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Written by Connie Loizos

How Automattic pays its remote employees across different geographies

A growing number of tech companies is telling their employees they can work from anywhere, even after this pandemic has passed. A looming question, however, is how.

Last week, Facebook CEO Mark Zuckerberg told employees that Facebook will adjust the pay of those who choose to move out of the Bay Area and work in different, presumably less expensive, geographies.  But others figuring out their own remote-work strategies might also look to Automattic, the now 15-year-old, heavily venture-backed company that is parent to the publishing platform WordPress; the platform for discovering long-form writing content, Longreads; the comment-filtering service Akismet; and, as of last year, the former social media giant Tumblr; among other businesses.

Automattic, which now employs more than 1,000 employees, has been nearly fully distributed from its founding days and became entirely so in 2017, when the company shut its San Francisco office and told employees they could work from wherever they choose. At the time, founder and CEO Matt Mullenweg told Quartz that most employees were already opting not to come into the coworking space it was providing, so it reasoned its money could be better spent elsewhere.

Because Automattic has always proudly shared its remote-work playbook — including giving employees a stipend to set up their home officesnand paying for travel — we couldn’t help but wonder how it pays its those employees and whether there might be lessons for companies now moving toward a more dispersed future, too. Here’s what we learned from Mullenweg, who answered our related questions via email over the weekend.

The biggest question, of course, is whether Automattic pays employees based on their geography and its related cost of living. In answering, Mullenweg didn’t give a blanket “yes” or “no, ” explaining that at Automattic, “[W]e aim to pay the same rates for the same roles, regardless of geography. Automattic currently has folks in over 75 countries. Sometimes this puts us above or below what may be the market rate for a role in a given area.”

He said it’s not so easy in practice. Among the biggest obstacles to keeping pay in sync is paying employees’ compensation in their local currency, which “can have wide swings, which creates imbalances,” said Mullenweg. Automattic also “generally only adjusts salaries up, so a positive currency swing may bring someone above a global norm for a year or two.”

He thinks that as more companies move in the direction of encouraging — or, at least, allowing — employees to work from anywhere, it may be difficult for them to “immediately switch to normalize salaries.” He says when Automattic started down its path, it “took several years to narrow the ranges people were in,” and that, even today, it’s never “perfectly even — more a direction you’re always heading in.”

We were also interested in Mullenweg’s thoughts about those companies that do adopt localized compensation. Specifically — based on what he has learned over time about employment regulations around the world — we wondered if tech companies that pay people different amounts for the same work might face consequences, legal or otherwise.

“Long term,” said Mullenweg, “I think market forces and the mobility of talent will force employers to stop discriminating on the basis of geography for geographically agnostic roles.” He also said that while he isn’t aware of location or geography currently being a protected class for pay discrimination suits — at least in the U.S. — he thinks that for “moral and competitive reasons, companies will move toward globally fair compensation over time with roles that can be done from anywhere.”

Indeed, Mullenweg suggested that companies have been paying based on local market norms in the past probably can’t get away with that much longer, even while it’s “difficult to fix that immediately” and may be something that needs to be adjusted “over several years, using more frequent or higher raises for the employees that are below your global market norm.” (Conversely, he added, “If you have people significantly above what the norm is across your company, I don’t think it’s fair to ask them to take a salary reduction because it’s a mistake the company made, but it may be unsustainable to bring everyone to that higher level.”)

In fact, the broader takeaway for companies that are moving toward this new future is largely to recognize that it takes time, along with an understanding of a whole lot of factors that don’t come into play with geographically homogenous groups of employees. Think “currency controls, geo-political instability, protectionism, security concerns, and even the impact of someone making 5 to 10 times what their friends and family may make in salary,” said Mullenweg.

It’s all worth it, suggested Mullenweg. Like Zuckerberg — who last week emphasized to employees that a dispersed workforce could “potentially spread more economic opportunity around the country more and potentially around the world more,” and, in turn, “hopefully a more sustainable social and political climate if opportunity can be shared more broadly” —  Mullenweg seems to view more remote work as a kind of equalizing force.

As he told us over the weekend, “You get a lot of richness, access to a global talent pool, and I think a positive impact on the world by spreading economic opportunity more widely than it has been in the past.”

