Start-ups

Legendary tech investor Bill Gurley: We're investing in start-ups without an office now, and we didn't before

Bill Gurley
Adam Jeffery | CNBC

Another change toward a work-from-home world courtesy of Covid-19: Bill Gurley, who has invested in the likes of Uber and Zillow, says he's now investing in start-ups that do not have a traditional office.

"We are now backing start-ups without offices, which isn't something we had done before," Gurley, who was a long-time investor with Silicon Valley venture capital Benchmark, told Bloomberg Technology host Emily Chang, in an interview posted online on Thursday.

Indeed, in a June survey by venture capital firm NFX, "60% of VCs said they were less likely to invest in start-ups that had the majority or all of its employees working remotely," the San Francisco Business Times reported. Remote companies are seen as more fragile, because employees can easily leave for the next remote job, NFX managing partner James Currier told the publication. And according to Trulia co-founder and NFX managing partner Pete Flint, being nimble and creative, as start-ups need to, is more easily accomplished when people are together in the same physical space.

But for Gurley and the Benchmark team, "we do early stage investing. We back companies with five to 10 employees, and they are founding those without an office" now, said Gurley (who announced in April that he won't be participating in the firm's next round of investing).

And there are some advantages to investing in remote businesses. For one thing, "a lot of times you end up taking on geographic diversity [in hiring] because you're not thinking about there being an office," Gurley said. Previously, "people struggled with building large engineering teams [in Silicon Valley] anyway because it was just so competitive and expensive."

The culture has changed virtually overnight because of the forced social distancing required by the coronavirus pandemic. Now, when tech companies want to make an additional hire, "every company" is saying to themselves, "Well, maybe that person could be remote because everybody else is already," said Gurley.

It will take three to six years to see how a remote environment will affect start-ups, Flint told the SF Business Times in June.

But it's not just start-ups — large, established tech companies are making shifts to remote work, too.

Gurley pointed out that real estate company Zillow is allowing its employees more flexibility; the company announced in July that it is going to allow 90% of employees to work from home permanently.

"This is a drastic change from where we started the year. We have historically discouraged employees from working from home, preferring face time and in-office collaboration versus virtual exchanges," Zillow's chief people officer, Dan Spaulding says in a written statement when the company announced the policy change. "Our old preferences have been debunked during the pandemic."

Cloud storage company Dropbox announced it was becoming a "virtual first" company earlier in October, as Gurley also pointed out.

Being a virtual first company "means that remote work is the primary experience for all of our employees globally," Melanie Collins, Dropbox's vice president of people, told CNN. "Because we know human connection is still critical in terms of building high-performing teams, we will invest in collaborative spaces designed for team-gathering and community-building, instead of a collection of desks you go to every day."

However, added Gurley, other companies, like Netflix still do not support a remote model.

"I don't see any positives" to remote work, Netflix CEO Reid Hastings told the Wall Street Journal in September. "Not being able to get together in person, particularly internationally, is a pure negative."

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