YouNeedABudget (or YNAB, as it’s known) started as a spreadsheet built by a college student who was looking to cover his rent.
A decade and a half later, it has grown into a full-fledged budgeting tool with apps across a number of platforms, a deeply devoted user base and hundreds of employees — all operating 100% remotely.
I spoke to YNAB co-founder Jesse Mecham about how it all works; why they’re remote, how they bring everyone together (both virtually and in the real world) and the pros and cons of being spread across the globe.
Here’s the transcript of our chat, lightly edited for brevity and clarity.
TechCrunch: Let’s set the scene a little bit. It’s 2004, you’re starting what would eventually become YNAB. Why?
Jesse Mecham: I needed to make rent. That’s the honest truth.
We were going to have a baby, and my wife was going to stop working so she could do the mom thing full-time. I was trying to figure out how I could not borrow money and not stop going to school, and I figured I could sell this little spreadsheet I had built. That was back before, you know, phone apps and all that — so I just got started on that, selling a little spreadsheet to make some side money to get us through school without having to borrow any.
When it was time to grow, what made you hire remote?
My very first hire (now my business partner and CTO) Taylor… he was down in Austin. I was in Utah.
He reached out through email and said, “I could improve this spreadsheet for you! We could add some functionality.”
This is about a year, year and a half after I started. The spreadsheet was selling okay; it was doing what it was supposed to do. But I told him I really just wanted separate, standalone software. He said he could build it.
We struck up a conversation over the phone — this was before video chatting and things like that. There was never even a consideration [at the time] that he quit his job or anything… he was just going to moonlight and build it on the side. So the idea of co-locating was absurd, given the position we were in. I still needed to finish school. So we just didn’t even think about anything other than, “well, we’ll just do a lot of phone calls and get it done.”
Then we did! We launched it nine months later without ever having met each other in person.
So the first employee was remote, and we both thought it worked okay… so when we went to hire another engineer, we thought, well, gosh, let’s do that again. At first it was accidental, kind of default. But now I’ve seen so many other advantages I’d never try to co-locate.
A decade and a half later, how big is YNAB now?
We’re at about… actually, 115 employees exactly.
When we say “remote,” where is everyone?
Mostly U.S., but we have a lot [of employees] everywhere else. Canada probably has the next most and then Europe has the next most after that.
What about you personally — are you working from home? An office?
I have a detached garage that’s about 100 yards from my house. Maybe 50 yards. I go over there and work out of a little office that’s built purely for me to work… to work remotely from home-ish.
I have a lot of kids and it’s a busy house. There’s no way I could actually work inside the house.
I get that. I have a two-year-old and it just so happens that this interview is scheduled at just the right time for him to be taking a nap. So I get it!
Yeah! [laughs]
So what would you say are the biggest advantages of having a remote team?
You get talent. You get the best talent.
It’s such a game-changer; we get to compete with large companies that have much larger hiring budgets because we accommodate peoples’ locations. It’s such a win for us, and I really hope the big… you know, Apple, Microsoft, Facebook and the like, they have lots of different offices, but I really hope they never embrace being remote completely because it gives us smaller teams with less cash an opportunity to be appealing on a different factor as far as work/life balance goes.
Yeah. It’s the hiring, by far.
Speaking of hiring, and cash… how do you determine how to pay Person A in California versus Person B somewhere where cost of living differs?
We used to pay based on their location. We had lots of different geographies, and what you said is exactly right — there are very different pay scales for the same role because of where someone lives.
Then a weird thing would happen. People would be like, “I’m living in LA, making X. If I moved, I’d still be making X, but my cost of living would plummet.” Which is great! That’s a great move. I would never begrudge someone being so optimally positioned financially.
But it made it weird for us… because if someone were to go from, say, Oklahoma to LA, they would say, “hey I need a salary adjustment,” and we’d say, “okay, that’s reasonable.”
But if someone were going from LA to Oklahoma, we would never say, “hey, we’re going to adjust your salary.” It just didn’t feel right to do that!
