Back in 2020 when the pandemic forced people to work from home, entrepreneurs saw an opportunity to build tools to fuel this new transition to remote work. From virtual offices to making it easy to run payroll for a distributed team, founders leaned in hard.
But now, three years later, some companies have remained remote, others have gone back to the office, and most are operating somewhere in the middle. It’s become increasingly unclear if there really is a large market for companies focused on catering exclusively to remote work. It seems that the remote work category has lost steam — but has it?
It’s hard to pin the exact numbers on it — because the category can include companies across various sectors — but there are signs that things aren’t going well for many remote work startups.
An investor tweeted a few weeks ago that two of the companies in her portfolio have pivoted out of the category. One virtual office startup recently sold off its IP and transitioned to AI — the founder even tweeted that he doesn’t really think remote work even works — while another one laid off almost a third of its team in 2022.
So is there anything about this sector that’s still attractive to investors? Kevin Spain, a general partner at Emergence Capital, is focused on what the firm dubs the future of hybrid work. He said that at the core, the best companies focused on remote work solutions are the ones not focused on remote work at all. The successful companies make work easier for teams no matter where they are.
“When I think about tools that facilitate better remote or hybrid work, these are collaboration tools,” he said. “They facilitate collaboration around a project or workflow. It doesn’t matter whether the people that collaborate are all in different offices and locations,or frankly they are in the same office, it doesn’t really matter.”
This makes a lot of sense. Thinking back on 2020 and the start of my remote work journey, the tools that made the transition the easiest were communication tools my distributed employer was already using like Slack, Google Docs and Zoom. Three years later, that is still how my current team communicates and collaborates every day.
Plus, many of the “remote work” companies we think of like Papaya Global or Deel — both focused on international and distributed payroll solutions — that seem to still be dominating are likely doing so because they weren’t building for the new world of remote work. Instead, they both started years before the pandemic to solve remote work issues regardless of what the broad trends were.
Spain said that it shouldn’t be surprising that remote work companies seem to be going away. It doesn’t mean that they’re actually going away, just that many of what we considered to be remote work startups were just marketed that way during the pandemic. Now that investors have moved on to backing the next shiny category, a lot of them aren’t using remote work as their tagline anymore.
“If I looked at all the companies that are actually categorized as remote work, you’d see this little tip of the iceberg,” he said. “Below that there are a lot of other companies effectively following and benefiting from that trend.”
This marketing switch is not dissimilar to a lot of what is happening in AI right now. While there are a bunch of companies that are jumping on the bandwagon and building off of the trend, again very similar to remote work back in 2020, there are even more companies that have been using large language models and machine AI algorithms for years. It makes sense for a startup to start highlighting its AI capabilities as investors and the market alike have gotten more interested.
So, the future of work was never about re-creating a virtual office or watercooler experience but rather just about making people work better together and stay connected no matter where they happen to be. Companies looking to tackle that should be just fine, but don’t expect them to call themselves remote work solutions anymore.
“We do think about hybrid work and remote work as one in the same,” Spain said. “If something facilitates better collaboration, it will facilitate better remote work.”