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    Distributed, with Matt Mullenweg

    Matt Mullenweg, cofounder of WordPress and CEO of Automattic, embarks on a journey to understand the future of work. Having built his own company with no offices and more than 1,300 employees in 76 countries, speaking 95 different languages, Mullenweg examines the benefits and challenges of distributed work and recruiting talented people around the globe.

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    Copyright: © 2019, Matt Mullenweg

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    Latest Episodes:
    VC Arianna Simpson on Distributed Work and the Blockchain Jun 13, 2019
    Show notes

    Read more about Arianna Simpson in “Is Remote Work Bull***t?” Subscribe to Distributed at Pocket Casts, Apple Podcasts, Spotify, RSS, or wherever you like to listen. “Remote Work is Bull***t.” When venture capitalist Arianna Simpson tweeted this opinion, she never could have guessed the massive response she would receive. In this episode, Arianna has a chance to clarify her thoughts on remote work. Then she explains how “programmable money” on the blockchain could lead to a new world of smart contracts and distributed work arrangements. The full episode transcript is below. *** MATT MULLENWEG: Back in March, Arianna Simpson tweeted an offhand remark that went crazy viral. “Unpopular Opinion: Remote work is mostly bullshit.” Arianna had no idea that thousands of people would like the tweet, and hundreds would weigh in with their thoughts, some pushing back, others hailing the blunt honesty of her “unpopular opinion.” As a true believer in distributed work, I naturally had to get in touch with Arianna when I saw the tweet. Arianna is an early stage investor, with close to 40 investments to date, many of which deal with the blockchain and cryptocurrency projects. I wanted to find out: How is it that someone, who knows so much about distributed software that’s created among globally-distributed teams, has such a pessimistic view of distributed work? It turns out, as it often does, that Arianna’s thoughts on distributed work are more nuanced than her tweet might lead you to believe. We discuss her reservations with remote work, we cover some of the things that traditional office arrangements are really good at providing workers, and we explore how companies can give their employees the best of both worlds with a hybrid model. But things really get cooking when we started talking about how the blockchain could one day be used by distributed companies to pay workers in far-flung locations with stablecoins that are pegged to a traditional currency. When money becomes programmable, all kinds of interesting contracts and financial arrangements open up, making it easier than ever for the distributed company of the future to partner with workers all over the world. ARIANNA SIMPSON: My name is Arianna Simpson and I run a fund called ASP. I’ve been an investor for the past several years, first general VC, and now running a crypto-specific fund. Matt: So you’re into distributed systems. Arianna: I am. Matt: One of the reasons I really appreciate you coming on — and a goal of this podcast is — I wanna have the very best versions of why people should be in the same place, as well as making the case for distributed work. We are obviously in the same place right now. Arianna: Yes, we are. Matt: We are in a tiny studio in New York City, and this is nice, right? Because we’re having a higher-fidelity communication. Arianna: Mhm. Matt: This all started in a tweet. Do you remember the tweet? Arianna: The tweet heard round the world! Oh yes, it was kind of Paul Revere-ish in its quality in that sense. Matt: Do you want to read it? Arianna: Sure. “Unpopular opinion, remote work is mostly bullshit. Way more gets done when you’re all in the same office.” [laughter] Matt: So are you normally this popular on Twitter? Arianna: Well, it’s funny because I tweeted that, and it’s definitely an idea I’ve held for a while. But I definitely didn’t expect it to have such a strong reaction from people, both in the positive and the negative. It got close to 5,000 retweets and hundreds of comments, and I was frankly shocked at how personally [people] took the comment. So I think it was an interesting way of seeing just how strongly people feel about the topic. Matt: What were some of the comments you got back? Arianna: People took it very personally to some extent because they saw it as a personal attack, which it really wasn’t meant to be. And I think a lot of nuance is obviously lost on Twitter. [laughter] Yeah, shocker, right? So I then went on and kind of explained what I meant. So for example, some of the caveats that I think are important to make [are] — I was referring to basically…traditional, venture backable, early-stage tech startups. There are lots of other kinds of businesses — lifestyle businesses and other things — that can run perfectly well, and probably even better in some cases, with distributed teams. But I think there is something to be said for having people in the same place at the same time when you’re driving towards a common goal and that was really what I was trying to allude to. But yeah, I think having people come and interrupt you every 25 seconds, as is often the case in open floor plans, is definitely not the most productive situation. So the model I’ve seen work well, or the model I lean towards, is having an office where people are working from, but having private offices or spaces where people can plug in their headphones and just do work alone while still being in the same place as, hopefully, all of their colleagues. Matt: I’m actually always struck when I visit friends at Dropbox or Airbnb — beautiful offices that I actually get jealous of because they’re so exceptional. Stripe has a beautiful office. How many people have headphones in and are looking at their computers? Arianna: Mhm. Matt: I’m like, well you could do that anywhere in the world. Arianna: Yes and no. So I think — say you have to sit down and write some code or write a blog post or something like that where you need to focus on one task and don’t