Remote work is better in a crisis. Here's why.
Jun 07, 2023
Jun 07, 2023
Making the efficiency case for remote
A lot of smart and influential leaders have made the case for returning to the office. More VCs and investors are telling me that startups calling people back into the office are “more serious” and focused on execution.
I’m not here to defend remote work. That’s been done, and Brex has already made our case for it. Admittedly, building a company remotely is not a perfect solution, but nor is requiring everyone to go to the office.
The collapse of SVB, though, revealed a whole new dimension where remote work outperforms: crisis management. The SVB crisis was existential to the entire startup innovation ecosystem and 20% of Brex’s customers banked there. The situation unraveled rapidly into what became the most severe bank failure since the Global Financial Crisis of the late 2000s. For Brex that meant billions of dollars, hundreds of support calls, thousands of applications and at least 10 different financial partners (very eagerly) checking in.
But in a matter of a few hours over a single weekend, Brex reacted more swiftly and efficiently as an organization – and in fact, evolved faster as a company – because of our remote-only organization. To protect Brex, we moved our funds to protect them from systemic banking risk, managed critical partner and regulatory relationships, and prevented fraud and credit losses. At the same time, we launched and secured billions of dollars in funding for an emergency payroll bridge loan product, onboarded 4,000+ customers, and added $2 billion of deposits from the afternoon of Thursday March 9 to Monday morning. Working that rapidly without impacting the quality of the service offered to customers was only possible with our remote-first approach. This is particularly true as a lot of these events unfolded over a weekend. I’ll explain why and offer ways to develop the same habits in your organization.
Generate new work faster
A remote-first company can spin up work more quickly. Why? Start with the asynchronous tools available to teams today. It started with the financial disclosure leading up to the crisis. SVB had been releasing various 8K filings outlining balance sheet risk. Internally, we have used a Slack channel called “#Conclave-of-Cash” to manage Brex’s liquidity for years (we decided to have some fun with liquidity management and reference the Vatican / Papal processes when deciding where we put our cash). This channel became very active as the situation escalated, as we shared analysis of SVB’s balance sheet, breaking news, and liquidity forecasts and ultimately used the channel to create an emergency Zoom meeting where we made the final call about moving the $290M+ of direct exposure we had to SVB. As the crisis unfolded, we created similar channels for specific aspects of the crisis such as #SVB-Credit and #SVB-Fraud, further easing communication and organization.
Faster to absorb context
Our strategy was to tackle the most severe risks first, starting with liquidity and treasury management as well as credit risk and fraud (given all of the money moving around the financial system that weekend). Simultaneously, we had to focus on customer support and generating the new products they needed to stay afloat such as tripling the amount of FDIC insurance we offered customers and our emergency payroll product. Leaders of critical areas like operations, support, and compliance needed to be across all of these initiatives and needed the context for what was happening.
It would have taken us far longer to collaborate and develop products were it not for our ability to communicate via collaboration and productivity software designed for remote work. All the context and conversation and resources you needed were already in those channels as they were the default method of communicating. All you had to do was scan and read. If we were all in a physical office it would be impossible to get context if you weren’t in that specific “war room” and you’d end up wasting time getting everyone up to speed. Reading is faster than talking and listening.
Connect with partners better
Tools like Slack and Google Docs / Slides also let you coordinate with external parties faster (they can have their own channels and settings with limited policies to ensure privacy and security) while maintaining auditable communication trails, even as you’re hopping back and forth among different topics quickly. And for all the times you do need to talk to someone face-to-face, we leveraged permanently-on Zoom rooms, some even with separate breakouts. Moreover, Brex used a feature of Google Docs that allowed us to track approvals from external partners with time stamps directly in the relevant document.
Of course collaboration software is not exclusive to remote work. However, the software is used most efficiently when remote communication (real-time and distributed) is the default. The combination of the tooling and the work style enabled us to work more quickly and efficiently, while keeping the entire team (internal and external) simultaneously aware of project status.
Steer with more agility (on a weekend)
Crisis is never unidirectional. We had to change our strategy and operational resourcing twice: once on the morning of Friday, March 10 when it was announced that SVB was going into FDIC receivership and again on Sunday night when the FDIC announced the full backstop. Communicating the zigs and zags clearly and rapidly to a broad audience (with live Q&A) through Slack and Zoom was much more efficient than emails or trying to grab everyone into a conference room and then repeat everything out loud.
Crises often require working the weekends, and the SVB bank run was no different. It started on Thursday and we knew right away we’d need to book lots of extra customer support shifts on Saturday and Sunday – probably more than we ever had. Having everyone already up and running at home made it so much easier to add shifts around people’s weekend plans. If we had to bring people in, it would have been hugely disruptive to our team and next to impossible to field all the inbound requests for help. This was true not just in support and operations, but across all aspects of the company that had to work together - engineering, product, design, marketing, communications, finance - all of these teams have experience collaborating remotely and that made weekend work much easier.
A strong risk manager once said to me, “to do risk management well, you need to have been in some accidents and survived to tell the story,” with the implication that experience in crises compounds and helps you confront new ones. As the SVB crisis unfolded, it was critical to connect with key experts and advisors (internal and external) on areas like regulatory policy, money market dynamics, payments fraud and credit risk. Capturing this expert advice and readily distributing it through our remote communication channels - while also allowing real-time Q&A and collaboration - enabled us to disseminate and absorb critical information.
As an example, we had to make a determination of the likelihood our customers would be able to access their SVB deposits and on what timeline. There was a nuance between deposits held on SVB’s balance sheet and those held in money market mutual funds. We needed to understand these nuances and connect with regulatory and financial market experts to understand ways clients could access a money market mutual fund if SVB’s trading portal did not reopen. Sharing this information immediately - with real-time feedback from recipients - allowed us to move materially faster.
• Context is better than control - Using collaboration and communication tools to share information readily and rapidly helps decision making
• Keep good communication hygiene - Helping teams navigate huge amounts of information and being clear about who has access to which information enhances efficiency
• Optimize for flexibility- Remote work naturally allows you to easily allocate resources (information, personnel, data, etc.) across different work streams and adapt to rapidly evolving situations
Brex’s experience handling the SVB crisis does not necessarily imply that your organization should be remote only. However, our experience is a testament to the power and efficiency of remote collaboration, and we’ve found that not having an office allows us to thrive through crises in ways we never thought possible.
Michael Tannenbaum is Chief Operating Officer and Chief Financial Officer of Brex.