Remote Work Interviews

Owl Labs (OL): Tell me about how you got to where you are in your career today.

Antonio Rodriguez (AR): I started my career working in startups on the engineering side. After a few years, I started my own company which was backed by Matrix, the fund for which I currently work. After a successful run, Hewlett-Packard bought the company, and as I was thinking about what to do next, David Skok, who had been my board member, asked if I'd ever thought about investing.

It took about a year for him and his team to convince me that I could see myself in this role. So, I joined Matrix in 2010 with the mindset of, I'll try it for one fund and see if I'm any good at this. Nine years and three funds later, I'm still here!

OL: You invest in early-stage companies to help them grow, including Owl Labs. What are some of the traits that you look for, both in the leadership teams of these companies and the products or services they offer that make you invest?

AR: The most important thing about the leadership team is that they have a shared view amongst themselves for the future. As I look back over the roughly two dozen investments I've made, the thing that's been most rewarding is when I get presented with an idea that initially seems silly, and over time, I go through a learning process with the founders as they unveil, block by block, how they will build that future that they presented during our first meeting.

Using Owl Labs as an example, I bought entirely into the fact that remote work and video for remote work were completely broken. Collaboration wasn't working. There were a whole bunch of things that Mark Schnittman had in his original vision that I thought were question marks at best, and it's been delightful to see how many of them both Mark and Max Makeev were right about over the last few years.

OL: From the product or service standpoint, are you primarily looking for gaps in the market, or are you looking for things that are broken and in need of fixing?

AR: Most of my more interesting investments have been in this category called "software-defined hardware." The idea is that you have commodity pieces, most of which come out of smartphones that get reconstituted. Without doing a ton of hardware engineering, you can build a ton of value by enabling that hardware with new software. With the Meeting Owl, it's a different camera lens and it brings together those components, but most of the value comes from the software within the Meeting Owl itself, which does all of the intelligent camera work. Owl Labs is a classic software-defined hardware investment.

Another example is Oculus. Oculus is a virtual reality (VR) headset and platform that's now owned by Facebook. When we invested in them, they were basically reconstituted smartphones. They used smartphone screens, smartphone guts, and the whole thing was connected, with the software driving the experience.

I like software-defined hardware because – even though as an entrepreneur, I never touched hardware in any way, shape, or form – one of the biggest product filters for me is, can I look at opportunities where the service or the product in service isn't something that could be prototyped quickly in a weekend. It felt like building SaaS software or building consumer internet software had become too easy.

The phenomenon was a bit like everyone at a Starbucks with a laptop trying to write the next Harry Potter, except this applied to different verticals in SaaS or consumer internet. One of my most important first filters beyond the initial founder filter is, do I think that I could rip off what you're doing in a weekend at a first approximation?

Anything that has hardware is definitionally not something you can prototype in a weekend, and that's how I fell into software-defined hardware before I even knew it to be what it was. What interests me most about it now is that the combination of these sensors and actuators provide a whole new rich set of uses that you couldn't just do in software alone and you couldn't just do with hardware alone.

OL: A few weeks ago, we saw the S-1 filing for Zoom come out. What are your takeaways from learning more about Zoom's financials, as another player in the video conferencing space?

AR: My biggest takeaway about Zoom is that it's a phenomenal business. They built a very big business very quickly which, in my opinion, just shows how broken video conferencing at the software layer was. They gained tons of mileage early on against much bigger, better-capitalized competitors like Microsoft and Google. They built a product that was easier to get consistently great video conferencing out of.

When we first started using Zoom here at Matrix to meet with entrepreneurs remotely, I felt like it was a bit janky for us to ask founders to install plugins. It just felt like 1999 called and it wanted its browser plug-in back. But it was clear that that was a very opinionated product decision that the founders at Zoom made.

When your product works and when you have product-market fit and it's loved by small and then eventually, a much bigger customer base, you can get away with a lot, including beating incumbents, which is what Zoom did.

To their S-1, I'd say I was surprised by the concentration of their customers at the high end of the market. I would've thought that Zoom would've started with a very broad base of different types of customers and then over time worked its way up, but a small number of their customers drive a lot of the revenue.

I was also surprised by just how much the company is spending on sales and marketing. It looks like a big SaaS company at scale, especially if you compare the ratio of sales and marketing spend which is about $185.8 million in the last year compared to the R&D. The product development that they're doing, which amounted to around $33 million, and the sales and marketing motion, were surprising to me.

