NewDetail

AICEP
Agência para o Investimento e Comércio Externo de Portugal

CABEÇALHO

What will happen to technology companies’ pricey digs?

“THIS IS one of the healthiest buildings in San Francisco.” Giving a tour of the new headquarters of Uber on a recent afternoon, Michael Huaco, the ride-hailing giant’s global head of “workplace and real estate”, does not hide his pride. And he has plenty to be proud of. Employees make their way to their work stations up a wood-panelled staircase, then through a sun-filled atrium which doubles as the conduit for the building’s natural ventilation. Meeting rooms and nooks with couches abound; desks are scarce. This being tech central, there is, naturally, a juice bar and a yoga studio.

 

There is only one niggle. Many Uber employees may prefer to keep working from home and come in only a couple of days a week, if at all. “No one really knows,” concedes Mr Huaco. His firm is not alone. Up and down Silicon Valley technology companies are wondering what will happen when they fully reopen after the summer break. Where they go, others often follow. How tech solves its HQ conundrum may therefore once again blaze the trail for new work spaces and practices in other industries, says Charlton Hutton of M Moser Associates, a design agency.

 

When it comes to offices, Silicon Valley has been an odd, some would say ridiculous, place. For an industry whose avowed goal is to digitise all of life by having software “eat the world”, most big firms’ work practices looked remarkably analogue. Before the pandemic, daily presence in the office was expected. Many spent hundreds of millions of dollars on headquarters to accommodate a large part of their workforce. Uber’s new San Francisco digs reportedly cost $130m to build; the company has told investors it will spend $1bn over 20 years on leases in the city. Salesforce, a business-software giant, is paying the developer of Salesforce Tower nearly $560m over 15 years to lease 30 of its 61 floors. Apple’s spaceship-like base in Cupertino, which can accommodate up to 13,000 people, cost $5bn, or $385,000 per employee.

 

Tech is not the first to suffer from the “edifice complex”. From the Chrysler Building and Sears Tower to the Bank of China’s iconic Hong Kong headquarters, companies have always erected monuments to their success. Technology firms have reasons beyond self-aggrandisement to covet posh quarters. Fancy workplaces help such businesses, which live and die by the quality of their human capital, to attract employees, in effect becoming a key part of the pay package. They enable teamwork, which most founders believe, rightly or wrongly, to be indispensable for innovation. And since many fast-growing startups lack a long history, offices where everyone congregates can help imbue the troops with the corporate mission. It may be no coincidence that Airbnb’s feel like a high-end Airbnb.

 

Even so, tech temples had begun to seem anachronistic before covid-19 washed up on California’s shores. Traffic was making the daily commute an insufferable two-hour ordeal. Most computer programmers came to the office but really worked elsewhere—in the cloud, managing projects with Trello, on Zoom and Slack. Designed to be lively, tech offices were often eerily quiet. Realising this, companies began to open more of them beyond the Valley, and into the virtual realm. The pandemic then gave the shifting equilibrium a shove, notes Nicholas Bloom of Stanford University. Although it is hard to predict where exactly all the bits will land, the contours of tech HQs of the future are coming into view.

 

For starters, most will be smaller. As in many other sectors, tech firms will blend remote and office work. When Andreessen Horowitz, a leading venture-capital firm, recently asked its 226 portfolio companies to describe work in the future, two-thirds said “hybrid”. Uber is reportedly trying to lease out a third of its new headquarters to other tenants.

 

Offices will also look different. Firms are throwing out desks and creating spaces for employees to socialise and collaborate. Okta, a digital-identity manager, is becoming a “dynamic working” space. In its remodelled headquarters most rooms will be easy to reconfigure, and let people gather more easily. M Moser Associates expects the pre-pandemic ratio of half of office space reserved for individual work and less than a third for meetings to flip. The daily battle for meeting rooms, legendary in tech, will be less fierce.

 

As physical space shrinks the virtual sort will expand. The pandemic has already set off a battle among Google, Microsoft and Salesforce over which will be the dominant platform for online work. Some less well-known services have seen user numbers go through the roof, among them Figma, a tool for prototyping apps and websites, Miro, a virtual whiteboard, and Envoy, which helps firms conduct health screenings, order food or book a desk.

 

To avoid remote workers feeling like second-class citizens, many companies are pursuing a “digital first” policy for meetings. When Salesforce’s employees can meet digitally, they should, says Brent Hyder, the corporate-software giant’s human-resources chief. Or, as he puts it, “We’re all equal on Zoom.” Many firms are planning more off-site meetings to compensate for the extra screen time (and rekindle social bonds). “Since we will pay much less for real estate, we will have lots of budget for such things,” says Marco Zappacosta, boss of Thumbtack, a marketplace matching customers with local plumbers, dog walkers or other service providers.

 

The most radical firms are doing away with headquarters altogether—becoming fully “distributed”, in the jargon. Snowflake, a data-management firm, now only maintains an “executive office” in Bozeman, Montana. The firm’s centre of gravity has moved from its former base in California to local offices around the world. This makes sense given that, as Denise Persson, its chief marketing officer, points out, “95% of our customers are outside of Silicon Valley.” In May Coinbase, a cryptocurrency exchange, said it no longer had a headquarters and that it would shut its San Francisco office next year.

 

As these shifts unfurl they will reshape tech’s Californian heartland. More firms will hire remote workers outside the region. More will follow Oracle, Tesla and others, and move their head offices to cheaper, less congested and lower-tax jurisdictions such as Texas or Florida. Silicon Valley will persist, though perhaps less as a place and more as a global network.

Partilhar