[Now] we use a provider for market data on compensation, and we use their national average. So if you’re living in New York or any coast and you’re applying to YNAB, you are going to be looking at a national average salary — not one specific to Manhattan. That probably means we self-select a little bit away from those edges… but we’ve done pretty well still hiring there, so I don’t think it’s so far off that we’re no longer competitive. So, short answer: national average to keep things simple.
You mention hiring as the big advantage. Are there disadvantages?
Oh yeah.
[Slower] idea interchange, how quickly you can convey something.
Loss of body language when someone says something. Loss of tone, if it’s not over the phone or video — they can misread a Slack message or whatever.
And energy! The energy behind something really cool happening and gathering everyone together to celebrate it, versus having everyone drop a little emoji response with a celebration hat, you know? There’s an energy loss you have to try and recapture in other ways… there’s some definite disadvantages to it that you gotta combat.
Let’s say it’s performance review time, or product review time, or brainstorming session time. Between different tools like Slack, video chat or email, how do you pick which one to use?
We let everyone kind of pick what they want.
Like the designers use something where they can kind of drive each others’ screens and kind of whiteboard together. I don’t know what it’s called, but they use that. [Note: After our call, Jesse told me he was talking about Figma]
Everyone goes to video very fast, because that just gives a lot of communication back that you’d otherwise miss even with just audio.
We’re using a piece of software called Loom recently which I really like, where I’ll write up a big post for the team. Instead of just having the team read it and maybe asking questions, I’ll record myself… not reading it, but I’ll record myself kind of walking through it and giving more insight than I would maybe type. A little more backstory. So it’s kind of like I’m presenting what I just wrote; the writing can still be referenced easily, but you’ll get more of the nuance of what I’m saying. I can give more context to people, the way I would if I was explaining something.
Our team has responded really well to that. Written word is super strong, especially for referencing something again. But to have a video that kind of gives you the feel of it? That’s been really, really helpful.
How do you make a remote team feel unified?
We get together. We physically get together once a year for a big company thing — that one’s just kind of “play.” Then individual teams get together once or twice a year to do work and bond that way.
I think physically bringing people together goes a long way. It gives you enough of that connection, and you can kind of run on that for a little while.
We’re also definitely quick to go to video versus writing things. When you’re trying to communicate something quickly, there’s no, “hey, can we do a call? Let’s set this up, what about tomorrow at 1:15? stuff like that. Just call.
Calling someone in Slack is fun, versus having to set up every call. It doesn’t need to be [set up]. Getting to that audio/video medium is crucial; it helps you connect better, and get to know each other better.
We also have a small thing where in our weekly team meetings we’ll take the time for everyone to say their “personal best” and their “business best” for the week. It’s this really tiny thing, but everyone loves it. It’s kind of an icebreaker; it gets the meeting warmed up, and people learn more about each other than they would have picked up being remote. That’s super small, but I’ve found it to be surprisingly impactful.
When it comes to the two different approaches that you mentioned when bringing people together — one for smaller teams to be focused and all working on one project, and the other big one where people can just kind of mess around… why the two different approaches? Do they have different impacts on the team?
They do! The team loves working together; when we’d do the big retreats that were [just] for fun, they would be like, “well, can we do some work?” They’d want to seize the moment and be in the room together whiteboarding, and moving so much faster.
So we recognized the desire to do actual work together and not just play. That’s when we started spinning up those team meetings as well, that are work-oriented.
The retreat — the fun one for everyone — it just helps everyone get to know each other and see each other again. Before we started doing this, some of them had worked two, three years together never having met in person. It’s a big deal.
I imagine that remote job openings at a company that’s been around for over a decade just get absolutely slammed with applications.
Yeah, we do.
So how do you hire? How do you filter through those?
Oh, that’s a whole other… it’s key, I’ll tell you that.
