Read more about Arianna Simpson in “Is Remote Work Bull***t?”
“Remote Work is Bull***t.”
When venture capitalist Arianna Simpson tweeted this opinion, she never could have guessed the massive response she would receive. In this episode, Arianna has a chance to clarify her thoughts on remote work. Then she explains how “programmable money” on the blockchain could lead to a new world of smart contracts and distributed work arrangements.
The full episode transcript is below.
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MATT MULLENWEG: Back in March, Arianna Simpson tweeted an offhand remark that went crazy viral.
“Unpopular Opinion: Remote work is mostly bullshit.”
Arianna had no idea that thousands of people would like the tweet, and hundreds would weigh in with their thoughts, some pushing back, others hailing the blunt honesty of her “unpopular opinion.” As a true believer in distributed work, I naturally had to get in touch with Arianna when I saw the tweet.
Arianna is an early stage investor, with close to 40 investments to date, many of which deal with the blockchain and cryptocurrency projects. I wanted to find out: How is it that someone, who knows so much about distributed software that’s created among globally-distributed teams, has such a pessimistic view of distributed work?
It turns out, as it often does, that Arianna’s thoughts on distributed work are more nuanced than her tweet might lead you to believe. We discuss her reservations with remote work, we cover some of the things that traditional office arrangements are really good at providing workers, and we explore how companies can give their employees the best of both worlds with a hybrid model.
But things really get cooking when we started talking about how the blockchain could one day be used by distributed companies to pay workers in far-flung locations with stablecoins that are pegged to a traditional currency. When money becomes programmable, all kinds of interesting contracts and financial arrangements open up, making it easier than ever for the distributed company of the future to partner with workers all over the world.
ARIANNA SIMPSON: My name is Arianna Simpson and I run a fund called ASP. I’ve been an investor for the past several years, first general VC, and now running a crypto-specific fund.
Matt: So you’re into distributed systems.
Arianna: I am.
Matt: One of the reasons I really appreciate you coming on — and a goal of this podcast is — I wanna have the very best versions of why people should be in the same place, as well as making the case for distributed work. We are obviously in the same place right now.
Arianna: Yes, we are.
Matt: We are in a tiny studio in New York City, and this is nice, right? Because we’re having a higher-fidelity communication.
Arianna: Mhm.
Matt: This all started in a tweet. Do you remember the tweet?
Arianna: The tweet heard round the world! Oh yes, it was kind of Paul Revere-ish in its quality in that sense.
Matt: Do you want to read it?
Arianna: Sure. “Unpopular opinion, remote work is mostly bullshit. Way more gets done when you’re all in the same office.” [laughter]
Matt: So are you normally this popular on Twitter?
Arianna: Well, it’s funny because I tweeted that, and it’s definitely an idea I’ve held for a while. But I definitely didn’t expect it to have such a strong reaction from people, both in the positive and the negative. It got close to 5,000 retweets and hundreds of comments, and I was frankly shocked at how personally [people] took the comment. So I think it was an interesting way of seeing just how strongly people feel about the topic.
Matt: What were some of the comments you got back?
Arianna: People took it very personally to some extent because they saw it as a personal attack, which it really wasn’t meant to be. And I think a lot of nuance is obviously lost on Twitter. [laughter] Yeah, shocker, right? So I then went on and kind of explained what I meant.
So for example, some of the caveats that I think are important to make [are] — I was referring to basically…traditional, venture backable, early-stage tech startups. There are lots of other kinds of businesses — lifestyle businesses and other things — that can run perfectly well, and probably even better in some cases, with distributed teams. But I think there is something to be said for having people in the same place at the same time when you’re driving towards a common goal and that was really what I was trying to allude to.
But yeah, I think having people come and interrupt you every 25 seconds, as is often the case in open floor plans, is definitely not the most productive situation. So the model I’ve seen work well, or the model I lean towards, is having an office where people are working from, but having private offices or spaces where people can plug in their headphones and just do work alone while still being in the same place as, hopefully, all of their colleagues.
