Many renowned people in the startup world have been voicing their opinion about the ‘new normal’ recently. As I am more settled in the current situation, I do think there’s a few things that still need to be addressed or are not given enough attention. The situation is still seemingly unstable, but running my own product development company, mentoring many tech startups and being part of active communities of investors has helped me see this crisis from many angles. Recently, I have been talking with people about the permanent impacts of this crisis on our daily lives. While some changes to our daily life may seem obvious, others happen to require more thought.
As I waited to meet my newborn this weekend, I got time to reflect on these thoughts and pen down some of these biggest changes in the industries we work in - and the world in general.
Remote work (especially in the tech industry)
For at least a decade there has been a lot of talk about remote work with slower implementation. I have seen many tech companies functioning quite well being completely remote. It makes sense to me because many jobs have been technically suitable for location-free employment for a while now. Finally, these past weeks and months have achieved what job flexibility lobbyists have not - convinced even the biggest skeptics that remote work actually works (or can be made to work with some effort).
After two months of isolation, even Estonians who love their personal space are excited to see their coworkers in person. The office can help you keep work and private life in balance, and keep you in the right mindset. Yet all in all, the overall popularity of remote work has gotten a permanent spur for sure. We recently did a survey within our own company regarding remote working and it was interesting to see that a vast majority (mainly software developers) was rather content with working remotely.
In Thorgate, we were probably better prepared to transition into remote work than many other companies. We’re used to being flexible and transparent. The fully remote office has been working for us and currently, we’re discussing a hybrid approach where remote working is much more the norm than before. This way people would also have the option to come and meet colleagues in the office when needed. It seems like we’re not alone and many companies are thinking likewise. Most probably increased remote working options and even more offices with a hybrid approach are going to be the new normal in the post-coronavirus world.
Commercial real estate and office spaces
It’s probably logical that the fewer people work in offices, the less space the companies need. And like in personal finance basics - it’s important to separate wants from needs. Office space is one of the biggest general expenses that isn’t directly associated with creating a product or service. During hard times managers have taken these types of spending under tight scrutiny.
Many interesting alternatives have emerged to rent commercial real estate for office space such as remote working room rentals, meeting room rentals and an AirBnB-kind of approach to renting offices like at MySpotit. I have personally mentored MySpotit for a year now seeing the prospects of the business model they have. For companies looking to have a partially remote team, or even a fully remote team, using such rentals instead of bigger commercial estate will make more sense.
Digitization
Companies are quickly realizing that digitization is the key to surviving this crisis. Automating processes brings a much-needed boost of efficiency to business processes. This also translates into less manual labor and fewer employees working on menial tasks in general. The current economy is pushing companies to be more mindful about hiring full-time employees and focusing only on the essential tasks.
At Thorgate we focus on smart-working i.e. we work smart, not hard. In the current economy, I see more companies doing the same through automating tasks to increase efficiency, and to make the best out of their down-market digital products.
Measuring company growth with hirings
This has for long been a vanity metric where the increase in a company’s headcount equals the growth of the company. Companies have measured their growth by saying things like “we went from 50 to 250 employees last year” for years now. This actually says next to nothing about the overall state and success of the company.
Now many of these companies are forced to do massive layoffs while nobody wants to deal with layoffs. It’s emotionally and financially draining, and also signals more trouble than the company might necessarily face.
It is estimated that 90,000 Estonians will be unemployed by the end of summer. In the past two months, as I have heard more and more news of lay-offs from companies I have seen performing rather well, this has had me thinking about possible solutions. For instance, I would like for Thorgate to hire some of these smart people in the different vacant roles we have. Moreover, now we have rolled-out an affiliate program to hire people around the world that are looking for more flexibility in working with us.
Meanwhile, I do believe that in the near future, growth metrics will focus more on tech adoption than the mere number of people. In the new normal, a company’s growth would not be suggested by a mere head-count.
Big personnel overhead
A huge personnel overhead has always been a liability. Recruitment itself is expensive and on top of that, most companies spend 80% of their time doing what every other company does, and only 20% of their time on things that are unique to their company.
At Thorgate, we already apply Pareto's principle of 80-20. 20% of the effort brings 80% of the results and we double down on that 20%. Recently we’ve put even more effort into that to focus on what truly works for us: Agile software development.
We can hope that from now on, companies (the smart ones, at least) will double down on that 20%, and outsource the rest. This lets them focus on their core business competencies, i.e. what they actually do best and what actually matters. I’m already seeing that many companies that used to hire large teams of developers for internal product development are now looking for different options, e.g. body leasing or outsourcing the entire development process.
Pre-payments
This also falls in the category of taking long-term commitments which won’t work anymore. Pre-payments used to be the norm but now many people and companies got burned hard and fast with not getting refunds. This has made people a lot more cautious about trusting others with their money. The new default option seems to be payment on delivery, not in advance. This works in every industry, for example, many marketing agencies now offer services based on performance instead of monthly retainers and long contracts.
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While all six points might sound logical to most entrepreneurs, acting on them, or integrating the idea of how things look like in the future within your business is what matters. In short, this is a great time to pivot. As I become a father for the second time around and I am thinking about the future at the same time, I want to urge all leaders to stay focused and push forward. Many of us might be dealing with a lot of stress and crucial decisions at this time. As you have more information you will not always be understood right away, but only time will tell as always that speed and decisiveness works in favour of businesses and those who are battling overwhelming odds. In the end, change is the only constant and we should approach the changes in our industries with stubborn optimism.