want to be distracted. Matt: I call that work. Arianna: Sure, I agree, and that’s actually part of work. One thing I’ve noticed about startups that end up being very successful is often there is this really strong sense of shared mission and shared energy, and that I find very difficult to replicate if you have people in different locations because you don’t have the same sense of camaraderie, the same sense of “You know what, this sucks but we’re gonna stay here until 10 PM and pound it out until we’re done ’cause we’ve gotta get this release out” or whatever it is. So that is a really difficult intangible that’s hard to replicate if you have people in different time zones or in different locations. It’s hard to muster up the same level of enthusiasm. Matt: It’s interesting you mention time zones. There [are] some distributed companies, like InVision, that actually ask everyone to work essentially New York hours. So they’ll hire you wherever you are in the world, but they say “This is our window and we’re all gonna be working at the same time,” probably for some of that collaboration-overlap benefit. Arianna: Yeah, yeah absolutely. I’ve seen companies — sometimes they’re small, they’re 15 or 20 people, and they have eight time zones. And I honestly don’t know how you manage to get anything done, because even just internal scheduling can become such a time suck and such an added complex issue, that really shouldn’t be one, that it can easily become a drain on resources and time. Matt: Often Twitter is for hot takes and reactions to things. So was this in reaction to any particular moment or experience? Arianna: No, honestly, not so much. I think it was just a general reaction to the trend I’ve been seeing, which is in the direction of more teams being distributed or remote. And my seeing that I’m still not totally convinced that that’s the most productive model for most — of the kinds of companies at least that I’m interested in investing in. It’s important to point out that there are certainly counter-examples and there are a number of companies that have been distributed from day one and have done very well. I would pose the devil’s advocate perspective that they might be — Matt: Would they be bigger? Arianna: Exactly. Matt: Yeah, what’s the opportunity cost. Arianna: Exactly. And I think it’s incredibly hard to measure that and so I can’t say that I’m right and they can’t prove that I’m wrong. So we’re stuck on that point. Matt: Do you find in your own portfolio [that] some of the standouts, or ones furthest along in their journey, have tended to be these more in-office ones? Arianna: I would say — obviously my portfolio is too small to be a generalizable subset, but at this point it’s north of 50 companies so it’s not three. [laughs] Matt: That’s sizeable, yeah. Arianna: Yeah. Matt: And to invest in those fifty you’ve met with five thousand? Arianna: Thousands, yeah, yeah. Matt: Yeah, thousands. People sometimes don’t realize just how many different companies investors see before they make investments. Arianna: Oh yeah, oh yeah. Matt: It’s kind of incredible. And a really good data input. Arianna: Mhm. Obviously as someone who tries to be pretty analytical, you have to say correlation, causation — there are so many issues that go into making a startup successful or not that just being like, oh well there are plenty of startups that fail and they were all right in the same room. So that is definitely not a sufficient attribute. But I would say in general there is something to be said for, at least in the earliest days, having that central locus of cohesion. Matt: That was such a reasonable thought. It would never fit on Twitter. [laughter] Arianna: Yeah, right? Matt: So I’m going to try to summarize. You’ve seen in the past and you expect in the future more companies, especially in their early stages, to do better when they’re all in the same room because the value of that collaboration is really high. Arianna: Yes. Matt: You’re open-minded to counter examples, but maybe those are the exceptions that prove the rule? Arianna: Yeah I would say that’s true. And I think one thing that I’m [advocating] is a hybrid model as well. So for example, some companies in my portfolio have the business HQ in San Francisco, and I see this typically if the founder is from somewhere that’s not the U.S., but they tend to still have a pretty strong presence in the Bay Area, and even when they’re distributed it’s a couple of hubs, not individual people all over the map. Matt: The easiest thing in the world is everyone around a table, that two-pizza team. It works for a reason. Arianna: [laughs] Mhm. Matt: You can maintain all the connections, it’s easy to communicate, etcetera. I think fully distributed also works really well. In between what’s really hard is multi-office because then you often have distinct cultures growing up. Arianna: Yes. Matt: A lot of the companies you see as more traditional are almost all multi-office. It’s physically impossible sometimes to get a certain size in a single building. And I would argue as soon as you’re on multiple floors, even, you’re essentially distributed, you might just not be doing the work. But the other one, this hybrid, it’s really hard. And it’s just hard to have them at equal footing to the rest unless the in-person team works really hard to make sure everything is documented; that the conversations are accessible. And even then there’s just things that happen naturally. We’ll have something when we’re walking to the coffee shop. That might be an important discussion. That might influence how we both think about how this widget is going to evolve. And unless we really put in the work to document that, to catch everyone else up, they might see the end of that decision and not the beginning. And that’s challenging, especially when you’re creating things in the early stages. Arianna: Yeah, I think that’s totally true and I’ve seen that happen a lot where the employees who are not in the main office often end up getting passed over for promotions or they just feel really disconnected, and so often have higher churn and end up deciding to leave because they’re in a silo. And everybody