Matt: I’m actually always struck when I visit friends at Dropbox or Airbnb — beautiful offices that I actually get jealous of because they’re so exceptional. Stripe has a beautiful office. How many people have headphones in and are looking at their computers?
Arianna: Mhm.
Matt: I’m like, well you could do that anywhere in the world.
Arianna: Yes and no. So I think — say you have to sit down and write some code or write a blog post or something like that where you need to focus on one task and don’t want to be distracted.
Matt: I call that work.
Arianna: Sure, I agree, and that’s actually part of work. One thing I’ve noticed about startups that end up being very successful is often there is this really strong sense of shared mission and shared energy, and that I find very difficult to replicate if you have people in different locations because you don’t have the same sense of camaraderie, the same sense of “You know what, this sucks but we’re gonna stay here until 10 PM and pound it out until we’re done ’cause we’ve gotta get this release out” or whatever it is. So that is a really difficult intangible that’s hard to replicate if you have people in different time zones or in different locations. It’s hard to muster up the same level of enthusiasm.
Matt: It’s interesting you mention time zones. There [are] some distributed companies, like InVision, that actually ask everyone to work essentially New York hours. So they’ll hire you wherever you are in the world, but they say “This is our window and we’re all gonna be working at the same time,” probably for some of that collaboration-overlap benefit.
Arianna: Yeah, yeah absolutely. I’ve seen companies — sometimes they’re small, they’re 15 or 20 people, and they have eight time zones. And I honestly don’t know how you manage to get anything done, because even just internal scheduling can become such a time suck and such an added complex issue, that really shouldn’t be one, that it can easily become a drain on resources and time.
Matt: Often Twitter is for hot takes and reactions to things. So was this in reaction to any particular moment or experience?
Arianna: No, honestly, not so much. I think it was just a general reaction to the trend I’ve been seeing, which is in the direction of more teams being distributed or remote. And my seeing that I’m still not totally convinced that that’s the most productive model for most — of the kinds of companies at least that I’m interested in investing in. It’s important to point out that there are certainly counter-examples and there are a number of companies that have been distributed from day one and have done very well. I would pose the devil’s advocate perspective that they might be —
Matt: Would they be bigger?
Arianna: Exactly.
Matt: Yeah, what’s the opportunity cost.
Arianna: Exactly. And I think it’s incredibly hard to measure that and so I can’t say that I’m right and they can’t prove that I’m wrong. So we’re stuck on that point.
Matt: Do you find in your own portfolio [that] some of the standouts, or ones furthest along in their journey, have tended to be these more in-office ones?
Arianna: I would say — obviously my portfolio is too small to be a generalizable subset, but at this point it’s north of 50 companies so it’s not three. [laughs]
Matt: That’s sizeable, yeah.
Arianna: Yeah.
Matt: And to invest in those fifty you’ve met with five thousand?
Arianna: Thousands, yeah, yeah.
Matt: Yeah, thousands. People sometimes don’t realize just how many different companies investors see before they make investments.
Arianna: Oh yeah, oh yeah.
Matt: It’s kind of incredible. And a really good data input.
Arianna: Mhm. Obviously as someone who tries to be pretty analytical, you have to say correlation, causation — there are so many issues that go into making a startup successful or not that just being like, oh well there are plenty of startups that fail and they were all right in the same room. So that is definitely not a sufficient attribute. But I would say in general there is something to be said for, at least in the earliest days, having that central locus of cohesion.
Matt: That was such a reasonable thought. It would never fit on Twitter. [laughter]
Arianna: Yeah, right?
Matt: So I’m going to try to summarize. You’ve seen in the past and you expect in the future more companies, especially in their early stages, to do better when they’re all in the same room because the value of that collaboration is really high.
Arianna: Yes.
Matt: You’re open-minded to counter examples, but maybe those are the exceptions that prove the rule?
Arianna: Yeah I would say that’s true. And I think one thing that I’m [advocating] is a hybrid model as well. So for example, some companies in my portfolio have the business HQ in San Francisco, and I see this typically if the founder is from somewhere that’s not the U.S., but they tend to still have a pretty strong presence in the Bay Area, and even when they’re distributed it’s a couple of hubs, not individual people all over the map.