OL: In other financial news, Rent the Runway and Glossier both raised big Series D rounds, bringing them both to "unicorn" status. RTR is predicated on people wanting to buy less and rent more, while Glossier is predicated on the D2C motion of people buying products that they love directly from the source. What do you make of those shifts in shopping and buying?

AR: I think they're different things. Rent the Runway is capitalizing on the notion that there are a lot of assets, like dresses, which you historically have bought and owned and utilized very little. The ultimate example of this is cars. Most people would rather not buy a car if they can use a ride-sharing service and spend less money over the course of the year. Rent the Runway is a smaller version of that.

This is a cultural change as it is anything else. The idea was probably very counterintuitive to people that didn't understand why women would want to wear a dress once and then send it back, but it's been about ten years since they first started, and it's clear that this is happening across a whole variety of categories.

Glossier's success is representative of a different thing, which is the fact that most of the intermediaries in the world of shopping have become rent extractors – they extract rent from the consumer to pay for their own physical rent to have stores. Whether it's Glossier or Warby Parker or Away, there's a direct-to-consumer brand in almost every category which combines a direct relationship with the end customer with a supply chain that is well-known.

You can go to China and get shoes and glasses and suitcases. But the real magic comes from keeping the quality of that overall supply chain as high as the retailers or the brands that have gone to retail promise to the consumer to grow that brand. We're going to see more companies like that in the future.

OL: I admire Glossier because it started as a content brand first, which helped them build trust before selling to their consumers. I'm a customer of all the companies that you just listed, so the model you've described is clearly working with my demographic.

AR: The great thing about these companies is that the feedback loop is a lot tighter. The company that I started was bought by Hewlett-Packard, and HP was nearly a $100 billion revenue company. They sold cameras and printers and televisions and computers and just about everything you could buy. As a consumer, what was shocking to me when I got there – and it shouldn't have been, but it was – was how little the various different product owners knew about their end users. The only relationship, by and large, was when you filled in the warranty card of the computer you bought at Best Buy and identified yourself with them so they could actually start to understand who you are.

From a product development perspective, that created a very long feedback loop that was hard for the product managers at HP to iterate on quickly, and it just doesn't exist in these B2C companies. Within the companies that we have in our portfolio here and in China and in India, product development is very much fed by marketing and what product marketing learns at the customer level on an almost daily basis. That's a big deal and a big competitive advantage that they have over the existing incumbents.

OL: A lot of what we're reading about now is finding work-life balance but also preventing burnout to the point where it starts to hurt your company and your employees. How can aspiring or current entrepreneurs and founders find that balance so that they don't burn out in the first place?

AR: My view is that in startups, there's no such thing as work-life balance. I know this is somewhat controversial, but the startup phenomenon is incredibly unique to the U.S., and now China, and hopefully the rest of the world over time. But startups are a different bargain that you, as the employer or founder or the executive, make in terms of your overall lifestyle. What you get is: you learn much faster, you have much more ownership and, if it all works, you get a lot richer at the end of the process. You work with people who are like family by the time you're done with building your company – whether it works or it doesn't. But you give most of your life away to it for a certain period of time.

That's why it's not often the obvious path for most people to go into startups, and I encourage people to do a lot of soul-searching before either starting a company or joining a company at the startup stage. I encourage them to talk to companies at different stages, because in the raw startup stage, you're giving up most of your life to help the company succeed.

In the early startup stage, you're giving up half to most of your time, and it's only later on when you get to the point of being a bigger, more established company that you can treat it as a job where you punch in and punch out. This doesn't mean you don't work nights and weekends, but the psychological, the physical, the mental, and the emotional burden is much lesser.

OL: One thing I find interesting is the growth of meditation and companies that are trying to monetize on how stressed out and overloaded people are.

AR: My view is that it has a lot to do with the dark side of social media. Social media is a fantastic customer acquisition and engagement channel for businesses. But the dark side of social media is that there are a couple of players at super-scale, and their whole reason for being is to take away as much of your time as possible. That time is gold to them when they can monetize it with your preferences for advertisers.

People are beginning to realize that social media is somewhere between junk food and smoking in terms of how damaging it can be. The meditation apps that sell the ability to take a break and try to clear your mind is mostly a societal reaction to that.