Why localized compensation in a work-anywhere world isn’t so simple

Last Thursday, Mark Zuckerberg told Facebook’s 48,000 employees that he expects upwards of 50% of the company will be working remotely within 10 years. After outlining many of the advantages that remote work confers — including to “potentially spread more economic opportunity around the country and potentially around the world” — he added that those who choose to move to other places in the U.S. or elsewhere will be paid based on where they live.

“We’ll localize everybody’s comp on January 1,” Zuckerberg said. “They can do whatever they want through the rest of the year, but by the end of the year they should either come back to the Bay Area or they need to tell us where they are.”

Facebook isn’t pioneering something entirely new. The concept of localized compensation has been around for some time, and it’s used by tech companies like GitHub that have primarily distributed workforces. Still, questions about whether it’s fair to pay employees based on their location are sure to grow as more outfits adopt remote-work policies.

Despite Facebook’s uncharacteristic transparency about its thinking, not everyone thinks the tactic makes sense.

One longtime Bay Area recruiter who typically focuses on executive searches calls “disparate pay for the same work” a “dangerous place to be.” Explains the recruiter, Jon Holman, “Even if you invoke the geographic disparity arithmetic based almost entirely on housing costs, what if a new openness to telecommuting means that more women or people of color can aspire to some of these jobs? Are you going to pay them less than the mostly white and Asian-American engineers in the Bay Area? I doubt it.”

Virtual events startup Run The World just nabbed $10.8 million from a16z and Founders Fund

Run The World, a year-old startup that’s based in Mountain View, Calif., and has small teams both in China and Taiwan, just nabbed $10.8 million in Series A funding co-led by earlier backer Andreessen Horowitz and new backer Founders Fund.

It’s easy to understand the firms’ interest in the company, whose platform features every functionality that a conference organizer might need in a time of a pandemic and even afterward, given that many outfits are rethinking more permanently how to produce events and ways to include farther-flung participants. Think video conferencing, ticketing, interactivity and networking.

We’d written about the startup a few months ago as it was launching with $4.3 million in seed funding led by Andreessen partner Connie Chan, who was joined by a slew of other seed-stage backers, including Pear Ventures, GSR Ventures, and Unanimous Capital. Perhaps unsurprisingly given the current climate, Run The World has received a fair amount of traction since, according to cofounder and CEO  Xiaoyin Qu, who’d previously led products for both Facebook and Instagram.

“Since we launched in February —  and waived all set-up fees for events impacted by the coronavirus — we are receiving hundreds of inbound event requests each day,” Qu says. More specifically, she says the startup has doubled the size of its core team to 30 employees and enabled organizers from a wide variety of countries to oversee more than 2,000 events at this point.

Qu says that a lot of event planners who’ve used Zoom to run webinars are now choosing Run The World instead because of its focus on engagement and social features. For example, attendees to an event on the platform are invited to create a video profile akin to an Instagram Story that can help inform other attendees about who they are. It also organizes related “cocktail parties” where it can match attendees for several minutes at a time, and attendees can choose who they want to follow up with afterward.

That heavy focus on social networking isn’t accidental. Qu met her cofounder,  Xuan Jiang, at Facebook, where Jiang was a technical lead for Facebook events, ads and stories.

Of course, Run The World —  which takes 25% of ticket sales in exchange for everything from the templates used, to ticket sales, to payment processing, and streaming and so forth — still has very stiff competition in Zoom. The nine-year-old company has seen adoption by consumers soar since February, with 300 million daily meeting participants using the service as of April’s end.

Not only is it hard to overcome that kind of network effect, but Run The World is hardly alone in trying to steer event organizers its way. Earlier this week, for example, Bevy, an events software business cofounded by the founder of the events series Startup Grind, announced it has raised $15 million in Series B funding led by Accel. Other young online events platforms to similarly raise venture backing in recent months include London-based Hopin (who recent round was also led by Accel, interestingly) and Paris-based Eventmaker.

Still, the fresh funding should help. While Run The World has grown “entirely organically through word of mouth” to date, says Qu, the startup plans to grow its team and will presumably start spending at least a bit on marketing.

It could well get a boost on this last front by its social media savvy investors.

In addition to a16z and founders fund, numerous other backers in its Series A include Will Smith’s Dreamers VC and Kevin Hart’s Hartbeat Capital.