June 5 2020 - New York, NY

Remote work: Rethinking the office strategy: Michael Tannenbaum

Thomas:
Welcome to Brex in the Black where we discuss financial operations. We've got Michael, our CFO here. Michael, what are we going to talk about today?
Michael:
We're going to be talking about remote work, which is a pretty hot topic these days.
Thomas:
Yeah. We've been working from home now for almost three months, and we've really proven that we can work in a remote way in a much different way than expected. As a result comes having to rethink office strategies, maybe make changes, but overall, how are you thinking about this and what are next steps moving forward?
Michael:
Yeah. Look, I think that, for me and many people, pretty surprised at how easily we transitioned to work from home. Obviously, this environment's not good for people. There's a lot of negative public health implications, but just from a office strategy perspective, I think it's been probably surprising to the upside. What I've been doing is trying to think more about working in an office as a perk, actually. That's the framework I've adopted, meaning working in an office as an expense. And I think what I now ... It's not a God given right. It's not necessarily something that everybody even wants. So, I've started reframing my approach, and how I'm doing the planning for the rest of 2020 and '21 from a financial and company perspective is to start to treat the office like a perk. For a lot of startups, you compete with big tech and you compete with other startups for talent, and that's still true today. Offices may be something that are status quo and everybody has, but if you start to think of them as a perk, I think that's going to help you more accurately plan and also make sure that you're getting the value you want out of them. We can talk a bit more about that, but that's the overall framework that I think is a pretty different shift versus assuming that offices were required and standard, to now thinking of them as a benefit to employment.
Thomas:
What was the thought process that led you to considering office of being a perk?
Michael:
Well, I think that one, when we, at least here at Brex, what we did pretty early in the shelter in place period, is ask people how they felt about work from home. We had pretty varied views. So some people can't wait to get in the back of the office. Those people tend to skew young. Some people love working from home, hated commuting before feel that they're more efficient, aren't necessarily looking for an office to provide a ton of social life. For some people office is their primary social life. And so I think that that's part of the situation is it sort of depends on the employee. So that was of one. Two is just from a cost perspective, I started thinking more as we're doing planning about what we spend on offices. Just to give you guys some benchmark, I typically budget around 150 square foot per person. San Francisco, New York, $80 a square foot is probably a reasonable, maybe on the low, not beautiful office benchmark. Call it class B if not class C. So you're talking about around a thousand dollars a month a person. So when you think about other perks that you offer, that's actually pretty meaningful a month. So I started to think, "Oh, well, for a thousand dollars a month, would these people want an office? Would they want to shared desk where they come in sometimes a week? Would they want no office and take that in food benefits, work from home office set up benefits, all different other things that you could offer." So those were two. And then the third was just as I started to look at specific functions, I started to think through which of those even benefits from being in an office, because as you know as well as I do, oftentimes in these offices, you just have people trying to be in conference rooms all day so they can make calls or to be in phone booths. So having someone come in, commute, get in the office, and then sit in a phone booth all day to make calls, someone like a recruiting sourcer or salespeople, customer support, people that are on the phone all day, not saying that it doesn't make sense for them to come in for a team meeting or to meet people or build a culture, but not every single day do you need to have these people coming into an office just to sit in isolation and talk on the phone. So I think those three things: survey results, cost, and just rethinking specific roles have made me start to view this as a perk for certain roles.
Thomas:
As you mentioned, office space is expensive, and especially as you scale. We've gone through a couple of offices already in 2020. We still have a lot of new folks coming on. How are you thinking of or what advice do you have for other founders that are also scaling their company to think about their office space for the rest of 2020 and into 2021?
Michael:
I think for most startups are likely in sublets or shared work, and so those leases tend to be more flexible. I think that if those are expiring in the near term, I'd go ahead and let those expire, because I think that right now, at least, it's pretty hard to make any definitive calls on office space through at least the end of the year. One, you have big tech out there saying people can work from home for at least the remainder of the year. You're going to have varied people in terms of their comfort coming back into the office because people may have people that are potentially at risk at home or more susceptible or people may have different levels of comfort, as I mentioned. So there, it's going to be pretty hard to enforce any in-office culture. And so, I think it's okay and people will understand if you don't have necessarily an office set up in the near term. I think in the medium term, people joined your company, if you had an office before, likely with the ... There's going to be a portion of people, as we've discussed, that want some way to interact with other people. So I think it is important to have a physical space in the medium, long term, that people can come in. It doesn't necessarily mean that everybody has a dedicated desk. It doesn't necessarily mean that it looks exactly like it did before. And it doesn't mean that everyone's coming in every day. So that's my recommendation is, let the leases expire, especially because you're probably going to see a more favorable from a cost perspective environment and from an options perspective environment as you're looking to do new leases, because I think most people, many people are rethinking their space needs. As you see unemployment rise, that means that there's fewer people in offices, so there's just going to be more space on the market.
Thomas:
Great. And that will wrap it up. That's the future of remote work and finances from Michael Tannenbaum. Thank you.
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