Even being in this age of great electronic connectivity, the idea of having an early stage (Seed or Series-A) company with multiple sites just sits wrong with me. There is a lot to say for having all key staff members able to see each other, drop-in, have ad-hoc meetings and generally be around for each other. There is another factor beyond the obvious that is often not discussed, which is the self policing that occurs in an organization. I've worked with people in start-ups that were very quick to identify slackers and people that didn't pull their weight. The peer pressure on the under-performers was intense. They rarely lasted more than a few months. When there are multiple sites, all of these aspects are hidden from the other team members. There often emerges an us vs. them mentality due to the fact that people who don't see each other every day often don't give each other the benefit of the doubt. Particularly people that don't already have established strong relationships. My bias as an investor is to discourage companies that are thinking of it from doing so, and to not seriously consider companies that are already there.

Even if you feel like you have the most dedicated team in the world that happens to be located at a remote site, don't fool yourself into believing that every additional person that is hired into the team will be as committed to the vision. This matter of scale simply doesn't work out.

There is, however, a way to make multiple-sites work, but the scheme doesn't fit early stage venture investments. It really works the best for Series-C and later stage-companies. I worked with a company a very long time ago (VLSI Technology) that wanted to start a remote site, but (wisely) did it by having the early founding team move into the same facility as the existing company. This was a long-term assignment, with the overlap lasting 6-12 months (depending on when people were hired) instead of the 2-3 months that you might have thought. Only after the core team was in place and integrated with the existing site was the move scheduled. This also gave the new team a chance to plan their business and prove that they could actually deliver something. The long-term effects were that relationships had been established between people at the old and new site, and a company culture was learned by the newcomers which was carried to the new site. At least for the first generation of employees at the new site, there was a very strong bond and understanding between them and the headquarters site. This, along with a lot of back-and-forth travel between sites kept everything working smoothly. Relatively short, non-stop flights also helped make this a manageable solution.

What does all of this mean to an early-stage entrepreneural team? The short answer is to bite the bullet early and get the team all in one place. Forget the idea of splitting development between sites. Pick a location that is good enough for everyone and get them there. Save the idea of multiple sites for after there is customer revenue and the company has a view to cash flow break-even. Only then can the team afford the overhead and inefficiency caused from having multiple geographic sites.