wants to feel connected to their team and to their work, and it’s hard to maintain that connection if you’re not on the same physical playing field as most of the team. Matt: I think churn is actually an interesting trailer indicator of how well you’re doing at this. Arianna: Mhm. Matt: We’ve observed in other successful distributed companies that the churn is actually way lower than any in-office companies we know. And that multiplies in the Bay Area. And I think that’s a function of — well, one, if you’re at the place where everyone is being poached to every other place, you’ll naturally have some higher churn. Arianna: Yeah, sure. Matt: Two, I think being in an office in general — you’re asking someone to do that work to get to and from the office everyday. And that commute and that scheduling — all of that can be challenging. Even companies that are very progressive and might say sure, if you want to leave at 3 PM to pick your kids up, that’s fine, and you can come back and work an extra 30 minutes or something. Meetings are still going to get scheduled then. Arianna: Yeah. Matt: And to be honest, I do get jealous when I visit some offices — like, I have a little bit of FOMO because I really love my colleagues and I really love spending time with them. But I think in our personal lives, when we make the decision to live with someone, to cohabitate, whether that’s a roommate or a partner or whatever, that’s a very considered decision and we take into effect a lot of things — their eating style, their music, their habits of all sorts, and we enter that in a deliberate fashion. But during a third of our lives, eight hours a day, traditional offices thrust us — Arianna: Oh yeah. Matt: — in sometimes tight quarters, depending on how fast the start up is growing, with people who we did not necessarily screen for those things. Arianna: I didn’t sign up for this, yeah. [laughter] Totally. Matt: And it’s funny, my friends who work at offices, sometimes their complaints — the things that really, really, really bother them — might be the temperature in the room, or there’s someone who calls their mom everyday and it’s an annoying conversation, or the person who brings in a really strong curry three times a week. You’ve probably had examples of this yourself that you think — like, you don’t like open offices for example. That’s a pretty specific taste. Arianna: Yeah. Well I mean that — I think the most egregious example of this was when I was working at Facebook. I was right in the middle of basically the main walkway to everything. So if you wanted to get to the door you went by my desk, in order to get to the cafeteria, the bathroom, literally anywhere, you had to walk by my desk. And so this was an office of, at that point in time, three hundred people and — Matt: So you knew most of them probably, yeah. Arianna: Yeah, because I tend to be pretty social and again — small team. But I couldn’t get anything done because I was literally in the middle of everything and everyone would be like oh hey, how’s your weekend… And I’d be like, oh my god, six hours later and I’ve accomplished nothing. So then what I started doing was barricading myself. I was booking conference rooms, which technically you weren’t supposed to do, but whoops, [laughs] to just go in there and work. So that’s where I realized okay, actually what I like is having other people around and the ability to go and talk to my colleague if I need to, be present in meetings, and all these sorts of things — but also an independent workspace where I can just be alone and think — that’s where my preference on that emerged personally. Matt: And how much of your day then would you say was like work [where you] needed to talk to other people, versus work where you needed to be in that grind mode? Arianna: For me, I was in that — they call it Global Marketing Solutions, aka Sales. So for me, I had a lot of time talking to people both internally and externally, and I was working in a somewhat cross-functional role, so I had to triangulate with engineering and design sometimes in addition to the client. So there was definitely a lot of active collaboration that I was doing. So I would say maybe two to three hours a day I needed to be alo…

    Full show notes at the publisher

    Pluto VR Cofounder John Vechey on the Virtual Office May 30, 2019
    Show notes

    Read more about John Vechey in “For Years, VR Promised to Replace the Office. Could It Really Happen Now?” Subscribe to Distributed at Pocket Casts, Apple Podcasts, Spotify, RSS, or wherever you like to listen. “A new form of communication” After leading PopCap Games to a successful exit, cofounder John Vechey started Pluto VR to help humanity transcend physical location through a virtual reality chat app. In this episode, John explains how VR might be used in distributed workplaces to enable people to have high fidelity meetings that capture the nuances of human conversations. The full episode transcript is below. *** Matt Mullenweg: We’ve been hearing about virtual reality since the late ’80s, but this technology still hasn’t yet leapt from the pages of science fiction into our universe—at least not into the mainstream. The VR revolution seems to be always just around the corner, but some people believe that we really are on the verge of something that’s going to change everyone’s lives. John Vechey, cofounder of Pluto VR, is one of those people. He’s specifically interested in how VR is going to change the way we communicate. John found success as the founder of PopCap Games–you may know them as the folks behind your favorite mobile games like Bejeweled or Plants vs. Zombies. After selling PopCap, he transitioned into virtual communications. I wanted to speak with John because he’s got some big ideas about how VR will one day be used for work. Pluto VR is building a communication platform that will allow people with VR headsets to talk to each other in a way that feels far more immersive than a phone call or a video chat. His goal is to seamlessly recreate the experience of speaking with someone face-to-face, with shared presence and context. He wants remote conversations to have more fidelity, so