I've done both and I have to say distributed is guaranteed to win in the long run.
In my last venture we had the Palo Alto office on University Ave, and I've walked a few miles up and down SandHill Rd, so when I say distributed works I'm contrasting it against past experience of trying to hire developers, architects and (worse) project managers in SV.
The challenges raised above in many of the comments about "being within shouting distance" and "eye contact" - together with the fear of distributed workers being passed over for promotions because of their lack of water cooler time - goes away when the ENTIRE team is distributed.
In a situation where the "core team" is within a fun, social campus and George is working from Seattle in his bunny slippers then it is very difficult to convince the in-office workers not to have chats over their cubicle walls and innovate during lunch on the bean bag chairs. Using the collaboration platforms like GitHub and Basecamp becomes a pain in the ass to them. But, when EVERYONE is distributed, then a lot of that goes away, and we've found adoption and proficiency with Google Hangouts (wired or WiFi, sorry) and all the other tools go way up.
In our current team for Infinite Monkeys[1] we've built the entire venture with funding from founders and SV sources, but a team that is purely distributed using over 200 contractors through oDesk[2], literally on six continents. It has allowed us to move beyond "hiring the best people who coincidentally live within 30 miles of San Mateo" to just hiring the best people. And so we have designers in Bulgaria, developers in Spain and India, marketers in Singapore, a bookeeper in Mauritius and a PR Lead in Michigan. It has allowed us faster release cycles and massive savings in our GoToMarket burn.
There are still challenges no doubt, and the fact is building this kind of startup even 36 months ago would have been almost impossible, but tools like Google Drive, oDesk, GitHub and Hangouts, I think are making it possible.
We have replaced the water cooler with 15five[3] (ironically a SFO startup) - asking each team member to write a 15 minute shared report of what went well this week, what challenges there are, and what ideas they have for improving the business. I'm getting better feedback now through my distributed team than I ever did with our hub and spoke teams before.
Lastly, and only because it hasn't been mentioned above, but I think another example of a long-term distributed company that has done it well is Mozilla. Say what you may about their products and direction, but the fact is their developer base is massively distributed and has been for years.
In my last venture we had the Palo Alto office on University Ave, and I've walked a few miles up and down SandHill Rd, so when I say distributed works I'm contrasting it against past experience of trying to hire developers, architects and (worse) project managers in SV.
The challenges raised above in many of the comments about "being within shouting distance" and "eye contact" - together with the fear of distributed workers being passed over for promotions because of their lack of water cooler time - goes away when the ENTIRE team is distributed.
In a situation where the "core team" is within a fun, social campus and George is working from Seattle in his bunny slippers then it is very difficult to convince the in-office workers not to have chats over their cubicle walls and innovate during lunch on the bean bag chairs. Using the collaboration platforms like GitHub and Basecamp becomes a pain in the ass to them. But, when EVERYONE is distributed, then a lot of that goes away, and we've found adoption and proficiency with Google Hangouts (wired or WiFi, sorry) and all the other tools go way up.
In our current team for Infinite Monkeys[1] we've built the entire venture with funding from founders and SV sources, but a team that is purely distributed using over 200 contractors through oDesk[2], literally on six continents. It has allowed us to move beyond "hiring the best people who coincidentally live within 30 miles of San Mateo" to just hiring the best people. And so we have designers in Bulgaria, developers in Spain and India, marketers in Singapore, a bookeeper in Mauritius and a PR Lead in Michigan. It has allowed us faster release cycles and massive savings in our GoToMarket burn.
There are still challenges no doubt, and the fact is building this kind of startup even 36 months ago would have been almost impossible, but tools like Google Drive, oDesk, GitHub and Hangouts, I think are making it possible.
We have replaced the water cooler with 15five[3] (ironically a SFO startup) - asking each team member to write a 15 minute shared report of what went well this week, what challenges there are, and what ideas they have for improving the business. I'm getting better feedback now through my distributed team than I ever did with our hub and spoke teams before.
Lastly, and only because it hasn't been mentioned above, but I think another example of a long-term distributed company that has done it well is Mozilla. Say what you may about their products and direction, but the fact is their developer base is massively distributed and has been for years.
[1] Infinite Monkeys - www.monk.ee [2] oDesk - www.oDesk.com [3] 15five - www.15five.com