anyone else is at any given moment. Are they working? Dunno. Are they taking a break? Dunno. Are they at lunch? Dunno. Are they picking up their kid from school? Dunno. Don’t care.”

There is credible basis for this practice. A study of factory workers by Harvard Business School showed that workers were 10% to 15% more productive when managers weren’t watching. This increase was attributed to giving workers the space and freedom to experiment with different approaches before explaining to managers, versus the control group which tended to follow prescribed instructions under the leery watch of their managers.

Remote workplaces experience a similar phenomenon, but by coincidence. “Working hard” can’t be observed physically so it has to be explained, documented, measured, and shared across the company. Cultural norms are not left to chance, or steered by fear or pressure, which should give individuals the autonomy to focus on the work itself, versus how their work is perceived.

Lastly, while physical workplaces can be the source of meaningful friendships and community, recent research by the Wharton School of Business is just beginning to unravel the complexities behind workplace friendships, which can be fraught with tensions from obligations, reciprocity and allegiances. When conflicts arise, you need to choose between what’s best for the company, and what’s best for your relationship with that person or group. You’re not going to help Bob because your best friend Sally used to date him and he was a dick. Or you’re willing to do anything for Jim because he coaches your kid’s soccer team, and vouched for you to get that promotion.

In remote workplaces, you don’t share the same neighborhood, your kids don’t go to the same school, and you don’t have to worry about which coworkers to invite to dinner parties. Your physical/personal and work communities don’t overlap, which means you (and your company) unintentionally avoid many of the hazards of toxic workplace relationships.

On the other hand, these same relationships can be important to overall employee engagement and well-being. This is evidenced by one of the findings in Buffer’s 2018 State of Remote Work Report, which surveyed over 1900 remote workers around the world. It found that next to collaborating and communicating, loneliness was the biggest struggle for remote workers.

Graph by Buffer (State of Remote Work 2018)

So while you may be able to feel like your own boss and avoid playing office politics in your home office, ultimately being alone may be more challenging than putting on a pair of pants and going to work.

Feature, not a bug?

Physical offices can have workers butting heads with each other. Image by UpperCut Images via Getty Images.

For organizations, the single biggest difference between remote and physical teams is the greater dependence on writing to establish the permanence and portability of organizational culture, norms and habits. Writing is different than speaking because it forces concision, deliberation, and structure, and this impacts how politics plays out in remote teams.

Writing changes the politics of meetings. Every Friday, Zapier employees send out a bulletin with: (1) things I said I’d do this week and their results, (2) other issues that came up, (3) things I’m doing next week. Everyone spends the first 10 minutes of the meeting in silence reading everyone’s updates.

Remote teams practice this context setting out of necessity, but it also provides positive auxiliary benefits of “hearing” from everyone around the table, and not letting meetings default to the loudest or most senior in the room. This practice can be adopted by companies with physical workplaces as well (in fact, Zapier CEO Wade Foster borrowed this from Amazon), but it takes discipline and leadership to change behavior, particularly when it is much easier for everyone to just show up like they’re used to.

Writing changes the politics of information sharing and transparency. At Basecamp, there are no all-hands or town hall meetings. All updates, decisions, and subsequent discussions are posted publicly to the entire company. For companies, this is pretty bold. It’s like having a Facebook wall with all your friends chiming in on your questionable decisions of the distant past that you can’t erase. But the beauty is that there is now a body of written decisions and discussions that serves as a rich and permanent artifact of institutional knowledge, accessible to anyone in the company. Documenting major decisions in writing depoliticizes access to information.

Remote workplaces are not without their challenges. Even though communication can be asynchronous through writing, leadership is not. Maintaining an apolitical culture (or any culture) requires a real-time feedback loop of not only what is said, but what is done, and how it’s done. Leaders lead by example in how they speak, act, and make decisions. This is much harder in a remote setting.

A designer from WordPress notes the interpersonal challenges of leading a remote team. “I can’t always see my teammates’ faces when I deliver instructions, feedback, or design criticism. I can’t always tell how they feel. It’s difficult to know if someone is having a bad day or a bad week.”

Zapier’s Foster is also well aware of these challenges in interpersonal dynamics. In fact, he has written a 200-page manifesto on how to run remote teams, where he has an entire section devoted to coaching teammates on how to meet each other for the first time. “Because we’re wired to look for threats in any new situation… try to limit phone or video calls to 15 minutes.” Or “listen without interrupting or sharing your own stories.” And to “ask short, open ended questions.” For anyone looking for a grade school refresher on how to make new friends, Wade Foster is the Dale Carnegie of the remote workforce.

To office, or not to office

What we learn from companies like Basecamp, Automattic, and Zapier is that closer proximity is not the antidote for office politics, and certainly not the quick fix for a healthy, productive culture.

Maintaining a healthy culture takes work, with deliberate processes and planning. Remote teams have to work harder to design and maintain these processes because they don’t have the luxury of assuming shared context through a physical workspace.

The result is a wealth of new ideas for a healthier, less political culture — being thoughtful about when to bring people together, and when to give people their time apart (ending the presence prison), or when to speak, and when to read and write (to democratize meetings). It seems that remote teams have largely succeeded in turning a bug into a feature. For any company still considering tearing down those office walls and doors, it’s time to pay attention to the lessons of the officeless.