Remote Work: Startups Prove It's the Future, Wall Street Takes Note

Reports suggest a COVID-19 vaccine may become available in the near future, potentially allowing a return to typical routines sometime in 2021. This is encouraging news. However, a curious trend has emerged: whenever positive vaccine developments are announced, the stock market tends to negatively impact companies that have thrived during stay-at-home conditions, such as Zoom and Peloton.

I am not offering financial guidance, but I believe these businesses will remain successful even as people begin returning to workplaces. While many individuals undoubtedly miss the benefits of in-person interaction – including office collaboration, shared lunches, and spontaneous meetings – it’s unlikely we will revert to a pre-pandemic work model of a full five-day workweek in the office.

Conversations with newer companies that were founded or expanded during the pandemic reveal a clear pattern: they have adapted to remote operations for hiring, sales, and overall management, and many intend to maintain a remote-first approach even after the pandemic subsides. Larger, well-established companies like Dropbox, Facebook, Twitter, and Shopify have also declared their intention to continue providing remote-work options in the future. Numerous other organizations are following suit.

The past year has provided valuable insights into the possibilities of remote work, and these lessons will influence how we approach both education and employment moving forward. It’s reasonable to expect that a portion of the workforce will continue to work remotely, at least part of the time, and a significant number of businesses may adopt a remote-first structure.

Wall Street reactions

The announcement on November 9th regarding the Pfizer vaccine’s efficacy of at least 90% caused significant market disruption. A prevailing investment trend throughout the summer, which involved shifting funds from established, non-technology sectors into software companies, reversed course. Companies that had previously benefited from the pandemic environment experienced declines, while more conventional, and even conservative, businesses saw their stock values increase.

As noted by TechCrunch on that day, Peloton’s stock price experienced a substantial decrease. The indoor cycling company concluded trading on Friday at $125.46 per share. Following the assimilation of the vaccine news, Peloton’s value decreased to $100.01 per share on Monday, representing a decline of just over 20%.

A comparable pattern emerged with Zoom. The stock closed on Friday at $500.11 per share. By the conclusion of regular trading on Monday, Zoom’s value had fallen to $413.24 per share, a decrease of slightly more than 17%. The following day, Zoom’s stock continued to decline, closing at $376.01 per share, nearly 25% lower than its Friday closing price before the vaccine announcement.

Several other stocks also suffered losses: Etsy’s share price decreased by $25, Wayfair experienced a decline, and even Amazon, a major market player, saw a slight reduction in value as investors considered the implications for the future of online retail. The BVP Nasdaq Emerging Cloud Index decreased by over 5%, illustrating the extent to which certain stocks lost value due to growing optimism about a potential return to pre-pandemic conditions within 2021.

However, despite investors’ willingness to sell certain technology stocks, subsequent positive vaccine developments coincided with increasing COVID-19 case numbers, lessening the initial impact of the sell-off.

Since November 9th, the Dow Jones Industrial Average, representing established companies, has slightly outperformed the Nasdaq composite, which is heavily weighted towards technology stocks. However, the difference is minimal—only a point or two—suggesting that investors primarily adjusted the valuations of previously overvalued stocks rather than dismissing the entire global technology sector.

The shift to remote work is here to stay

Despite potential stock market fluctuations following vaccine news, Box co-founder and CEO Aaron Levie suggests that these reactions don't reliably indicate the direction of technology trends, such as the continuation of working from home.

“I generally wouldn’t rely on stock market responses as a predictor of technology’s future trajectory,” Levie stated.

Levie asserts that a transition towards more adaptable work arrangements is unavoidable. While organizations will likely adopt varying strategies regarding the balance between office and home work, he notes that the vast majority of leaders he’s consulted with anticipate remote work remaining a component of their operational model even after the pandemic subsides.

“I haven’t encountered a single CEO or CIO throughout this pandemic who anticipates a complete return to pre-pandemic work conditions. My insights are based on conversations with hundreds of CIOs. The prevailing view is that the future workplace will be hybrid, with the specific balance between remote and in-person work differing based on industry and company culture,” Levie explained.

During the New York Times Dealbook conference, Google CFO Ruth Porat discussed the potential structure of employee returns to the office, confirming they are actively developing the hybrid approach described by Levie.

“Our plan for returning to the office, which is actually more complex than the initial shift to remote work, centers around a hybrid model – a combination of in-office and remote work,” she said. While Google recognizes the benefits of in-person interaction for fostering innovation, she clarified that a daily office presence isn’t necessary for all employees.

“We’ve observed that innovation thrives when people collaborate. This includes both planned interactions within teams and spontaneous connections across different teams, which is why we value bringing people back to the office. However, remote work has also proven effective and can boost productivity by eliminating commute times. Therefore, we will continue to explore the optimal balance between these two approaches,” she added.

Data Supports the Trend

Although some might suggest that personal experiences aren't definitive proof of the lasting shift towards remote work, data from the consulting firm KPMG offers compelling evidence.

During July and August, KPMG conducted a survey of 315 chief executive officers from major companies worldwide, including 100 based in the United States. The survey covered various subjects, notably their perspectives on the future of work following the pandemic. The findings revealed that 76% intend to expand their utilization of digital collaboration technologies, a result consistent with observations made by Levie during conversations with client leaders.

Furthermore, 68% indicated plans to reduce their office footprints based on insights gained throughout the COVID-19 pandemic. A decrease in office space implies a continued prevalence of remote work arrangements. This aligns with the long-term research on remote work patterns conducted by Dion Hinchcliffe, an analyst with Constellation Research.

“The traditional five-day workweek in the office is becoming less common. The expectation is that employees will utilize a smaller office space for specific purposes – such as client interactions, team collaborations, and company-wide meetings – and primarily work remotely when it’s most effective, which will be the majority of the time. I anticipate most individuals will visit the office approximately one to two times per week to maintain connections with the company, but otherwise work from home or directly from client locations,” Hinchcliffe explained.

It is important to recognize that workers in blue-collar professions, who largely maintained in-person work throughout the pandemic, have not experienced these advantages, and have often faced increased challenges.

“Their circumstances have remained largely unchanged, and they have continued to serve essential roles in sectors like transportation, hospitality, retail, and manufacturing. Their jobs have become more difficult and hazardous, and many positions have been eliminated with no prospect of return, contributing to a continuing decline in opportunities for this workforce,” he stated.

Productivity Extends Beyond the Traditional Workplace

Recent experiences have demonstrated the feasibility of completing work tasks remotely, and given the extended period of mandated remote work, Hinchcliffe notes that many professionals have established dedicated workspaces to facilitate continued productivity, even following a return to the office environment.

“A significant amount of time and resources have been dedicated to enhancing worker productivity at home, and the ability to work from any location has proven highly beneficial. Employees have either developed dedicated home office areas or undertaken home improvements and expansions to better support remote work – the Home Depot CIO informed me that their home renovation and addition services are experiencing substantial growth as a result,” he explained.

Karen Mangia, Vice President of Customer and Market Insights at Salesforce and author of “Working from Home, Making the New Normal Work for You,” asserts that the necessary infrastructure is already established, presenting a chance to fundamentally alter our approach to work.

“Companies that leverage the current situation to reassess and reshape their culture, communication methods, and levels of trust will successfully implement long-term work-from-anywhere policies. This proactive approach will result in increased employee engagement and stronger loyalty,” she stated.

The lessons learned throughout this period are too substantial to simply revert to previous practices. The collaborative tools currently utilized for remote work will remain valuable even with a return to shared workspaces, and this experience will undoubtedly reshape our understanding of work permanently, regardless of prevailing financial perspectives.