Social media giant Twitter has been at the forefront of an interesting new work experiment. CEO Jack Dorsey has announced that the company will let all of its 5,000+ workers work from home permanently, even after the coronavirus pandemic ends. What started as a practical business reaction to COVID-19 fears in California has morphed into a potential long-term trend, with Facebook and Google among other big tech giants offering their employees the opportunity to work from home through 2020. All of this raises an interesting question: Does having a physical office location still matter for social media companies?
Remote work goes from perk to de facto standard
Until the coronavirus pandemic hit in force in early March, the conventional wisdom had been that remote work was an interesting perk to offer employees, many of them concerned about work-life balance. But it certainly was not a key feature of everyday work life. The idea of remote work was simple: if you let employees work from home one or more days a week, you can actually boost productivity, workplace happiness, and job satisfaction. Doing so would free employees from cumbersome commutes and give people more free time to take care of things like childcare or elder care.
And, by and large, this strategy seemed to work. Employees would still drop by the office for important meetings, and nobody had to worry about Zoom conference calls to review routine matters – you simply walked down the hallway to your colleague. For top employers like Facebook, Twitter and Google, remote work became a valuable feature that could be dangled in front of prospective young job candidates. And, even during the current pandemic, there have been no public backlash against the new stay-at-home reality: most Twitter users continue to have the same user experience, and may even assume that everything is “business as usual” at Twitter. In the short-term, then, the remote work experiment seems to be a success.
But that doesn’t mean that this new remote work strategy will pay off in the long-term. There are already rumors that Twitter is looking to ditch its physical location in a beautiful 1937 Art Deco building in San Francisco. Without Twitter as the anchor tenant in “the Twitter building,” it would be tantamount (from a real estate perspective) to a large anchor tenant at a mall leaving or closing up shop. Imagine your local mall without a big anchor tenant like Macy’s – it automatically makes all of the real estate around you less valuable.
And this actually has huge implications for tech companies, and social media companies more specifically. Read any history of Silicon Valley or any other tech hub, and one of the first things you’ll notice is how much importance most people place on geography and location. Like any good “networking effect” on social media, good talent in one location attracts more good talent, which attracts more good talent. Tiny clusters of businesses and startups that form as a result have a synergistic effect, which is why “incubators” and “accelerators” are so important to tech hubs – you need to have people milling around, sharing ideas, and yes, sharing a beer or two on a rooftop deck located in a prime piece of real estate.
What makes a tech hub a tech hub?
So what happens when location and physical presence no longer matter? Over the long-term, it might lead to the creation of new tech hubs far from Silicon Valley. If everyone is virtual and all work is remote, what is to stop Philadelphia, say, from becoming the next great social media hub? Top East Coast university graduates, used to the social nature of university campuses and the free interchange of ideas via in-person meetings, might start to turn their noses up at companies like Twitter, preferring to work at a place where they get their own desk, plenty of breakout rooms for spontaneous brainstorming sessions, and corporate cafeterias filled with visiting professors, executives and venture capitalists. That’s when you’ll start to see articles in the mainstream media about the “Silicon Valley brain drain.”
The next six months will certainly be interesting. Other companies may decide to do a test run and see if productivity is still up when working from home. If everything still runs smoothly, they, too, might decide to ditch a physical real estate presence and opt for a purely virtual existence in the ether. That might work in the short-term, especially as a cost-saving measure in perilous times, but how well will it pay off in the future?