We screen on cover letter, not on resumé. Resumé doesn’t tell you nearly as much. We screen for feel, like core value feel, through that cover letter — frankly, you just can’t be boring. We won’t look at resumé at all.
We let about a fourth of applicants get through to what we call the “core value questionnaire.” We may not call it that externally, that may be an internal thing. But it’s about 25 questions that are very in-depth that people have to write back… it usually takes someone about two or three hours to fill out, if they do a good job with it. Those questions are meant to show us if the person possesses the core values we’re looking for. From that fourth, we usually will take another fourth.
For a normal position, we might get six to eight hundred applications … for maybe one or two slots. So at this point we’ve narrowed a pool of 600 down to 150 and narrowed it down again to whatever that is — fortyish. From that 40, we can do our first initial phone interviews. Those will be quick; we just want to be see if our process up until that point has worked. From that 40, we usually get to 10 that we can do longer in-depth interviews with.
Then we just keep whittling down. There’s usually two long interviews, then we always fly the person out and make sure they don’t think we’re crazy and we don’t think they’re crazy. They have to meet some team members face-to-face — we’ve had a few where we thought, “oh man, this person’s great!” and then we met them in-person and knew right away we were wrong. So we’ve got to have a face-to-face.
It’s a lot of written; we try to get a lot of it done with written, asynchronous feedback, before we actually commit to the time of all those interviews.
It’s a long process for the candidate, as well. We try to be upfront about how long the process will take, and the odds of getting from one stage to the next, so they don’t just feel lost.
Once they’re hired… how do you get them up to speed? What’s the onboarding process like?
We send them a welcome package — it’s awesome. It lands on the day they start with swag and [personalized] welcome notes from the entire team. Everyone writes individual notes kind of introducing themselves. It helps people feel connected really fast. We usually give them a gift card to go out to celebrate. If we’ve been able to figure out their favorite restaurant during the interview process, we’ll give them a card for that place — otherwise we’ll go a bit more generic.
We’ll always assign them some kind of onboarding buddy; I don’t know what our name is for them. But it’s someone where I know I’m allowed to (and this person expects me to) bother them with a lot of tiny questions. That’s been real helpful.
I also try to tell them not to worry too much about getting up to speed really fast or doing something superhuman. Once we’ve hired them, we know they’re right. They’re not on trial anymore. They’re not trying to prove themselves; they’ve already proven themselves. They can relax and just know they’re part of the team and we’re in this for the long haul.
We’ve had employees that have started here say that they felt more welcome here being all remote than they ever did with a co-located job. It’s more about the mindset and the approach versus remote or not.
Have you onboarded anyone only to realize the remote aspect doesn’t work for them?
Yeah, with one. We actually had to let the person go. It was kind of a relief for them too, to be honest.
They didn’t realize how much energy they got from the office environment. About a month in, we knew something was off. They knew too. We tried some stuff, but at the end of the day everyone kinda knew: We’re pushing a boulder up a hill here.
One of our other employees… they were aware they needed more interaction, so they just kind of put themselves out there like, “does anyone want to code where we’re in a Hangout?” Not necessarily talking, but knowing that you’re coding with someone. That helped a lot. So they noticed they were missing some aspect of their old work at an office but they were kind of proactive about what they could do about it.
We try to be really open with people that it’s not for everyone — and also that it’s not just slam dunk, super easy. But there are strategies you can use to make it much more palatable; getting out and changing your location, [going to] the co-working spots that are popping up everywhere. There are lots of different ways you can help yourself feel a little more connected.
Getting out, doing stuff and not hermit-ing — it’s a big deal.
I’m actually surprised that most of the remote workers I know… not a lot of them are nomadic, so to speak. They tend to stick around a home base.
Absolutely. There are some, but I think it’s someone who already wants to be nomadic and says, “remote work is for me.” I don’t know as many people who say, “I’m in this remote job! I should be nomadic!”
That nomadic desire is probably there from something else already.