they can capture the nuances and subtleties of communication that humans are used to experiencing. If distributed work is going to take off, we’re going to need really good communication tools. But how realistic is it to assume that we can have virtual offices that are so lifelike and useful that they replace physical ones? Are we really anywhere near this dream? Matt: Hello, this is Matt Mullenweg, we are on the Distributed.blog podcast and I’m talking to John Vechey, who I’ve known for a few years now. John, tell us a little bit about your early career so we know how to catch up to where you are now. John Vechey: So in 2000, I started a company with some friends called PopCap Games. And at the time, PopCap was like, we’re gonna make some games, but instead of for games, which at the time was pretty much sixteen to twenty-five year old males, we’re gonna make games that everyone can play. Our first game was a game called Bejeweled. Matt: I love Bejeweled! I played it on the Palm Pilot. John: Nice. And that was like the original, like, great format for it with the touch of that stylus. Matt: With the pen, yeah. John: Yeah. Bejeweled, Plants vs. Zombies, Peggle, we started as a web game company, transitioned to a downloadable game company and then a multi-platform company and then eventually a mobile company. So over the course of like fourteen years there was a lot of different phases of PopCap. Matt: Of those, which did people get most obsessed about? John: Of our games, like, Bejeweled and Plants vs. Zombies were our most popular. And people got obsessed about them in different ways. In Bejeweled 2 we put a Zen mode in so you couldn’t even lose. All you could do is just play. Like, it would never hit a losing condition and there was just points that would rack up. And it was one of those things where I realized that there were people that had spent over a year’s worth of hours playing that mode. Matt: Wow. John: Right? Matt: Last night I told friends I was coming here to Seattle to do this interview and Plants vs. Zombies came up, and it turns out both of them had taken a whole Thanksgiving where they just got obsessed with it and went through every possible level. John: Yeah. And I think that’s the Plants vs. Zombies story ’cause it had a linear aspect to it that Bejeweled didn’t have. Bejeweled was more like an arcade game and Plants vs. Zombies was like an exploration and collection game. And so you’d hear stories about people like yeah, we went on this vacation and we just beat Plants vs. Zombies, that’s what we did for a vacation. [laughter] I’m like, that’s cool. Matt: No I totally get it. So PopCap sold to Electronic Arts, right? John: Yeah, in 2011. We were around four hundred people. Matt: And was PopCap all in one office? John: We had a joke at some point that the sun never set on PopCap. So we had offices in Seattle, San Francisco, San Carlos, Vancouver, Dublin… period, I think that’s it. [laughter] So we had a lot of offices and all offices were pretty — I mean they were all kind of doing a mix of regional work and game development so it was definitely a lot of travel. Matt: So you were a multi-office? John: We were multi-office, yeah. Matt: Most of the people working there went into some office somewhere in the world everyday. John: One of the weird things about PopCap was one of the cofounders, Jason, who was the creative director, he was always remote. Matt: Wow. John: So we had this really weird thing where one person was distributed and that actually shaped our culture of game development. Matt: Where was he? John: He was up first in Vancouver Canada and then he moved to Vancouver Island. The core of what we were was always distributed. And he came down quite a bit but in some ways it was frustrating for him because he’s like, well, I can come down and not get work done or I can just stay up and get work done. Matt: You’ve been running companies and doing highly creative and successful development with games for a long time. Why don’t you introduce us to what you’re working on now? John: I left EA in 2014 maybe, after working there for three years. I knew I didn’t want to make games anymore and so I started looking around at what was happening and I went to D.I.C.E, a gaming conference, and saw Palmer Luckey talk. And he talked about what virtual reality was doing and how it was closer than anyone realized and — Matt: Say who Palmer was. John: Palmer was the founder of Oculus. It’s a VR headset and it was bought by Facebook. And I saw this presentation, and I was like, wow, this could be really world changing. Matt: It must have been a good presentation. John: There was a lot of passion behind it. And it was like, I wonder if any of this is real. But it was. It was real enough to at least be like, hey I wonder if there’s something there. And so I started just going around town being like, hey let’s say I want to do this type of thing or that type of thing in VR, does anyone know anyone I should talk to? How would I do that, right? I wasn’t an expert in VR. And I met two co-founders, Jarrod and Forest, who had this startup called Impossible Object. I head up north into the far Seattle suburbs into this studio they had, where they had this high-end professional motion capture set up, and then an Oculus development kit. And their first words were like, take your pants off and put this suit on. So I had to like, put this motion capture suit on. And I had experienced a bunch of different experiments that they had done where I could like walk around the room, I could look at my own body, I could manipulate things with my hands — things that weren’t possible with the current consumer VR hardware. And so I was like, that was amazing, what are you doing with this? What’s your plan? And they were like, well we’re not thinking that anyone’s gonna buy this forty-thousand dollar motion capture system, but we think this is where VR is going, so we’re trying to learn as much as we can about the future five years from now, instead of trying to think about how to develop for the world right now, which is gonna rapidly change. Matt: And those are your co-founders at Pluto? John: Yup. And then with another