OL: What are your thoughts on remote work?

AR: We absolutely need to substitute distance with technology and with the internet as it gets better. The internet gets you more bandwidth at a lower latency, and people are building all sorts of interesting internet software applications and pieces of hardware to make remote work possible at a much higher bandwidth. As a macro trend, I think it's terrific. However, I don't think remote work is at the point yet where it doesn't extract a tax which can be quite dangerous to the development of a company.

As much as people write about it otherwise, the pre-Product Market Fit stage of a startup's growth is more art and much less science. There needs to be a high level of collaboration among the people who are trying to take something new that hasn't existed before, and they need to be able to work on an ad-hoc basis on problems and brainstorm and other types of collaboration you can do when you're co-located. In a future world where we all have AR glasses, where you and I can sit together physically and two people can be painted into the room remotely, we might be at a place where we can do high-quality pre-Product Market Fit work without suffering a huge penalty by having people working remotely.

In today's world, people who don't understand that, if you're going to do the pre-Product Market Fit exercise with a meaningful percentage of the team working remotely, you're going to be paying a tax, are just kidding themselves.

OL: We're seeing more companies that are being built from the ground up as remote companies – like Buffer, Basecamp, and Doist. Do you think a remote company has to build it into the DNA from the beginning? Or do you remote work is something you can build into a company once you've reached a point of growth where the tax you mention isn't paid anymore?

AR: The canonical example here is GitHub. They started as a totally remote organization, and then eventually coalesced in San Francisco before having a very successful exit to Microsoft. If I were to layer the amount of tax you pay for remote work in this pre-product market fit phase, if you start 100% remote, that's probably better than starting with a core nucleus of people in one physical place and then having 25% of the total team work remotely.

The reason why I think it's better is that the tools you use and the "artifacts of work" you create to communicate the building of the product are likely to be well-tuned in an organization where nobody can be physically together. However, I would still bet that remote work has a higher cost of operation in terms of the productivity tax you pay without the energy of everyone working together in one room.

Over the last couple of years, especially out of our San Francisco office, the cost of starting a company, and the cost of attracting and keeping talent, has made it so there are a number of companies starting remotely from scratch, because you cannot find the people that you need to hire in the area anymore. Remote-only companies likely work best when there is a strong founder with a product vision that is well enough informed to be almost all the way down that product-market fit curve— and ideally, most of a minimum viable product (MVP) either built or in use. My own bias is that I would want those early four, eight, or ten people in one room where they could work together.

OL: Do you think people have to be together to build a company's culture from day one? Is that something that you've had good or bad experiences with in some of your portfolio companies?

AR: Yes, we've had both. The classic failure mode of culture comes when you start with a distributed team or a partly-distributed team and then, over time as the company begins to scale, the core nucleus forms in an office, and then the remote people start feeling left out. When you get into those situations, the onus has to be on the people who are in the office to make sure that they're not cutting corners. They need to keep remote people in the loop and make sure that they feel equally part of the team as the company moves forward. And that's hard to do.

There are a whole bunch of tactics that the better companies employ to make sure that doesn't happen. My favorite tactic is a company where co-located employees Zoom into the meeting so everyone in attendance is effectively remote. It's wonky and something I never would've thought of doing, but once you think about it, you realize it's a nice way to make sure the remote people aren't paying too much of a tax.

The other one, which you can do at a sufficient scale, is to start cleaving the work such that you have fully integrated teams. This is particularly true of companies that have grown to have more than one office. You can cleave a product or a subproduct within the product, and give that chunk of work – from engineering to marketing to sales – to a team that is fully remote, or to a team that is fully in another office. Then you have these sort of autonomous subunits that can work together better because the interface points between them are clear and better thought through.

OL: Do you think culture is more about the way you work together or is it about having ‘lunch and learns' and getting on Slack, sharing non-work related things? Is it a combination of both?

AR: It's both. It's absolutely the way they work together. My own view on company culture is that it's the core engine and you're working together to win in the marketplace. Without a strong execution engine, companies with the culture posters on the walls and the lunch and learns and all that stuff can start to feel like a cult. People are doing the things that they see companies like Google having done and they're attaching themselves to the wrong part of the habit surface area.