Matt: The easiest thing in the world is everyone around a table, that two-pizza team. It works for a reason.
Arianna: [laughs] Mhm.
Matt: You can maintain all the connections, it’s easy to communicate, etcetera. I think fully distributed also works really well. In between what’s really hard is multi-office because then you often have distinct cultures growing up.
Arianna: Yes.
Matt: A lot of the companies you see as more traditional are almost all multi-office. It’s physically impossible sometimes to get a certain size in a single building. And I would argue as soon as you’re on multiple floors, even, you’re essentially distributed, you might just not be doing the work. But the other one, this hybrid, it’s really hard. And it’s just hard to have them at equal footing to the rest unless the in-person team works really hard to make sure everything is documented; that the conversations are accessible.
And even then there’s just things that happen naturally. We’ll have something when we’re walking to the coffee shop. That might be an important discussion. That might influence how we both think about how this widget is going to evolve. And unless we really put in the work to document that, to catch everyone else up, they might see the end of that decision and not the beginning. And that’s challenging, especially when you’re creating things in the early stages.
Arianna: Yeah, I think that’s totally true and I’ve seen that happen a lot where the employees who are not in the main office often end up getting passed over for promotions or they just feel really disconnected, and so often have higher churn and end up deciding to leave because they’re in a silo. And everybody wants to feel connected to their team and to their work, and it’s hard to maintain that connection if you’re not on the same physical playing field as most of the team.
Matt: I think churn is actually an interesting trailer indicator of how well you’re doing at this.
Arianna: Mhm.
Matt: We’ve observed in other successful distributed companies that the churn is actually way lower than any in-office companies we know. And that multiplies in the Bay Area. And I think that’s a function of — well, one, if you’re at the place where everyone is being poached to every other place, you’ll naturally have some higher churn.
Arianna: Yeah, sure.
Matt: Two, I think being in an office in general — you’re asking someone to do that work to get to and from the office everyday. And that commute and that scheduling — all of that can be challenging. Even companies that are very progressive and might say sure, if you want to leave at 3 PM to pick your kids up, that’s fine, and you can come back and work an extra 30 minutes or something. Meetings are still going to get scheduled then.
Arianna: Yeah.
Matt: And to be honest, I do get jealous when I visit some offices — like, I have a little bit of FOMO because I really love my colleagues and I really love spending time with them. But I think in our personal lives, when we make the decision to live with someone, to cohabitate, whether that’s a roommate or a partner or whatever, that’s a very considered decision and we take into effect a lot of things — their eating style, their music, their habits of all sorts, and we enter that in a deliberate fashion. But during a third of our lives, eight hours a day, traditional offices thrust us —
Arianna: Oh yeah.
Matt: — in sometimes tight quarters, depending on how fast the start up is growing, with people who we did not necessarily screen for those things.
Arianna: I didn’t sign up for this, yeah. [laughter] Totally.
Matt: And it’s funny, my friends who work at offices, sometimes their complaints — the things that really, really, really bother them — might be the temperature in the room, or there’s someone who calls their mom everyday and it’s an annoying conversation, or the person who brings in a really strong curry three times a week. You’ve probably had examples of this yourself that you think — like, you don’t like open offices for example. That’s a pretty specific taste.
Arianna: Yeah. Well I mean that — I think the most egregious example of this was when I was working at Facebook. I was right in the middle of basically the main walkway to everything. So if you wanted to get to the door you went by my desk, in order to get to the cafeteria, the bathroom, literally anywhere, you had to walk by my desk. And so this was an office of, at that point in time, three hundred people and —
Matt: So you knew most of them probably, yeah.
Arianna: Yeah, because I tend to be pretty social and again — small team. But I couldn’t get anything done because I was literally in the middle of everything and everyone would be like oh hey, how’s your weekend… And I’d be like, oh my god, six hours later and I’ve accomplished nothing.