person that I was friends with. Matt: How do you go from this mixed reality thing to thinking about work and how people collaborate together using these technologies? John: I had come from games and I didn’t want to make games. Jonathan, one of the other co-founders, had come from animation, didn’t wanna — Matt: Why didn’t you want to make games? John: I was just done with it. You know, you do something for fourteen years and you just want a break maybe. Matt: So one of your co-founders also was done with games. John: Well he had been in animation. He came from Disney Animation for fourteen years. Matt: Wow. John: Yeah. So his career was interesting ’cause he started with Lion King and ended with Frozen and he’s like — and everything in between was very different than either of those extremes. [laughter] He was like, it was like a long walk down and then a looong walk back up. Matt: Interesting. John: And I think I was sitting there being like, well I really don’t want to get into VR and then start a game company. So for us, what was important about coming together was that there was something that existed above us and above any kind of decision-making power structure, even ownership structure. Our purpose was to help humanity transcend physical location. So that was important, and that we could align ourselves around that was the second thing. And then the third thing, what was it? So really we felt that the power of what was happening with virtual reality at the time wasn’t just that you could go to a place, but that you could go to a place with someone else. Matt: Hmm. John: It wasn’t just like cool, I can essentially take a drug and space out, it was more about like, well what can we do together? And we took it even farther, like what if right now we’re so tied to our physical location, right? Like just today alone I got up, I went to an office, then I went to go have a meeting in one part of town. I came back to the office to have lunch, went over here, right? I’ve already done more trips than I would care to do. It’s nice to be in a car for a little bit, it’s nice to be on a bus for a little bit, but it’s not really serving my life. I could’ve been more present working on something, reading, or just sitting out in the sun. Matt: Help humanity transcend physical location. John: And we spend a lot of time on each word. Matt: Help humanity, as opposed to robots. John: I think you can actually break it down literally one word at a time. Like “help,” what does that mean? It’s like, to aid, to be a part of, to make something possible that wasn’t possible or make it easier for other people. So I think that the help part really for us came down to — we don’t need to own the solution, we just need to be part of creating something bigger than us and helping other people do something. Like, we are in service of other people. And then “humanity” is like, who is it? It’s humanity. It’s not companies, it’s not tech bros, it’s not Americans, it’s everybody. Every choice we make we need to think how is this helping all of humanity, right? Matt: At a global level. John: At a global level, at an able-ness level, at a gender level. Really being like hey, we need something that serves and can help everybody. And then “transcend,” right, that’s like a — we spent a lot of time on that word. Matt: [laughs] That’s a big word. John: It is. And so for us it’s about moving beyond, making something thoughtless. So if you think about things that have transcended something before in our society, you can certainly say commerce has transcended physical, I think would be a pretty fair thing to say. What else has transcended? Matt: ‘Cause now we have credit cards and… John: Yeah, how much do you touch physical money, much less prioritize your life around it? Matt: Yeah. John: It’s pretty rare that you’re like, oh I’ve really gotta go to the bank to do this large financial transaction with physical currency, right? Matt: Yeah, almost never. Are there technologies in the past that you feel like helped humanity transcend location that you find inspiring? ‘Cause that was actually one of my first thoughts is like, from the telegram to the phone to email, you know, all these sorts of things. Like, we are more connected than ever and I think it’s the primary thing responsible for our progress. So in theory, if your mission is successful, and this new technology brings humanity closer together, it’s just like upgrading the routers and ethernet between a data center. Like, it’ll get faster and better and we’ll be able to create better things. John: So there’s been this history of community of making the physical limitations smaller to communicate over a longer distance and then at the same time there is a higher quality of communication. And so you think about the telegram to the telephone to the mobile telephone, but then you pretty much get to audio chat and then you add some video — and we’ll talk about video in a second — but then that’s it. And then it’s in-person, but there’s this giant gulf between what it means to be in-person and what means to use video chat or talk on the telephone. There is all this information you get from in-person that you don’t get from those other mediums. And that information is what is fundamental to what we’re trying to do and it’s fundamental to our purpose. Because you can’t just say we’re making a better video chat. Great, humanity has transcended physical location. You’ve gotta do something that we can’t even imagine right now. The closest we can get is a high def video of you but you’re never watching a video being like, I feel like I’m in the same space as you. Matt: So what is Pluto today? John: What Pluto is today is the start of a new form of communication. We call it shared presence and this idea that you can share our presence with someone and feel present. And so we have an alpha version of an IOS client right now that we’re working on. So IOS to IOS, one to one. Matt: But that has to be a flat screen, right? John: Yes, it has to be a flat screen but it doesn’t have to feel like a flat screen. Matt: What does that mean? Mind blown. [laughter] John: It’s like imagine if you were looking through a