I’ve been spending a lot of time thinking about the long-term effects of the COVID-19 crisis lately. And the one thing I keep coming back to is the new work-from-home trend. This is going to change our economy in ways we can’t even imagine yet.
Facebook’s Mark Zuckerberg recently said that up to 50% of their employees could be working remotely on a permanent basis within five to ten years.
“When you limit hiring to people who live in a small number of big cities, or who are willing to move there, that cuts out a lot of people who live in different communities, have different backgrounds, have different perspectives,” Zuckerberg said in a weekly livestream with employees.
Facebook already has plans to build “hubs” of remote employees in areas like Dallas, Atlanta, Pittsburgh, Portland, and Philadelphia.
Another big tech company, Shopify, went even further. Here’s what founder Tobi Lutke posted on Twitter.
As of today, Shopify is a digital by default company. We will keep our offices closed until 2021 so that we can rework them for this new reality. And after that, most will permanently work remotely. Office centricity is over.
And Twitter itself recently said that employees have the option to work from home permanently.
I expect many more companies will use a similar strategy.
New Tools for a New Era
This crisis, almost overnight, created a massive shift in work habits. Millions of people were suddenly forced to work remotely.
And many tech-savvy companies are adjusting well to the change. Most people in the tech world already use Slack (or Microsoft Teams), Zoom, cloud document hosting and other tools that help remote employees stay connected.
Companies who are new to such tools have been forced to adapt quickly. Email isn’t enough for most businesses in this situation. You need more ways to communicate and stay connected. The companies that provide those services stand to reap huge rewards.
Geographic Dispersion
Currently Twitter, Facebook, Google and countless startups are all based near San Francisco. The vast majority of their employees live and work in this tiny slice of America. The area is extremely overcrowded AND flush with cash.
As a result, hiring in this region is extremely competitive. The job market, especially for developers, is tight. Housing expenses are sky high.
This is going to change. Working remotely has suddenly been normalized at a huge number of companies. Big tech firms like Facebook are starting to hire remote workers from all over the country.
Let’s think about a few of the effects this is likely to have.
- Fewer drivers on the road leading to less traffic and pollution
- Less time spent commuting
- Big tech employment spread around the country
- Smaller offices
There will be negative consequences too. Less connection to our co-workers. Less socializing. Not as much exercise. Local businesses that depend on office workers buying their products will struggle. And of course, not all of us have a good place to work at home. It’s definitely not going to work for everyone.
But for many people, it’s working really well considering the circumstances. Companies will continue to adapt. In the future, more employees will have the option to work from home two or three days a week. Hopefully, employees will be able to go into the office full-time if they need to.
I expect we’ll see a lot of experimentation in this area going forward. When this crisis is over, some companies will go back to “normal” quickly. Others will embrace the remote work trend for the long term.
It’s going to be interesting to see how it all plays out. As investors, we have to pay attention to trends like this. Remote work is reshaping how business is done across the world, and I believe the effects will last long after the lockdowns end.