So then what I started doing was barricading myself. I was booking conference rooms, which technically you weren’t supposed to do, but whoops, [laughs] to just go in there and work. So that’s where I realized okay, actually what I like is having other people around and the ability to go and talk to my colleague if I need to, be present in meetings, and all these sorts of things — but also an independent workspace where I can just be alone and think — that’s where my preference on that emerged personally.
Matt: And how much of your day then would you say was like work [where you] needed to talk to other people, versus work where you needed to be in that grind mode?
Arianna: For me, I was in that — they call it Global Marketing Solutions, aka Sales. So for me, I had a lot of time talking to people both internally and externally, and I was working in a somewhat cross-functional role, so I had to triangulate with engineering and design sometimes in addition to the client. So there was definitely a lot of active collaboration that I was doing. So I would say maybe two to three hours a day I needed to be alone, just answering emails or things like that, and the rest of the day was a little bit more interactive.
Matt: That’s a high percentage, that’s 40 percent of a normal workday.
Arianna: Yeah.
Matt: And that definitely varies per role, of course. If you’re an engineer, maybe that’s higher, a writer — I feel like a lot of engineers and writers replied to your tweet.
Arianna: Yeah, definitely. But I think even with engineering, it depends. What are you doing? Because if you are just executing on something then yeah, I agree, but so much of what, for example, my portfolio of companies [is] doing is not just like, “Oh, write the code to do the thing,” it’s “Figure out what are we writing code to do. What is the product that we’re building to begin with, how should it be built?” And a lot of that is much more collaborative than just going off and writing code in a silo.
Because what happens — and again this is par for the course in terms of companies I see — if you just focus on going off and writing all the code rather than thinking about “oh, what are we building, what do our customers actually need?” it’s easy to just spend a lot of time writing code that doesn’t actually solve the problem you were trying to solve for. So I think especially, again, particularly in the very early days of the company when you’re trying to figure out product-market fit, you need to be talking to your team, and you need to be talking to your customers, and a lot of that is less silo work and more collaborative.
Matt: So if you were going to fish in a pool and put everyone in the same office, then you want to fish in the biggest pool possible. And the hubs are probably better for that.
Arianna: Mhm.
Matt: Historically we’ve said that’s ’cause of the universities and the previous companies there. What changed is now people can learn the skills to be amazing at these things all over. They can follow your Twitter, they can read Fred Wilson’s blog, they can — the resources are really going online in an amazing way. And so when you multiply that, and if you assume talent and intelligence is equally distributed but opportunity wasn’t historically, but is becoming more equally distributed with the internet, there’s just a lot of good people out there, and so there’s an arbitrage opportunity in that they might not have — the 5,000 thousand companies that are in the Bay Area that are interesting to work at. So the 100 interesting distributed companies have a lot more access to what I would call an ocean versus a pool of talent.
Arianna: Yeah I think that’s true, and that is why I think, at least in part, we are seeing a trend in that direction. But I will push back on the idea that all of this can be learned online. There is definitely a lot that can be learned online and I have learned — I studied nothing related to anything investment-related, so everything I’ve learned in that category has been through a combination of reading stuff online, but also learning from peers. And that’s true both if you’re an operator and if you’re an investor. And the highest concentration of that is going to be where? Probably the Bay Area.
Matt: I totally agree peer and other mentorship is super important, but I definitely have people I’m very, very close to that I might only see once every year or two. You can just build really great relationships mediated through the internet. And then you run into each other at a conference, which is, by the way, neither of your cities you’re normally in —
Arianna: Sure.
Matt: And that can be the in-person spark. There is one place where I think we agree one hundred and a million percent, which is the importance of that in-person interaction — and something I really recommend — that distributed companies do meetups.
Arianna: Yup.
Matt: Because there is a level of trust. I call it the breaking-bread moment. If we were to share a meal, there’s just something built into us, a trust is engendered there that then increases the bandwidth and our ability to connect when we’re not physically collocated.
So our policy is the whole company comes together once a year. We call it the Grand Meetup. And the individual teams, which are anywhere from five to fifteen people, get together two or three times a year outside of that. So we tell people when they join Automattic, it’s just about four weeks of travel per year and then the other forty-eight weeks, be wherever you want. Which is the reverse where most in-office companies say, “Be here forty-eight weeks a year, the other four weeks you can do whatever you want.”