portal. Matt: So I would be holding up my iPhone and then on the screen I’d see you sitting in a chair across from me? John: And instead of it feeling like you’re looking at video of me, you’re feeling like you’re looking like — think like a magic portal, right? So it’s just a portal in space and you’re just like, oh yeah, I’m holding my hands up like a little rectangle, I’m still looking at you. And it just happens to be that we’re in the same physical space and I’m doing this, but what happens if it’s like, oh, it’s like a magical portal and you can be anywhere? Matt: So for our listeners, John was just holding up his fingers right in front of his eyes. Now if my phone were there though, the camera would only be showing you like my eyebrow and eye, one eye. John: Correct, if I – Matt: So it seems like we normally position these things for the sake of the person on the other side. John: Right. And so what happens is when you’re communicating with a shared presence and Pluto’s product, there’s a mutualism — Matt: To position it so you see my face, I need to hold it farther away, right? John: Yeah. So you can’t just do a small segment of it. And it’s one of those things where it’s like, there’s things you can do on video chat that you can’t use Pluto for. Pluto is really bad for walking. ‘Cause just imagine you’re walking backwards and I’m walking forwards and we’re still trying to talk, like it doesn’t — that’s not how walking communication works. So like Facetime, for example, or video chat, is really, really good for that type of communication. But if you’re in a long distance relationship and you really wanna connect with someone, Pluto is way better, right? You sit the device up on a sta…

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    Upwork’s Stephane Kasriel on Fixing the American Dream May 16, 2019
    Show notes

    Read more about Stephane Kasriel in “The American Dream Is Broken, and I Think We Have a Shot at Fixing It.” Subscribe to Distributed at Pocket Casts, Apple Podcasts, Spotify, RSS, or wherever you like to listen. “The American Dream is Broken, and I think we have a shot at fixing it.” Stephane Kasriel, the CEO of Upwork, thinks that most work, as we think of it today, is in need of an overhaul. In this episode, Stephane explains how changing the way we think about work can simultaneously give workers freedom and flexibility, enable companies to operate more efficiently, and revitalize local economies all over the world. He also shares tips on how companies can make smart moves toward a distributed work model. The full episode transcript is below. *** Matt: To start off, say your name and how long you’ve been here, just so people have a sense of you. And then we’ll talk. Stephane: Sure. So my name is Stephane Kasriel, I’m the CEO of Upwork. I joined the company close to seven years ago. Initially I was running product management and design and then when our head of engineering left, I became the head of product management, design and engineering. And then a couple years later, when the CEO left, I got promoted and became the CEO of the company. And that was about four years ago. Matt: Awesome. How big is Upwork? How should people think of it? Stephane: You know, that’s a great question, how big it is it depends if you define it by employees or everybody in the workforce. There’s about fifteen hundred people who work at the company, about four hundred of them are full time employees of Upwork Inc., the company, and they mostly work in one of our three offices in the U.S. We have an office in Chicago, we have an office in the South Bay — in Mountain View, and then we have an office in San Francisco. But then we have another eleven hundred or so people that are what we would call freelancers and they work from home — they work from about five hundred different cities in the world, which is pretty impressive. Matt: That’s a lot of cities. Stephane: I’m not sure I can name five hundred cities in the world, so that’s a pretty big part of the world. And part of the reason why we call them freelancers is because that doesn’t have a legal meaning. And so some of them are full time employees of Upwork but they just happen to work remotely. Some of them are independent contractors or whatever is the equivalent in that particular country. And then some of them are essentially what the U.S. would call leased employees, meaning they get a W2 but they get a W2 from something called Upwork Payroll, which is our product. So as you can imagine, we use our own product to manage our entire remote workforce. And so depending on the employment law and all of the other considerations that are embedded in the product, they end up being classified differently. And because this whole discussion was pretty long, we call them freelancers. Matt: [laughs] And Upwork is now a public company. Stephane: Mhm, yeah. Matt: Tell me about that. Stephane: Yeah we took the company public in October of last year, which is something that we had wanted to do for a long time. The reason being, you know, a lot of companies go public because they need to raise a lot more money. In our case, we’ve been cash flow positive or break even for many, many years, so we did not need to raise the money. What we really needed was to raise the awareness. And I think the labor market is obviously one of the biggest markets in the world, like a hundred trillion dollars or so, of which remote work can be a very substantial part of it, and I think Upwork can play a role in trying to create a better future of work. Like I think the current present of the labor market is pretty messy — and we can talk about that if you want — but it’s pretty broken for a lot of people in the world. And we think we can be a driving force in creating a better future but we need a big, big loudspeaker in order to be able to influence people. And being a public company just allows us to have a lot more visibility, a lot more credibility, than what we used to have. And that’s been the main driver for doing this. Matt: And that also means all your numbers are public. So what’s the rough size of the business now? Stephane: Yeah so this year we’re going to do on the