Business

The virtual business: Doing deals in your pyjamas

  • 4 March 2011
  • From the section Business
Man using laptop in Bryant Park, NYC
Image caption Blue sky thinking: Running a virtual business could mean that when you have an internet connection, you're at work

Sitting at your office desk, squinting in the direction of the distant window as you work through the post-lunch slump, do you dream of starting your own business and being your own boss?

But then you think of the cost of starting your own business - the cost of office space, IT infrastructure, staff, and realise you just can't afford it.

Or can you?

Running a business from home is nothing new. But technology such as the internet and cloud computing is increasingly providing easily-shared lower-cost software options for start-up firms. Cheap internet telephony services let you stay in touch with people half a world away.

Friends Jamie Waldegrave and Chris Huey met at university in Durham before taking jobs in the financial services industry.

In October they quit their jobs and decided to start their own business. TipToken is a group-buying website, and has been live for just three months.

So far uptake has been promising, says Mr Waldegrave.

"We've been really pleased with the response," he says.

"It takes time to grow, but the numbers are moving in the right direction, we're getting more and more traffic to the site and more sales, which is really nice."

Image caption Chris Huey (left) and Jamie Waldegrave say operating virtually was their only option

The partners are the only full-time employees of the company. For any other work that needs to be done they use remote freelancers thousands of miles away, as they don't need full-time staff.

The business is web-based. Skype lets them talk to their developers and designers in India, and for all other IT needs they rely on cloud-based services accessible from anywhere, so they can share data with staff based anywhere in the world.

The self-funded operation started on a shoestring budget, and Mr Waldegrave says working as a virtual company is the only reason they exist.

"The cost of taking on in-house design staff and development, or keeping a local company on retainer would be impossible," he says.

"We don't have to upgrade to bigger offices, and we don't have to worry about employment law. That would have slowed us down a lot. We can do things quicker and faster."

Taken on trust

Mr Waldegrave says that building a relationship with remote workers you can trust is vital.

"The ones we started out with, they were no good, didn't get the work done and it was a real problem. We had to go through the process of getting the deposit we'd paid back and that took a lot of time."

"We do a lot of research on someone before we take them on, and try not to have too many different people."

Image caption The Peopleperhour.com website lets prospective employers see how freelancers have been rated

One of the ways TipToken tries to minimise problems is by using sites such as PeoplePerHour.com, an online marketplace for remote workers.

The company says they've seen a growth in registered users from 50,000 to 136,000 across 150 countries on the back of the virtual business trend.

Chief executive Xenios Thrasyvoulou says the company focuses on providing talent, rather than outsourcing menial tasks.

"They're no less talented than those who are part of your core. It's just that you don't need an SEO [search engine optimisation] person fulltime, and you can't afford it.

"But you want someone to be on your instant messenger, to be able to call on a Saturday and get an answer, in the same way as an employee anywhere in the world."

So how far can you take the virtual company? Mr Thrasyvoulou thinks there are limits.

"It's a fallacy that you can be 100% virtual, it gets to the point where it gets quite draining on the one person that's the owner. You need a core to grow with."

Lingo24's operations director Jack Waley-Cohen agrees. The translation company started as a virtual company. They now have 130 staff spread over four continents.

"Before we got our first office location I was convinced we could carry on being pretty virtual, but I genuinely think there comes a point where you do need people together. Not necessarily all the time, but some of the time."

Mr Waley-Cohen says what they have is a "hybrid" situation - a core physical presence in small offices, with the majority of staff working remotely. He thinks that starting virtually had huge benefits.

"Working virtually in the beginning meant that we've just worked a bit more intelligently," he says.

"We've developed all our systems to give us flexibility you won't have in an office. And as a growing business cost is a major consideration. Even if you have a small team in an office it adds to the overheads."

The company uses a lot of free or publicly available IT tools, including Skype, Google Apps for business, Dropbox and Yammer.

Alone in a crowd

There are disadvantages. Having staff working in isolation, even with a wealth of modern connectivity tools, creates its own problems.

Mr Waley-Cohen says keeping everyone in the loop can be difficult - the company now uses a daily newsletter to keep staff connected.

Textappeal is another company working to a hybrid virtual model.

Founded originally in Paris, the company does transcreation - translation for the advertising and marketing industries. This requires more than just straight language skills, it's about ensuring that advertising and branding translates culturally.

Clients have included a worldwide hotel group. When this hotel firm translated its slogan into Chinese characters, they found later it also meant pig's tail, leading them to engage Textappeal's services.

Image caption Costa Coffee uses Textappeal to make sure they don't make a cultural faux pas

They now work in 151 markets with global brands such as Nikon, Swarovski, and Nokia's luxury mobile brand Vertu.

Co-founder Elliot Polak says their remote workers can feel isolated at times.

"The idea that everyone can work from their home is a nice idea, but most people want to be with other people - it's more stimulating and they come up with better ideas."

The company says it values its remote workers and works hard to help them feel like part of the team, flying their top people in to head office to spend time with each other and the team.

In the 12 years Mr Polak has been in business he has seen a seismic shift in the technology available.

"It's hard to believe we were using fax machines. We could fax each other and find people in different markets who could do these things.

"Over the last two years people have realised that you don't really need offices - you just need talented people and thanks to technology you can connect people up."

Using talented people who have been through a rigorous testing process, but who are local to the countries the brands are breaking into, gives Textappeal the edge, Mr Polak believes.

Pyjama party

For the budding virtual business owner it doesn't have to stop there. If you'd rather your new venture had a more prestigious address than your bedroom, there are companies that can provide you with a postal address and redirection service, telephone answering service, and even meeting rooms when you're in town.

Executive Offices is one of those companies, and their chief executive officer is John Drover. The company has seen huge growth in virtual businesses using their services.

"It allows people working form home to punch above their weight. It's great to work from home but 18 Acacia Avenue doesn't have quite the ring of 23 Berkeley Square."

Image caption Business meeting taking place in Second Life

And if you want to be truly virtual, or just take a meeting while still in your pyjamas, you could join those using the services of virtual world Second Life.

Adam Nelson, executive director at Linden Labs, the company behind Second Life, says that hundreds of companies use Second Life to arrange meetings, conferences with remote workers, training, 3D rapid prototyping, and more.

"Businesses can purchase their own virtual spaces, and build or buy the 3D content and applications that suit their specific needs," Mr Nelson says.

"Many choose to work with a company in our Solution Provider program, qualified experts in creating content and experiences in Second Life.

"Alternately, businesses can choose to use facilities in Second Life provided by third parties - for example, there are several full-service conferencing facilities available."

IBM has held a global conference in Second Life, Northrop Grumman used it for training people to use a bomb disposal robot, and the Children's Memorial Hospital in Chicago used it for a disaster preparedness simulation.

Virtually there

This is just the beginning, according to Milind Govekar of technology analysts Gartner.

"For years we've been talking about globalisation but we didn't really have the tools to manage that. Now we do."

He says the driver behind the acceleration in uptake over the last few years is undoubtedly cloud computing.

"If I've got an idea and I want to do something, it's cheap as chips, as well as the agility it gives me in terms of trying it out."

"It's a generational thing as well. The next generation coming to work are very comfortable with virtual entities, they are digital natives, they've grown up with computers."

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