Arianna: Yeah, definitely.
Matt: We just try to flip that. But that in-person time is what makes the whole thing work. Text is the toughest, right? Because I think it’s very easy to misunderstand. There’s usually a charitable way and a non-charitable way to read any message. And it’s almost like in a tone of voice that —
Arianna: Like how would this person say this?
Matt: Yeah.
Arianna: Yeah and if you know them and you trust them…
Matt: [reciting in various intonations] Did you get to that report? Did you get to that report? Like, did you get to that report..?
Arianna: Yeah.
Matt: [There are] so many variations in how it could be said. And we bring our own biases into that. When I read something you’ve sent me, if I’m nervous about how you’re feeling about me, I might read it in a way that you’re judging me or something. So that’s the hardest thing. Humor doesn’t always come through in text. But once you meet someone…
Arianna: Sarcasm. [laughs]
Matt: Yeah, you can kinda hear their voice and like it’s kinda uncanny.
Arianna: Yeah I agree. And I think that’s why, especially at the beginning of a working relationship, I think it’s really helpful to spend time in person. Now that may or may not always be possible but it does really help set the tone for how you will be perceiving interactions with that person.
Matt: Yeah. I mean everything you said and everything you’ve observed, I believe.
Arianna: [laughs] Well look at that! Twitter, a little bit lost in context. Yeah.
Matt: Well there’s some things that I think you might be missing, some other advantages, especially if you go whole hog on the distributed approach. But if anyone’s listening to this, whether you’re doing one or the other, I would say that all the things you raised are things that distributed companies need to compensate for.
Arianna: Yup.
Matt: And collaboration is really, really important. And that brainstorming — you know there’s now tools that make it better. InVision, actually, which is a distributed company, makes a pretty good one. Zoom is really good. [There are] all these things that are doing really well. But there is something about being around a table.
Arianna: Yeah.
Matt: One thing I do see though is that some of the most successful startups I’ve seen or invested in have been very thoughtful about how they work together, whether they’re in-person or distributed. They actually devote a lot of engineering resources, a lot of thought, the founders spend a lot of time on the mission, the documents, repeating it, getting everyone on the same page. Sometimes I liken it — I’m not a baseball guy but I’m gonna make a sports analogy. You know when they go up before they’re about to bat and they have like three bats and they swing that a few times so it’s a little harder?
Arianna: Yeah, yeah.
Matt: But then when they have the one bat, I guess it makes it easier, I don’t actually know. I think that first 15 people is kind of like that. If you’re distributed, you have to work harder for those first 15 people. But it makes that 15 to 150 way easier. You run into the problems of — how do we document and get everyone on the same page — earlier.
Arianna: Right, so if you can do it at that scale — yeah yeah, totally.
Matt: One of the biggest issues I see in in-person groups is when you have that meeting and you think everyone agrees and they don’t really, right?
Arianna: Hmm… yeah.
Matt: We’ve all been in those meetings.
Arianna: Totally.
Matt: We’ve all seen that. And it didn’t matter that we were all in the same room and had a white board and spent an hour, hour and a half together.
Arianna: Yeah, everyone says “Yeah, yeah,” and then everyone leaves and they’re like “Did you think that was good?” and the other person’s like, “No.” [laughs] And it’s like, what did we just do for an hour?
Matt: Right? Or even if we all agreed emphatically in the meeting, we might’ve had a different definition of what we were agreeing on.
Arianna: Yeah.
Matt: That’s the most common one I see. That’s why notes are such valuable things in meetings. I think note-taker is the most powerful position to be in.
Arianna: Hmm, interesting, yeah.
Matt: It’s kind of like the first draft of history, it’s journalism.
Arianna: Right, right, yeah, it’s true.
Matt: And that’s where you really see — Did we all agree and think about the same thing?
Arianna: Mhm, yeah it’s actually been interesting a few times to see somebody else’s notes and be like, “Is that what you got? Because that was not what I got.” So it’s — even in person there can certainly be a lot lost in translation.
