I've worked with lots of great companies, both on-site and remotely, and I can that in my experience proximity is only directly correlated with productivity at the earliest stages. Once everyone understands their piece of the puzzle, sharing a physical space hasn't been important. Remote teams work best when everyone is actually dedicated to the same cause and working toward a common goal, however the same could be said of any team.

I've built three successful teams remotely and I wouldn't trade any of them for one in a shared space. Use Slack for real-time, text-based communication, Google Hangouts for face-to-face chats, ScreenHero for remote desktop sharing (e.g. for pair programming or quick demos), Pivotal Tracker (or similar) for task tracking and weekly check-ins with every employee. If someone seems to be dropping the ball or losing focus, bring it to their attention and ask what's going on.

TL;DR: Communication is key. Not everyone's suited to remote work, but neither is everyone suited to sharing space. With the right tools in place and a dedicated team, you're all set.

I don't think you need to be in Silicon Valley (and in general would argue against being there most of the time), but at the same time an early stage company where the team is remote is not a good idea IMO.

There are a lot of issues with it, but primarily you need to figure out how to work together, figure out product/company direction, pivot and make quick decisions and overall not screw up too much. So starting out where everyone is remote is a huge burden to add to an already really tough situation. I think even if you look at the successful companies that have a significant number of workers remote, you'll find that when the core team started they had a majority of people in the same location or very close. And you'll still find that a number of the people are in a given area or get together very regularly in person (which has a cost to it).

If you are an already established team with multiple prior successful remote projects, then that might make your chances of success go up some. But the likelihood of being successful still, in my opinion, goes down many times over when core members are not near each other regularly.

I can hear the people saying oh it worked for us blah blah. I am sure you can find cases where it has worked. I am sure I can find cases where it was a massive failure. Neither of those matters as much as the overall statistics and your gut feeling on whether it will work. Just remember, everyone will have to be willing to work extra hours just because they are remote, those extra hours will be spent mostly in communication and clarifications and working across time zones.

Don't get me wrong, I think remote work is awesome and is super successful when implemented properly. But for a small company just starting out or small team barely off the ground I just think the burden is too high to make it successful fast enough.

If you can do remote well the benefits outweigh the drawbacks. I have built and worked in / with remote teams (primarily US based) for 5 years in that time I have found the primary killer of productivity is isolation. A lot of developers are introverts and if allowed they will work alone with little collaboration.

We do a few things to help solve that issue, first and foremost we use tools. We use a collaboration platform called Sococo, to be honest I hated it at first it's kind of hokey with a virtual office map and rooms and everything, but it does a few things right the first of which is it makes it very easy to se voice communication, there is no dialing or ringing like a phone, you just pop into someones office and click the mic button. People can lock their office to avoid the popping in but the point is, it seems to jump the psychological barrier of making a phone call and emulates more naturally the "hey I just popped in for a quick chat".

The next one that we do, is we try to hire developers in common locations. While we will hire the best developers available in the market we do try to lean on our developers to build our network and hire in their locations. If we hit a critical mass of developers in a location we let them find a space they agree on and incentives them to move to an office culture in that area. So satellite locations grow organically and tend to follow the ebb and flow of market strengths.

Remote development has been proven, and if done right it works well. Personally I don't understand decisions like the one Yahoo made a while back as it seems short sighted to me to limit the market you can draw from for talent. Especially in a market that is so under staffed with truly talented people.

My contact info is in my profile if you want to chat about it, I have done remote for a long time. I can get you down the right path if you decide it is the route for you.

If you make good use of Slack or video chat, there's very little impact on communication or productivity. There's actually a lot of research showing that productivity is much better when people have privacy and quiet (the opposite of an "open office").

However, the rapport and happiness of your team might suffer if they all work remotely. It's not a good lifestyle for everyone.

Also, keep in mind that there are many large cities with a very reasonable cost of living. You can have an office (with the option to work remotely) in one such city. Houston, Atlanta, and Nashville come to mind, but I'm not an expert.

The idea that it's "Silicon Valley or bust" is totally ridiculous unless you're planning to launch a B2C product that requires lots of runway and, therefore, investment.

Thanks for your input. Valuable points. And we are in fact, launching a B2C product :)

If you are a startup, working remotely is not a good option. It is even worse, if your co-founder is working remotely. Startup is not just about getting things done faster. It is about validating if your direction is right. To do that, you need your team with you for brainstorming and moral support.

If you want to save cost, you should move to the remote location where your team is, after raising some money in the valley.

Proof? There are several YC teams that are fully remote without issue.

I have experienced this problem first hand. AFAIK, YC does not recommend co-founders working remotely.

I work for a YC company that is 100% remote. Works very well.