order of about one point seven billion dollars. Matt: Wow. Stephane: And it’s growing pretty nicely so it’s going to be much more than that next year. Matt: That’s super cool. Stephane: Mhm. And I should mention that’s the amount of business that is done on the site, what we call gross services volume, or GSV — we looked at the financials of the business, gap revenue is… about fourteen point something percent of that one point seven billion. So the gap revenue in 2018 is on the order of two hundred and fifty million dollars. Matt: That’s incredible. Stephane: But what I really care about, to be honest — Matt: Is the gross. Stephane: Is the gross. Because that’s how much money we give in the freelancer’s pockets. Fundamentally our mission at this company is to create economic opportunity so people have better lives. And the way we measure that is the amount of money that goes into people’s pockets. So revenue is how much we get to keep, we are a for-profit company, we need to make money too, we need to hire all these people and continue to build the business and all that stuff. But the real reason why this company exists is for the GSV, right? It’s the money that goes and allows people to be more free, be more flexible, live anywhere in the world that they choose to live in and be able to have access to jobs that they would not be able to get otherwise. Matt: Would you call that number your north star metric? Stephane: Yeah. I mean the one number — like, when I look at our all-hands and what we talk about all the time, we don’t talk about revenue, we don’t talk about EBITDA. I mean obviously we have a finance team and we have an accounting team and they really care deeply about this stuff but I would say the reason why people join this company either as full time employees or as freelancers and either in an office or remote, is because they get to create jobs for lots of people. And the proxy for that is how much money goes into the freelancer’s pockets. Matt: You mentioned earlier that work was a little broken. Stephane: Mhm. Very broken. Matt: Tell me more about that. Stephane: Well I think we’re in a place right now where if you live in San Francisco, for instance, where, ya know, we are based here, you have — If you are highly skilled you have access to amazing economic opportunities, great jobs, working for some of the most amazing companies in the world. But the cost of living has been rising faster than your salary. The average rent in San Francisco has been growing by about seven percent per year for the last forty-five years, so you compound that, it’s become outrageously expensive. What we see is that young people, young college graduates, when they move to the Bay Area, spend close to seventy percent of their disposable income on rent. And that’s despite the fact that they have a pretty lousy apartment and they typically have roommates. And that is more than twice as much as the overall U.S. market right now, right? So you’ve got a place where [there are] great jobs, great environment, very international, very dynamic, all that stuff, but completely unaffordable to live in. And then meanwhile you just go a couple hundred miles away from here, you go to Stockton, you go to Modesto, you go to Fresno, you go to Sacramento, let alone going in the Midwest of the country, and you have places where it’s extremely affordable to live in and frankly it’s actually very nice to live in. There’s plenty of beautiful places outside of the Bay Area where you really want to live but there’s no jobs. So fundamentally we are in this economy where if you’re a young person in particular and you don’t already have real estate that belongs to you and you might even have a ton of college debt to get started, you have this catch 22, where if you live in the middle of the country you don’t have a job and if you live in the big cities in the U.S. you have a job but you have no money, and either way it seems like a pretty bad outcome. And it doesn’t need to be that way. It’s the last evolution where we missed — we missed a turn. The first industrial revolution you had to move people from the farms where they used to be working to the assembly line because physically we were manufacturing our goods and you had to be on site and the whole nine-to-five was because the machine was gonna run from nine-to-five and so you had to work when the machine was gonna run because frankly at the time machines were expensive and humans were pretty cheap and so it made sense that way, right? But you fast forward to the fifties where manufacturing started to slow down in the U.S. and a big part of the western world and the service industry knowledge work became a big thing. And increasingly a bigger part of it was done in office towers and cube farms. And if you think about it, that was — I would say — a bad metaphor. The cube farm is the modern version of the assembly line except that none of the work that you do in the cube farm actually has to be done on the cube farm. And increasingly work can be done from anywhere, and increasingly it doesn’t need to be done from nine-to-five, increasingly it doesn’t need to be this long term, one-on-one relationship between an employer and an employee. But somehow we missed the transition and we are continuing to operate as if work had to be done the same way. And you could say so what’s the big deal? Let’s keep doing it. But the reason why it’s a big deal is like — not to get into politics or something — but there is increasingly, in the Western world, a group of, a part of the population that is saying this system is not working for us. And you have the myth of the American dream, the idea that if you’re highly skilled and working hard, you should be able to be successful increasingly depends on where you were born or where you live or how much wealth your parents have and whether you’ve been able to go to college or not as a result. And that is not what — I’m an immigrant in this country, I signed up for the American dream. And I think it’s pretty broken right now and I think we’ve got a shot at fixing it. Matt: When I moved from Houston to San Francisco my rent went from eight fifty per month, which I paid