Matt: A common pattern that I really like about distributed meetings — let’s say meetings on Zoom — is you’ve got the Zoom here and then you have a shared Google Doc in the other, and someone’s the designated note-taker but you can read what they’re writing as they’re writing. And then again it leads to that clarity because we’re actually writing down — we’re agreeing on words that represent what we thought this meeting represented or the decision it came to.
Arianna: No, it’s true, but I think, for example, I get much more distracted if I’m having a conversation with you and we can look at each other, I’m generally much better able to be there. Whereas if it’s a screen it’s like oh, can I open this window behind this window so I can do this other thing at the same time.
Matt: Mhmmm.
Arianna: It becomes — my phone goes off.
Matt: It takes practice, for sure.
Arianna: Yeah, things that I wouldn’t do if you and I are chatting unless we’re really good friends and I’m expecting something important. I wouldn’t take out my phone and be messaging on it. It’s just easier to get distracted by that sort of thing if the person’s not there in real life.
Matt: In a distributed company it’s one of the personal development things that people really have to work on is how to go into that mode where things aren’t popping in. I definitely have to close all windows ’cause if I see a chat message come in or something…
Arianna: It’s like, oh what’s that? Yeah…
Matt: I have most of the bubbles, the number bubbles, turned off on my computer. There’s apps like Focus and things that will actually shut down access to other websites.
Arianna: Yeah. But I find even my brain, even if there’s no external notifications, my brain will just go off. [laughs]
Matt: Yeah. I would argue that’s practice.
Arianna: Mm. Okay. Yeah, maybe.
Matt: Yeah it’s one of those habit things.
Arianna: Maybe I just need to meditate more still. [laughs]
Matt: I don’t know about meditating but I definitely do it sometimes where if I find myself getting really distracted at my desk, I’ll take my laptop to some place else just to get that practice in.
It’d be a waste if we [had] a blockchain expert on here and [didn’t] talk about blockchain a little bit. Do you think there’s any interactions between — and I will say the mental incongruity of this massively distributed ledger system and the in-office bias — but does blockchain fit into future of work at all?
Arianna: Yeah.
Matt: Anything you’ve seen?
Arianna: Yeah I think it’s a great point. And it’s funny because I definitely think a lot of the promise has been “Ah, everything is distributed, decentralized, blah, blah, blah.” And in reality what I think teams are realizing is that especially in the early days of something, it’s very hard to build a network or a project if you don’t have a tight-knit group of people working on the thing. So physical centralization is one facet of that, there are many other kinds of —
Matt: Kind of shortcut to get that alignment.
Arianna: Yeah, mhm, exactly. But I think in general teams are saying “We’re gonna start out pretty centralized.” And I mean that both in physical location but also in — how do we make decisions. So is it the core team that’s making decisions or is it the community? Can the community vote on certain proposals and how the protocol should evolve, for example? Then, from there, as the network becomes bigger and more mature, more stable, then they move towards a more decentralized model. I think that’s both in terms of how they make decisions and how the protocol is governed, as well as where [the team is] and the people who are contributing to things.
I think crypto has definitely been more distributed than most other kinds of companies or projects. But I still see a very strong concentration of teams in, for example, the Bay Area and to some extent New York, particularly ones that are working on financial infrastructure. Because again, where is a high concentration of engineers? It turns out the Bay Area, New York also. And particularly ones who have the relevant backgrounds and interest oftentimes to be building some of these things. So I would say it’s more distributed but it’s still actually — we’re still definitely seeing strong hubs in, for example, those two places.
Matt: I wonder as well by hypothesis — which you can agree or disagree with — that the hype around blockchain attracted a lot of folks for a while there. And so I mean — I remember you said lifestyle business earlier. Maybe a lot of people who weren’t fully in it or didn’t fully understand what a startup required —
Arianna: Yeah.
Matt: And those teams might’ve coincided with some of the more distributed ones or ones where they didn’t do the work to get together.
Arianna: Oh yeah, definitely.