Culture starts with being able to execute on the mission of the company in a way that makes everyone feel like they're winning. That alone is enough to build a great business, but it's not enough to build a great company and, in particular, a lasting company.

To have a lasting company, once you have that business flywheel going, you need to have culture play the role of enforcing and reinforcing the right rituals. Those rituals can be around learning, collaboration, and mutual respect for different points of view. And everything you do, whether it's manifested through lunches, hackathons, or events out of the office, needs to reinforce the rituals that keep that flywheel going.

OL: You make a good point that the culture is something that transcends physical objects, but the physical aspects, like lunches or games, can help to reinforce it.

AR: It is the people who come to companies with a very high bar for doing the work that will keep the company moving up and to the right tend to be better remote workers. But other cultural attributes are needed to keep up that motivation across different locations. It's harder to build and maintain momentum with many remote employees, so companies tend to do best with everyone traveling to work together on-site once a month, a quarter, or even a year. The best remote people fall back on questions about execution, speed, and learning to measure their sense of happiness and fulfillment at work. They ask questions like, "Are we moving quickly enough? Am I learning, being successful, and being a contributing member of this team?"

To make working remotely work effectively, one of the most important things is that employees have the right personalities. It's not just about introverts versus extroverts, it's a question about why employees show up every day, and how much they want to win.

OL: Some people really do get their energy from that physical brainstorm in that co-located meeting. Energy flow between team members really is different remotely versus in-person, and you make a good point that it's worth considering when companies decide how often or when should remote employees be brought into the office.

AR: What you're describing is a function of two things. One of the key elements, when you're physically in a room with other people, the conversations and exchanges are happening at an extremely high bandwidth. If you think about it, we've experienced hundreds of thousands of years of evolution of a massively powerful computer – our brains. Your body is attached to that computer to help it communicate your feelings and your energy levels more clearly in-person than over virtual communications channels. More bandwidth is implicit by the mere fact of being in a room with other people, and I think that makes the interactions higher-energy and higher-quality. Over time, this will get better, and tools like AR and VR will help people feel as if they are physically or at least volumetrically in the meeting room.

The second thing is that the level of attention capture that takes place differs according to the environment, too. You and I are in a room together right now, and we're the only people in the room, so there's no way for you not to know if you've captured my attention. It would be rude of me to be looking out of the window and thinking about what I'm going to eat for lunch while you're speaking to me and me alone in this room.

The right kind of video experiences have a non-physical but very high virtual level of attention capture. If you then step down that pyramid to lower levels of attention capture, a phone call which is in the middle of the pyramid. If you and I are talking on the phone, I could be checking my email, if I'm good enough at multitasking. You might think I sound distracted, but it's not obvious if I'm paying close attention or not. The lowest level of attention capture would be chatting within a Slack channel, where I could literally be feeding my cat and eating breakfast while having a conversation with you.

Physical interactions that are properly set up are the highest form of bandwidth that our brains are excellent at processing, combined with almost total attention capture. This environment leads to the most collaborative kind of interactions.

OL: For scrappy startups with limited budgets and employees working in different locations, how can they prioritize allocating budget for travel and lodging so remote employees can travel in for a retreat or a working session? How important is that at a stage of growth where every dollar on your bottom line really counts?

AR: It’s super important. Think about the cost of productivity when you don’t have proper sync between early team members. The cost of lodging plus airfare for bringing a few remote people into the office is very low compared to the salaries of a team running in the wrong direction for a quarter or two.

There are some cases with very early stage startups where people aren’t drawing salaries. Then it becomes a real issue, and I don’t quite know how you’d solve that. I know one case in particular where a company started with a lot of consulting engagements, and they would use the consulting dollars to get people physically in the same place to collaborate on the product they wanted to build, which was a clever hack.

Once you have the money to pay salaries, I would make sure to budget enough to bring people together on a regular basis. I would rather startups have a much crappier office or no office at all, and to offset all that travel money with rent money they’re not paying.

OL: We talk a lot about hybrid teams, where some people are in the office and some people are working remotely. What do you think is the secret sauce to make hybrid teams work?

AR: The onus rests on the local people to remember that they have remote team members. Problems arise when it becomes hard for people to do that consistently.