half, to twenty-seven hundred dollars a month. And this was 2005. Stephane: Yeah. It’s gotten worse since then. Matt: So compound that by seven percent per year since then. Stephane: It’s bad. Matt: For a similarly sized place, ya know? A little bit of an upgrade. Yeah. How about you? Do you remember your old rent when you lived in France? Stephane: Well I moved here in ’97 and I remember when I moved here people were saying don’t buy a house, it’s crazy, some of these houses are worth a million dollars. There is no way this is going to last. And of course the same houses now are probably three or four times that. You know, eighty percent of houses in San Francisco cost more than a million dollars. Matt: Eighty percent? Stephane: Eighty percent. There’s not a ton of people in the world, even if you work for a tech company — like the amount of money you need to save in order to have a down payment to be able to afford a million dollar house and then you pay, you know, one point something percent of property tax. I mean it’s really hard to afford a good life in the Bay Area right now, even if you are a data scientist working at Facebook. If you are not in tech and you’re just an average worker trying to get by, it’s a real struggle. Matt: It’s kind of amazing as well. We think of the Bay Area as this engine of innovation but the percent of the economic activity that just goes to landlords is astounding. Stephane: Yes. Historically there have been more billionaires coming from real estate than from tech in the Bay Area. [laughter] Little known fact. Matt: You have so many cool stats about the Bay Area. [laughter] Stephane: Twenty years of doing this. But you know the thing is, it doesn’t need to be that way. And I think this whole distributed company, remote workforce, whatever you want to call it movement is finally the awakening by the tech industry [to the reality] that we are part of the problem. Part of the reason why jobs have been destroyed in plenty of places in the country while all of the new jobs were created in a small number of areas is because of tech. And overall it’s a good thing. Right? Increasing productivity makes people richer. We need innovation, we need automation. By the way, we don’t make as many kids as we used to so we need more robots to actually help us grow the economy — like, all these things are true. But the problem is the jobs that are being displaced are not in the same location and don’t need the same skills as the jobs being created and the displacement of the jobs comes from us, the tech industry, right? And so I think increasingly there is both a practicality of — as a small start up you just can’t hire good developers in San Francisco because if they are really good, they are paid so much more money by the big tech companies that you can’t possibly attract them. So there’s a very down-to-earth, like, you-don’t-have-a-choice type of approach to this. But I think increasingly there’s also a bigger social calling for realizing that hey, there’s some really great developers and great marketers and great everything else over there, and we can really help these people get a better life by giving them a job instead of trying to poach people from Google who will then poach them back. This very zero sum game, red ocean type of approach of the war for talent, the way it’s conducted in the Bay Area. Matt: If we allow the economic opportunity to be world wide, won’t that just mean more accumulation of capital by the companies themselves? So Google has to pay their employees very high salaries because they’re in this competitive market. Stephane: Mhm. Matt: If the global average was much lower than that, let’s say a third of what it was in the Bay Area, the extra profit would just go to Google shareholders or the company itself. Stephane: Well I think it’s — the economy is not a zero sum game, right? In an ideal world workers are better off and companies are better off. I mean that makes it much more attractive than if it’s a win-lose where yeah Google is worse off but Google’s employees are better off. I mean that’s going to be how to convince the CEO to then convince their board, to then convince their shareholders, right? So in an ideal world you get to a place where — and that’s what we tried to do at Upwork, right? We tried to make sure that the companies are better off because they get access to talent that they would struggle to get otherwise. They don’t necessarily need the talent full time and so they can pay by the hour or by the task. And frankly they may not be that attractive to the workers in the first place because, if you’re a highly skilled worker in today’s economy, your skills are in high demand and you get to choose where you work. Matt: Yeah. Stephane: And for most companies, they really struggle. Not everybody is not attractive to workers as much as they’d like to [be]. And so sometimes — so, on the company side, some of it is driven by cost savings. For some companies, in particular very small companies that are bootstrapped and before they get VC funding and what have you, the ability to pay developers less than what they would pay locally can be a driver. But for the most part it is just accessing the talent and being able to work with people on demand. And that is not incompatible with the fact that people are better off because they get to have more flexibilit…

    Full show notes at the publisher

    A new podcast, 15 years in the making. May 15, 2019
    Show notes
    Subscribe to Distributed at Pocket Casts, Apple Podcasts, Spotify, RSS, or wherever you like to listen.

    Matt Mullenweg, cofounder of WordPress and CEO of Automattic, embarks on a journey to understand the future of work. Having built his own 850-person company with no offices and employees scattered across 68 countries, Mullenweg examines the benefits and challenges of distributed work and recruiting talented people around the globe.

    Produced by Mark Armstrong and the team at Charts & Leisure: Jason Oberholtzer, Whitney Donaldson, Cole Stryker, and Michael Simonelli. Theme music by Jason Oberholtzer. Cover art by Matt Avery.


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