Matt: You might’ve seen more than most investors, a higher percentage of really just terrible…
Arianna: Oh for sure. And one of the things about prices having come down significantly since, for example, 2017, is just the fact that there’s so much less garbage to wade through.
Matt: It’s cleared it out a lot, right?
Arianna: Yeah, a hundred percent. So the people who are starting teams now are much more dedicated. I would say the volume of deals has gone down significantly but the quality has increased dramatically, which is actually a really good sign. So from my perspective now it’s a great time to be investing in the space because it’s still pre-hype. I think we’ll probably have another crazy bull run at some point but we’re before that and the people who are starting teams now, distributed or not, are much more legitimate and committed to whatever it is they’re building.
Matt: A big challenge for distributed companies is payroll and payments. Like I said, we have people in sixty-five countries. Are you seeing anything there?
Arianna: Yeah. Well, I think stablecoins are super important for that point in particular and —
Matt: Just for people who might not know…
Arianna: Yeah, sure. There’s a few different models but the main idea is that you have a digital asset that is in some ways like Bitcoin but rather than fluctuating in price it holds a peg, presumably to one dollar, let’s say. And so what that allows for is basically you avoid the issue of volatility. So I don’t have to be worried that my next month’s salary could be four dollars or it could be 50,000 dollars, which is an exaggerated version of what might happen today if you were being paid your salary in Bitcoin. Which, by the way, some people still opt to do, especially teams who have folks who are in other parts of the world. In many cases they have opted to do crypto-payments because it’s just easier. But in general the volatility is a problem because you have to pay your rent and your rent is not fluctuating, your rent is stable.
Matt: By the way, this is also why we pay people in local currencies. I remember very distinctly, I think it was a colleague in Ireland coming to me, he’s like “Hey, my paycheck is going down every month and my bills are the same. So this is gonna cross at some point and I’m gonna — it’s getting tighter and tighter.”
Arianna: This is a problem.
Matt: And so I realized, oh yeah, it makes perfect sense, you should be paid in whatever your costs are denominated in.
Arianna: Yeah, absolutely.
Matt: And the company can absorb [those] swings a little easier than a person can.
Arianna: An individual, mhm, yeah. The idea with a stablecoin is that you could be paid in cryptocurrency but it wouldn’t need to be fluctuating in value. And so I think that was a big gating factor for a lot of teams or companies that wanted to pay in crypto. Now I’m not saying that all [of] the sudden everyone’s going to want to be paid in crypto, but now that stablecoins are in existence — like Dai is one of the most popular ones.
Matt: How do you spell that?
Arianna: D-A-I.
Matt: Okay, okay.
Arianna: Yeah, yeah. It’s — sorry, I get deep in my crypto rabbit hole, it’s —
Matt: I don’t mind asking dumb questions.
Arianna: No, no it’s a perfectly reasonable question. [laughter]
Matt: Weren’t there some stablecoins that there were some allegations around that it wasn’t all there or they weren’t fully backed?
Arianna: Yes, so you’re probably referring to Tether. The issue there is, in some cases, these things are not easy to audit. There’s different models for stablecoins. So [there are] ones that are basically — give us a dollar, we’ll give you a digital dollar. And then there are ones that are more regulated by smart contracts. So a piece of computer code that executes some sort of function, for example —
Matt: Like if this then that?
Arianna: Kind of, yeah, at the most basic level. And so you could say, if this person dies, then release their Bitcoin to this other Bitcoin address. The good thing about it is it doesn’t require me to trust you necessarily. Obviously I have to trust that the code is valid but it allows me to basically interact with a machine rather than an individual. And you can bake in lots of rules to basically create money that is programmable, which has a lot of different sorts of applications.
Matt: And Ether is the most popular there? Ethereum?
Arianna: Yeah I would say… Mhm. Yeah, Ethereum is definitely the most used platform for that sort of thing.
Matt: So some of these stablecoins are built on smart contracts?
Arianna: Mhm.
Matt: So how does that work?
