Why this Seattle-area startup ditched its physical office — and what it means for the future of work

Tagboard CEO Josh Decker enjoys the last few moments inside his company’s physical office. The Seattle-area startup is going fully remote as questions swirl about when employees can return safely to work amid the pandemic. (Tagboard Photo)

With no end in sight to the COVID-19 pandemic and the transition to work-from-home going smoothly, Tagboard faced a dilemma: keep paying rent for the company’s existing office space, or go fully remote.

The choice was clear for Josh Decker, CEO of the Seattle-area tech startup.

“When we weighed the uncertainty of the economy, the overhead cost of the lease and amenities, plus the circumstantial lack of clarity as to when we would ever be able to use the space again, we knew it was in the best interest of our team to take action,” Decker said.

While many companies are allowing employees to work remotely through the rest of 2020, few have ditched their office space altogether. Others could follow Tagboard as tech companies across the globe weigh the benefits of keeping a physical office against potential cost savings amid the ongoing economic and health crisis.

Tagboard was able to cut a deal with its landlord to get out of the company’s office lease. “I’m very thankful they were amenable, and we worked out a path to part ways that was fair to both parties,” Decker said.

The Redmond, Wash.-based startup, which sells technology that enhances live programming, offered its desks, chairs, monitors, and other furniture to employees for their home office setup. Google did something similar with a $1,000 stipend for WFH gear.

Tagboard is also using savings in overhead to provide a technology/internet stipend for remote work and to pay for in-person activities when social distancing mandates lift.

Decker said his 29-person team has relied on software such as Slack, Zoom, 15Five, and other tools to communicate and work from home. It hasn’t affected performance — in fact, the company posted record sales in the most recent quarter.

“While we will miss the kegerator full of cold brew, lunchtime outings, and foosball games, our team has become increasingly unified through the tough global circumstances,” Decker said.

Tagboard is not alone in reducing its physical footprint. Fifty percent of Facebook’s workforce could permanently move to remote work in the next 5-to-10 years, CEO Mark Zuckerberg told employees in May.

The sudden shift to WFH is creating new expectations for how and where work gets done. It’s also increasing usage of cloud-based services that facilitate remote work, and spells potential trouble for a U.S. commercial real estate industry that saw deal volume sink 79% in May, Bloomberg reported.

It remains to be seen how companies will return to the office in the post-pandemic world and if employees will be expected to be present. A recent Salesforce survey found that just 45% of workers believe their employers are ready to reopen their workplaces. Spiking COVID-19 cases in various states also add to the uncertainty.

Speaking on CNBC this week, Slack CEO Stewart Butterfield said he anticipates 60-to-70% of employees will want to be in the office one or two days per week. He said there is still a need to bring workers together, but coming to an office every day may no longer be required, particularly given that some people are more effective at home and can save time by not commuting. That could mean reduced real estate needs and expense.

“Someone referred to it as ‘unbundling the office,’” Butterfield said on CNBC. “If you think about all the different things we do there, the one that takes up the most square footage and is probably the least important is housing all these people that sit by themselves at their computer not talking to anyone while doing their work. They can do that anywhere.”

(Microsoft Image)

“Work will likely be a fluid mix of in-person and remote collaboration,” Microsoft said in a new research report published this week. More than 70% of employees and managers surveyed reported a desire to continue working from home at least part time.

The survey did find some frustration with the WFH shift, such as distractions, internet connection issues, and lack of ergonomic work environments at home. Many parents are struggling to manage the family with schools and childcare centers closed while trying to keep up at work. These complaints could also influence what the office might look like in the future.

In a recent report covering the Seattle office market, Broderick Group found that WFH is “certainly a long-term trend” but noted that “it will not be the death of office space.” As treatment for COVID-19 improves and a vaccine arrives, Broderick expects that “the expense of office space, and importance of in-person contact for collaboration and culture will allow space planning for higher densities to come back in vogue.”

Broderick reported that leasing activity in Seattle during Q2 fell to about one-third of the leasing amount compared to the same time period last year. It expects rent rate growth to slow to 1.1% in 2020, compared to 6.2% last year and 5.2% in 2018.

(Colliers International Image)

Some companies may opt to sublease their existing office space. Goldman Sachs is leasing the top floor of the Rainier Square in downtown Seattle from Amazon, the Puget Sound Business Journal reported.

There are a number of future developments planned for the Seattle region, including east of Seattle in Bellevue, where Amazon is expected to occupy several new buildings.

In its Q2 report, Colliers International expressed optimism for the real estate market in the Seattle region, in part due to the tech industry. Seattle-area companies such as Microsoft and Amazon have seen their stock prices rise over the past several months as customers rely on technology during the pandemic.

“In all, the Puget Sound’s tech-driven fundamentals have remained resilient in the face of uncertainty, and with a robust development pipeline should only have room to grow once the dust settles,” the Colliers report noted.

Why this Seattle-area startup ditched its physical office — and what it means for the future of work Why this Seattle-area startup ditched its physical office — and what it means for the future of work Reviewed by TechCO on 7/10/2020 Rating: 5

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