Why Remote Companies Are More Profitable (with Liam Martin, CEO of Time Doctor)

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Today, it’s my great pleasure to host Liam Martin, the co-founder and CEO of Time Doctor, a time-tracking tool, and the founder of Running Remote, a conference about remote work launched in 2017.

As Liam told me, everything he does focuses on one single mission: empowering the world’s transition toward remote work as quickly as possible, as he believes this will make humanity happier. 

Today, we’ll discuss focusing on outputs, managing asynchronously, and why remote companies are more profitable.

Here’s what I picked up from this fascinating conversation. 

1. Time Tracking to Understand Effectiveness

‍While time tracking is controversial, Liam believes it must be done in the context of radical transparency. And that if you measure your inputs at work better, you can get more and better outputs. Microsoft research shows that 76% of people say they’re more productive working from home, but managers say they are not. This is why measuring work is important to Liam, as it makes this conversation objective. ‍

2. Remote, Work-Life Balance, and Hybrid‍

A longitudinal study from Liam’s Timedoctor data shows that while remote employees’ output per week is higher, output per hour is lower. Remote workers stretch out their weeks more, melting work and life together. Liam says that remote workers need to learn to create more boundaries between life and work. And that therefore, there may actually be a great role for hybrid work, where you spend your synchronous working time in an office and your asynchronous work remotely.‍

3. Asynchronous Management

From twenty years of remote work experience and studying the best remote companies, Liam embraced a model called asynchronous management, where you lead people without synchronously interacting with them. In fact, project management platforms can do the lion share of what management used to be, And as long as you focus on the outputs someone creates, that should be totally possible. ‍

4. Remote as the Norm

‍Liam remarks that 82% of new tech companies in San Francisco are remote or hybrid, compared to 16% pre-pandemic. If all new companies embrace this working model, this will eventually become the norm. So, if you as an existing company don’t embrace this model, you will not be able to compete as it decreases costs. 

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You can find the full episode and transcript here:

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Transcript:

Daan van Rossum: I just want to get the most controversial question out of the way, because typically when you talk about time tracking with people, it doesn't sound like it's human-centric. It doesn't sound that positive. Is there a way that we can check people's time and do it in a very people-centric way?

‍Liam Martin: We can. I have something that I mentioned in my book, which is radical transparency, which is giving everyone access to everyone else's data. What we do throughout all of our companies is we can measure it, we distribute it internally. So, I'm not scared about measuring the input as long as you're trying to optimize that input towards an output, essentially. 

‍Daan van Rossum: That sounds like your personal productivity; you want to track that, measure that, and show what you spend your time on, whether that's worthwhile or not, which I'm a big proponent of.

Do you think that's how companies use tools like Time Doctor, or is it more just to see who's working and who's not working? Because obviously, that's like the stigma that the category has.

‍Liam Martin: That is definitely, I would say, the majority of people right now that currently use Time Doctor are simply using it as a tool to be able to figure out, Are you working or are you not working?

However, there is a growing minority, and I would probably almost say that at this point, we're close to the majority of our user base. We have hundreds of thousands of users across our network. That are actually using it to be able to optimize for outputs and not necessarily inputs. We have variables like, can we cross-reference your Zendesk data or your Salesforce data to be able to figure out what activities you actually do throughout your workday that optimize towards your success? And which actions actually celebrate your success? 

‍Daan van Rossum: I totally buy into the idea that it's really about people's own productivity. If you want to be more productive, and I always talk about meaningful productivity, not productivity just to send emails or Slack messages, but actually getting things done that are valuable and meaningful to you.

If you want to get better at that, then obviously you need data, and that's the whole quantifiable self-movement, so from that side, it makes total sense. 

On the other side, you have employers that are using it just to see if people are logging on. Are people doing work? Are they being distracted?

And so it sounds like for you, the mission is more to actually get those two worlds together, where you need to educate people on how to use this as a tool to do more of what's important for you and your role. Then, through that, get the employers on board to use it in a different way.

Liam Martin: 76% of employees say they're more productive when they work from home. 67% of managers say they aren't. 

‍Daan van Rossum: Microsoft research. Who's right? How do we define productivity? 

‍Liam Martin: “It doesn't matter. We're going back to the office, go back to the office. You're not productive when you work from home.” “Why? I'm more productive when I work from home.” “I'm the boss. Go back to the office. That's it.” 

Why don't we actually define this and create a way to measure it so that we can optimize for those outputs. This is the reason why everyone's going back to the office. It is the only reason. And I wish there were other reasons. No one really wants to talk about this, but the reality is that if there's eyes on the person in the office, then I know they're working. This is the reason why everyone is going back to the office. 

‍Daan van Rossum: Managing by walking around, managing by looking over the shoulder.

‍Liam Martin: Essentially, right. If we could actually prove that workers were more productive when they work from home, and I have the data, there's a bunch of other studies that can back this up, not just my data sources. If we could prove that remote employees are more productive when they work from home, that's one of the biggest reasons to be able to stop this backward trend that we're currently seeing.

And it is getting aggressive in terms of that push back to the office, so I've smelt that in the air. It's also showing up in a lot of the data sets and the surveys that we're seeing roll out, but essentially, I think that we're creating irrevocable damage at this point to be able to not talk about the pragmatics of remote work and where they need to be, and not just talking about serving employees’ needs, but serving managers, leaderships, and corporations, and recognizing where they need to fit inside of this mix, because we're losing.