Here’s an example: You and I are in charge of thinking about our registration flow because it’s a key part of the funnel that we’re trying to debug. I’m the engineer, you’re the product manager. Our designer works remotely in California, three hours behind us. You come into my office with an idea about moving two buttons and adding an extra form first thing in the morning. I think it’s an awesome idea, and we should implement it right away. I can make all of those changes without going back to the designer who has slaved for tens of hours on all the permutations of that registration flow and, in particular, the form we’re about to change.

When I was a founder, we had a couple of remote employees on the team, and the scenario I’ve outlined would come back to bite me on a regular basis. It’s hard for both sides of the equation. It’s hard on the person who is remote, who has done the work and the heavy lifting over time. It’s hard for the folks physically in the office, because they like the ability to quickly iterate and make changes as inspiration strikes. Members of the co-located team have to make sure to bring everyone along on the team to avoid alienating anyone.

The example is like firing a cannonball. In situations like these, of which there are many when you have remote workers, every time decisions are made without coordination between the entire team changes the angle of the cannon a little bit. It doesn’t feel meaningful in the moment, but over the course of that cannonball being shot, little decisions made without coordination along the way can make a huge difference in the ability of that team to work better together to improve performance, faster.

I was very guilty of that. Because that was over a decade ago, remote technologies were nowhere near where they are and, had we had slack and had we had high bandwidth video conferencing, I might’ve been better at it.

OL: What do you like more about being a board member than being a CEO?

AR: It's less stressful when you're not the person who has to worry about making payroll. Being a CEO is one of the hardest jobs – if not the hardest job – in the world, because you have to be strategic and set a vision. Most good CEOs also have a certain operational cadence for getting things done. In some cases in startups, that can come in the form of a COO, but usually, startup CEOs have to be the full package. There are parts of that job, particularly the operational cadence, that I didn't like as much. I was pretending to try to do the best that I could and talking to as many other founders and first-time CEOs as possible to figure out what tricks they would use for that. This job fits me better from that perspective.

I also like the breadth of being a VC and a board member, as opposed to the depth of it. When you're a CEO, you have to be miles and miles deep in your business. As a board member, structurally, that would be a disaster, because you have two or three categories which you invest in, and you have a handful of companies in each that are at different stages. You have to be much broader because you can't afford to be deep in any one thing. It's not your job to pick where the office is going to be, or when you're going to launch a product. If you do these things, you're probably doing the company and yourself a disservice as a board member.

OL: You must need to be hyper-organized with your notes from your conversations and the progress each business is making.

AR: When I came here, Evernote was just a couple of years old, and I didn't get it. Then, I started dumping all of my notes in Evernote, and now I get it. I didn't think I needed this level of organization in my life until now.

OL: What do you think is the biggest gap when it comes to making remote work more ubiquitous in the workplace? Do you think it's technology? Do you think it's our leadership? What do you think is going to take it to the next level?

AR: Technology is a big lever in that way. If I had a projector such that people felt volumetrically like they were in the room, there would be no difference between co-located and remote meetings. Now, we're very far from that point still, so the question is, every time we make a quantum jump towards getting to that Star Trek universe, how much more remote working capability do we unlock?

Technology is at the base of advancing remote work, and on top of technology, management has to evolve. Think about the worst habits of a manager who expects everyone to work in the office every day. A lot has to be fixed at the management level, and there are probably a lot of hidden biases around what those managers would expect of co-located versus remote employees that need to evolve over time. The best remote folks have such an executional orientation that there's no question they're usually high performers on the team, so some of it will take care of itself, but there are hidden biases among leaders that we'll have to work through.

OL: Better technology might make it easier for those managers to trust their remote employees if they can see the results of what they're doing in real time. This doesn't solve the bigger problem of if they trust their employees or not, but it might give them more visibility into the work they're doing to prevent micromanagement.

AR: It's an interesting point you make. In some ways, sales and engineering are the easiest teams to start working remotely because there's a lot of exhaust that gets created from both types of employees "doing the work." In sales, you could go into the CRM and see what your salespeople are doing and the deals they're closing. In engineering, you have GitHub and Atlassian tools, where you can go in and see what progress is being made as an engineering manager.

For me, the harder teams to implement remote work are marketing, which can have hard metrics, but also requires investments with longer lead times, like content marketing. In product management, it's hardest, because there's no dashboard for the product manager, and a lot of the work they do is very non-linear in nature. Trust among that team is also super important.