Arianna: So let’s use an example to make it concrete. I just referred to Dai, which is the — basically pegged to a dollar, stable currency of the Maker system. And Maker, by the way, is built on top of Ethereum. So the way Maker works is basically — let’s say I have $150 worth of Ether but I need to pay my bills, or I want to lever up on my Ether position because I’m a trader. So I don’t want to sell my Ether but I want dollars, basically, what can I do?
I can create — it’s called a CDP, collateralized debt position, with Maker. So I send to this smart contract, I send it a $150 worth of Ether. So what it does is it sends me back $100 worth of Dai. So I still own my original collateral but I have this stablecoin available now to me in a smaller percentage. And that can be used again for a number of different things. I can go buy more Ether with it so I have exposure to more than my original position, or I could use that to pay off my loans. I don’t know. [There are] a number of things that you could do with it obviously.
But that is pretty incredible because, if I have a bunch of Ether, how else can I get some sort of stable U.S. currency from that? I’d either have to sell it or — a bank is not gonna accept that as collateral. So we’re starting to see this emergence of very interesting new financial ecosystems and having the ability to have a crypto version of a dollar is a very important part of that and —
Matt: It’s a programmable dollar. That’s so useful.
Arianna: Exactly, yeah, yeah. So I am super excited about that whole category of things.
Matt: Speaking of smart contracts, and this is where we’ll end, I’ve heard pitches where smart contracts can be used for massively distributed work arrangements. Where you and I — there’s no company, the company is just a series of smart contracts. Plausible, implausible? Any companies you’ve seen that seem cool like that?
Arianna: Yeah. DAOs or Decentralized Autonomous Organizations definitely play off that idea and want to implement that model in a whole variety of ways. And this is not a new idea, by the way.
Matt: It popped up in journalism the other day, right? Like there was some journalist saying “I don’t get paid as a freelancer all the time,” and there was something, some platform saying that this would be like a smart contract; when the writing is delivered, the payment gets delivered.
Arianna: We’re gonna see more of that. There is definitely a lot of complexity because in reality you’re still involving people in a lot of these processes and people are complicated and messy and there’s regulation and there’s compliance and [there are] all these other things where people are like, “Oh you can make a decentralized Airbnb.” And I’m like, “Yeah okay, but who’s gonna pick up the phone if there’s a problem? [There are] all these trust and safety considerations. A lot of this stuff is not gonna be fully automatable for hundreds of years.
Matt: Hundreds? Wow.
Arianna: I mean, before we eliminate the need for people in that context I think — I mean who knows, I might be wrong, but I think it’ll be a while.
Matt: If you eliminate the people who needs the Airbnb then?
Arianna: Right, exactly. [laughter] Yeah, just get rid of them from the process entirely. Yeah I think [there are] a lot of human elements and challenges that come into the picture. But for example, I think these platform systems of smart contracts can be really interesting for fundraising as well, and that’s how Ether rose to be well known — was being used as a platform for aggregating capital. And that’s, again, a system of smart contracts.
Matt: If you were to look maybe not 200 years in the future but 20, what percentage of jobs do you think will be primarily distributed, not working in a central office?
Arianna: I still think it’ll be fairly low, like probably under 25 percent.
Matt: Oh. That’s higher than some people who believe in distributed work say, so…
Arianna: Yeah no that’s fair.
Matt: So that’s not bad.
Arianna: Yeah.
Matt: Well we’ll see in twenty years.
Arianna: We will, we will.
Matt: Until then, thank you so much Arianna for coming on. I really loved the conversation and really appreciate it.
Arianna: Thank you.
Matt: That was Arianna Simpson. You can find her on Twitter at @ariannasimpson—that’s A-R-I-A-N-N-A Simpson—or at her personal site, ariannasimpson.com.
I was glad to have the opportunity to speak with folks like Arianna, who are challenging my own beliefs when it comes to the future of work. There are some real hurdles—hurdles that we consciously work through every day at Automattic—and it’s important to understand them and fix them.
On the other hand, how encouraging is it to hear about the promise of payroll on the blockchain? If stablecoins can overcome the volatility problems that plague bitcoin, it will become easier than ever for distributed companies to sprout across the globe, in the places we least expect it.
Thanks for joining us.
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