We promote it, to a degree. It’s so fun to have a team member have experiences that, I think, add value to an organization. If I have a designer that starts and says, “hey, I’m going to go to Japan for six weeks, but I’m going to work there… not take vacation,” I just think that’s perfect. They’re going to have all this exposure that will be valuable. We try to promote people getting out and working from odd locations. It enriches their perspective, and I think that enriched perspective adds value to their decision making, and adds value to the business.
You mentioned hoping that bigger companies don’t embrace remote —
Oof, yeah.
— Because it’s such a big advantage for you. I know of quite a few companies that are trying to — because their employees are asking for it, saying it either needs to happen or they’ll leave. With you having seen it rolled out from day one… do you think it is something bigger companies can properly embrace? Can it be introduced later into a company’s life, or does it have to start from the beginning?
It’s probably easier from the beginning, right?
But I think if you did it team-by-team, where that team was truly siloed and all of that team was remote… you could just go, “okay, team, we’re remote now,” and it would probably work.
The worst thing you can do is try and mix it. All of our policies and tactics… everything is oriented toward nobody being co-located. That’s just top of mind for us, always.
But if you have one or two on a team that work remote, and then you’re getting everyone together for that stereotypical… birthday cake or whatever, those [remote] people aren’t involved! And there’s so much conversation, and so much learning, and getting to know each other that happens co-located that those remote employees can’t be a part of.
For us, none of that happens unless we’ve orchestrated it. In that way, we can orchestrate it evenly across the board.
So it can be done, but I think it’s better if it’s 100% or none. The worst situation is when you’re the only one conferenced into a [meeting] and everyone else is sitting around the table. You’re like, “wait, who said what? What?” You’ve missed 60% of the meeting, even though you’ve been there the whole time.
Or you hang up the call and you’re like, “agh, what are they talking about now?”
Exactly! The meeting after the meeting.
All or nothing, I think, would be the way to go. Or at least team-by-team. If team culture is most important, if that’s what you’re saying, and you don’t necessarily care if marketing is the same as engineering or something like that… you can just say “Hey, all of engineering is remote.” You can probably pull that off.
Work/life balance stuff. It’s something that I found a lot of remote workers, including myself, have had trouble with. Being able to turn off, knowing when to turn off, and how to turn off. When the office can be everywhere, it starts to feel like you should always be working. How do you tackle work/life balance [for your team]?
First, the top executives… we don’t work after work hours are over. And that is probably number one.
Even if you tell someone, “hey, don’t worry,” or “hey, I understand that you can’t get back to this until tomorrow, if I’m slacking you at 8 p.m. because I randomly thought of something, even then there’s still a pressure. You can tell them not to feel pressured, but they’ll still feel pressured! So the best thing you can do is the leadership should not work outside of work hours. That will slowly convince everyone else that you’re serious. I think that’s probably number one.
It helps people really believe you. It’s like when people say there’s unlimited vacation and then you look at your boss and he hasn’t taken a day of vacation in eight years — you’re like, “oh, yeah, I bet it’s unlimited.”
There’s that idea of “do as I say, not as I do,” but you really do have to do it in order for people to believe.
If you started another company, would it be remote?
Oh yeah. Absolutely.
Personally, I don’t like the idea of having to be there at nine, or eight, or whatever, or I’ve sent a message. I don’t like the idea of, “oh, Jesse’s not here until 9:30? I guess I won’t come until 9:30,” or “Jesse’s here at 7:30? Guess I should start coming in at 7:30.”
Or if I stay late one night because I’m just on a roll or something, people aren’t just hanging around like, “when’s he going to go so I can go?” — that kind of garbage. Or if I leave at three o’clock because I want to do something in my workshop, I want to be able to do that and not have someone feel like, “oh… what’s the deal here?”
You know? [People should be able to] just work, do your work. When you’re done, be done. Don’t worry about what the person next to you is doing, or what your boss is doing.
That part, for me, is personally liberating. And we don’t have to pay a quarter-million dollars in office space, either.