Something that occurs to me as I'm saying this is, if you asked me what I would do with a magic wand to improve a company with a significant portion of high-performing remote workers, I would use the magic wand to get everyone working together in the same place for one year. It's a bit of a cheat, but I'd require a year of working together, after which point people could work anywhere they wanted. It builds a lot of trust between people who are used to working together, and the company could overcome a lot of the problems that will take time for technology and management to fix and change.

OL: Do you think that technology will have advanced enough in the next ten years to fully unleash remote work?

AR: Ten years is the worst time frame to ever ask someone to make predictions, because in the words of Bill Gates, we tend to dramatically overestimate the amount of progress we make in a short period and underestimate the progress we make in a long period.

I have a lot of faith that technology is going to advance quite a bit during this time frame, and I have a lot of faith that there are a lot of talented people all over the world. More than anything else, I think we're going to see more remote work in the next ten years, not less of it, but I have a hard time envisioning that happening on a mass scale.

When IBM and Yahoo called their remote employees back to the co-located offices over the last few years, those were reactionary moves to try to fix the symptom and not the disease that each of those companies was suffering from, which was really a lack of focus,  unmotivated people, lack of strategy, lack of vision, lack of alignment, and other pitfalls, which were manifesting in remote workers who were checked out while they were "at work." Remote work isn't to blame in those cases.

There will be more remote workers in the future, and more remote-only companies will be founded. There will be more acceptance of feed-like tools, whether it's in Slack or whatever comes after Slack, to make sure remote employees feel more present in the conversation so they have what they need to get their work done.

The big question will be, in a world where there's more remote work, will there still be a significant advantage of working together in-person over working remotely? I don't know the answer to that question. I would bet that, over the next ten years, people working physically together will be at an advantage compared to people working remotely full-time, but maybe not. Maybe I'll be surprised.

OL: What do you love most about what you do?

AR: It's super simple – it's the people. You back great founders, and you surround them with the best people who will complement them and make the company better. When it works, the good companies become perpetual motion machines that keep you fresh by introducing you to new people that are in different stages of their careers and doing different things. We might not have otherwise met were it not for your company reaching this stage of growth. Because Owl Labs is at the point where it's starting to attract great new people, this is super rewarding for me to do from that perspective.

Key Takeaways

1. Having a clear vision is important for any growing business, but is especially critical in the pre-Product-Market Fit stage.

Whether you're going to build a remote team or work out of one physical location, having a shared vision about the future is critical when it comes to forming a company. Antonio explains that companies work best when there is a strong founder with an understanding of the value proposition and a product vision that is well-informed from the very early stages, and that this vision is the common denominator that he looks for when deciding which startups to invest in himself. During the pre-Product-Market Fit stage, when a product or solution hasn't been built or launched yet, that vision helps founders get funded, hire early-stage team members, and keep up team momentum and motivation.

2. Remote company culture fails when a core leadership group works together in an office and distributed employees feel less connected.

While team lunches and office outings are a fun way to bring people together, these activities don't create company culture. As Antonio points out, culture begins with people who readily execute on the mission of the company in a way that makes everyone feel like they're succeeding. Including remote employees in this feeling is critical. With the right people in place, other aspects of a company's culture will follow.

Conversely, Antonio warns that company culture can fail when remote work is implemented within a company while a core group of leaders remains in the office. In these cases, the onus is on co-located team members to include remote team members in as much in-person communication as possible. Ideally, when teams reach a certain scale, they're able to build fully remote or fully co-located teams to work on specific products or projects together more seamlessly.

3. Remote work can help companies accelerate growth -- once they've already reached Product-Market Fit.

Antonio believes there will be more remote work in the future, not less. But in order for this work successfully, management and team members need to be on the same page. Remote workers need to feel as though they're being kept in the loop, especially as a company grows, and teams and workflows need to be built with the challenges of remote work in mind. Antonio believes that a company in its early stages before achieving Product-Market Fit should prioritize having everyone physically in one room to build trust and accountability between team members before becoming partially or fully remote in the future. There needs to be a high level of collaboration among the people who are trying to take something new that hasn't existed before, and they need to be able to work on an ad-hoc basis on problems and brainstorm and other types of collaboration that you can do when you're co-located.

To learn more, read our interview with Jonathan Gheller, founder of One Fix, next.