Zoom, ZBars and The Financial Case to Eliminate Office Space

Well, we’ve made it through the shelter-in-place order -- the first round at least. Although the restrictions have loosened up a bit, as a family we are still staying in as much as possible. While I find myself trying to find more than one way to pass the time, my hair is longer than ever before and I seem to have an addiction to my kids’ Z Bars (aka Clif Bars for kids) -- specifically Iced Oatmeal. They’re great for a quick whole grain snack with a touch of sweetness. Food options and what's for lunch, dinner, etc seem to be the one of the biggest issues on all our plates. I find that I load up on groceries and follow in my mom’s footsteps by buying two of every item which is easier now that we’re ordering groceries online, with my favorite services being TTK Provisions & Doordash for ease of use. Full Disclosure: I’m an investor and acting CEO at TTK Provisions.

Zoom Boom: 

I can’t tell you how many Zoom calls I’ve been on but I can tell you that I prefer Zoom over Google Hangouts any day. Their quality and functionality is way superior. Zoom has created an amazing experience and navigated the COVID-19 crisis really well, all things considered. They grew their business by 10X in a matter of 4 weeks or so. 

I pay $19.99/mo. But even at $150/mo for a 10 person team to get a virtual office with no long term lease... is a steal. From a cash standpoint, it’s a great deal compared to an office with rent, utilities and dirty dishes that no one knows who left in the sink. Not to mention the cost of snacks, meals and cost of bathroom supplies. At face value, it appears to be a great value. 

We Need the Office...But Do We Really? 

In the early days of running my organic juice company, I thought we needed an office. Over time I realized it was just an overhead cost that we could do without. Sure it was nice to have the ability to meet people in person, but that was about less than 5% of the time. I was more concerned with optics than cash flow management: I thought having a “real office” was an indicator that we were a “real company”. At that point, I was clueless on how to be resourceful and didn’t know the first thing about running a lean organization. In my previous (and traditional) work experiences, I was always in an office that was just the norm. It was something known and familiar. I soon realized this was unnecessary on multiple fronts, especially from a cash standpoint. It was time to face the fear of not having an office. I used to hear (even until recently) from industry colleagues and Silicon Valley leaders that having remote employees would produce varying levels of productivity degradation. “OMG, they’ll be distracted!” “How will they be able to focus?” “How will they be able to collaborate?” Technology solutions like Notion or Zoom are changing the way we work together. Well, suffice to say, working remotely is here to stay. Time will tell the fate of offices with their perks and all.

Will we trade espresso and snack bars for temperature check and mask issuing kiosks? 

Math: 

We’re going to look at this purely from a monthly cash perspective. While I know there are “other” factors in evaluating whether or not you should have an office, during this time is cash king/ queen. 

So imagine you have 10 employees at an average salary of $100K (before taxes and benefits) and pay $3,500 in monthly rent for your office. You have another $500 in utilities, $500 in office supplies and like $10,000 in printer ink monthly (j/k). Ok so we’re at $4,500 in expenses, not including the exorbitant printer ink cost. Below is a bit more detail on how I see the comparison playing out:  

Employee’s Benefit: 

Who needs shoes? Who needs new dress clothes to work productively? Based on a Flex Jobs study, 90% of employees said flex working arrangements would increase morale. In a world where you can have food delivered at any time of the day, and digitally connect with anyone in the world, why should you “have” to go into an office? Arguments are being made that employees need for social interaction and collaboration that can only be done in a physical space. For the moments where you really need to roll up your sleeves and get in the same room, just rent an office by the hour. 

PocketCFO has been remote since day one with Ting Wu, our cofounder, originally in New York while I was in the SF Bay Area. I’d say this has saved a small startup like ours tens of thousands of $$ already in the last year we’ve been established. We’ve been opportunistic though with our residency at USC’s Viterbi Startup Garage, we’ve had free office space in Marina Del Rey, California which was nice for us to meet in person every other week, but that was short lived when COVID-19 came upon us and shelter-in-place was put in order. Currently our organization is all remote with all 3 cofounders in different cities and 6 interns spread across the world including one intern located in Singapore. While this may not work for all companies, it can definitely help minimize cash spent on offices and other supporting expenses.

Other Benefits: 

Something that was brought up this past week by Marion Edwards (one of my mentors) was that working in offices usually drives visible hierarchy whether it’s during in person meetings, specific “appropriate” dress codes for office or cubicle placements. Working remotely has looser guidelines on how you show up physically and mentally in meetings as well as level sets the attendees all as little squares on the screen. Don’t get me wrong, there’s still the odd talking over each other in Zoom, but unspoken seating arrangements in meetings don’t exist in Zoom land. The lack of guidelines has blurred the lines on what attire is for work, working out or bedtime. Hats are great ways to show up and keep it together when you’re having a bit of a hair day… or for me going on 10 weeks with no haircut, hats can tame the beast. Given this, I’ve saved at least $50 bucks on haircuts, probably $200+ in not buying new shoes and at least that much in not buying clothes. 

Time will tell whether these guidelines will tighten or if there will be an entire chapter in Employee Manuals dedicated to “Appropriate Attire and Behavior During Video Conferences” but for now, enjoy the clothing and haircut savings while wearing your new hat. 

Remote Workers Can Be Healthier:

Remote workers tend to take less sick days, likely due to less exposure to germs in a typical office. According to Indeed’s Remote Work Survey, 50% of remote employees said working remotely reduced their sick days and 56% said it reduced their absences.

In another survey, 47% said they strongly agree that flexible work arrangements “would or do allow me to be more productive” and 31% said they somewhat agree.

This has been very true for me which means a lack of commuting means more time on my bike and walking around the neighborhood. 

The Show Must Go On...To Zoom 

Ten Helpful Questions to ask before committing to office lease (when the COVID-19 hysteria blows over:  

1. Why do you believe you need the office space? 
2. Do you really know what your true office space costs will be? 
3. What hidden costs are lurking beyond the lease? 
4. Have you asked your employees what they’d prefer? 
5. What could you do to take care of your employees better with the money saved from an office lease? Pay for a gym membership? Buy them a Peloton and Pay For Membership? Upgrade their benefits? 
6. Have you polled office managers to see what costs they have incurred in offices they weren’t prepared for? 
7. If your revenue was 50% of what it is now, can you afford the new office? 
8. Do your client relationships depend on in person meetings at “your” office? 
9. Do you need an office manager (added headcount) to run and maintain the office operations? 
10. Could you pay yourself and your employees a bit more without the office? 

So to office or not to office? 

In my mind, this article has convinced me to hold off on getting office space as long as possible. While there are other factors involved in the analysis, it’s clear offices cost money and we can afford a significant loss of productivity per employee per month (roughly ~20%) before it starts to measure up to the cost for an office. 

Stay Safe and Healthy,

Eric