‍Daan van Rossum: Absolutely. It's the reason why engagement levels are as low as they are. I thought it was really interesting in the 23-gallon data. They've been running that since 2000. But in this year's data, they said, “Well, there's great news. Engagement has grown to double-digit numbers.” And I was like, “Okay, that's great.”

But it was like 13%–23%. That's fantastic. It still means that three-quarters of the workforce are actively disengaged. Where does that come from? It comes from these kinds of insane things, like I have this, as someone from Brian's team calls it “executive nostalgia.”

I have this warm feeling about being in the office together. Therefore, you should be here too, but we're saying it to a generation that has worked with mostly Gen Z's here; they've never been in an office or they have never really seen the need for an office because their whole life is online and everything that they do goes through digital channels, and it's all open and digital, and it just doesn't make sense to them.

So, you mentioned you have hundreds of thousands of users on the platform, and that must be generating a ton of data. Is there anything interesting that came from that data? Is there anything that managers could use to become better managers and create a better employee experience for people? 

‍Liam Martin: Yes, but we're probably going to be on this podcast for 17 hours if I discuss all of those different things. We did a really interesting longitudinal study pre- and post-COVID. We had a lot of clients that were using Time Doctor pre-COVID, and then they immediately switched to remote in a day. And it's obviously not a very good A/B split test. Because you don't have a control group that's off on one side. But when you see it with multiple companies and you start to see these trends occur, the data is pretty clear.

So for us, we see approximately a 10%–15% increase in overall output. And we define output by the outcomes that are being generated. A Zendesk ticket is being completed. A sale is being completed. Things that you can essentially widgetize across organizations that we have the outcome components to.

But some of the other things that we've identified are also quite interesting. Remote workers work longer. They have a longer work day than in-office employees, but they work differently. So they don't work as hard. So their output per week is higher. But their output per hour is lower, which is a really interesting phenomenon that we found not just in one or two companies, but it's a trend across a lot of the organizations that we were tracking that had this switch towards their work.

What we identified was that people were taking, instead of a 30-minute lunch, an hour and a half lunch, and they'd probably sit down with their wives at noon and go back up to their office or to their bedroom at 1:30 instead of 12:30, or maybe in the afternoon, they might run off to Costco and do some shopping or something like that, but then later on, they would work late into the evening to be able to make that time up.

So that work day expanded. I actually don't know what the long-term implications would be for work-life balance. This is still a pretty open question for me. But I know that for me, that's the way that I've always worked. 

For me, work and life meld together. I have an office here that I work from. I have a laptop, but everything is connected here, and I sit here to work, and my work doesn't leave this room. So if I need to even go on social media or something like that, I physically pick up the phone and leave the room. It's very Pavlovian for me, but it's really good for overall productivity, and output is just creating a space that's just for work and then a space that isn't.

I think that probably a bunch of remote workers need to learn those lessons to be completely honest with you. As we've seen this pullback into hybrid, right now the majority of the people that we see on our network are hybrid, and I'm the first one to say this because I was very much against hybrid. 

But it looks like the most pragmatic solution for the next evolution in distributed work. Which is, we won't get to full remote work, so you can't be location independent, you can't live in Vietnam as an example, and you can't work for a company in New York, but what we're going to be able to start to have is basically that your synchronous collaboration time is spent in an office, and then your work time is spent asynchronously at your home, your home office, or wherever it might be. 

So, I start to see that as a trend that starts to occur now because we can measure the different IPs between their work environments and then not work environments.

‍Daan van Rossum: Then how do managers deal with all that because the policy is typically set at the company level? So there's typically not that much input that managers can give on how the team will work. How do they navigate this? 

You just mentioned some really great habits. They would have to learn it themselves. Then they have to also do that for their team, and at the same time, they have to do their own work. They have to manage. They have to manage upper management. It creates a lot of tension. 

Is there something you do with the managers in your organization that we could learn from?

‍Liam Martin: In our organization, we've been doing it for almost 20 years. So, it's a little bit of a different game, but essentially, what I did was, by running the conference remotely, I was able to study all of these companies pre-pandemic. We were a community. It was crazy in 2019. The event, I think, had 700 people, and that was the community of remote work.

It was just a bunch of tech nerds, essentially, who just really wanted to be able to build their companies remotely. And we believed that we could do it without necessarily having a central office.

Now, everything is completely changed, but the one thing that they all had in common, which I made the thesis of my book, is something that I called asynchronous management.

It's the ability to manage people without directly synchronously interacting with them through face-to-face communication. One-on-one direct communication. So the concept of the platform being the manager, you mentioned that your team, their Gen Z, probably have project management systems.

They have marketing technologies. They have reporting tools. These are all the managers. The platform is essentially the manager for a large amount of the tasks that a manager classically did when they were in an office. None of those lessons were learned during COVID. It was emergency remote work, so no one really understood how you manage people who work remotely.

A lot of people thought it was just the same as in an office. It's the same deal. It's not. It's very, very different. I was just on a call with Amir, who is the guy who runs Doist, which is a very famous asynchronous organization. And he has an employee who's worked for the company for 17 years.

They have never spoken to this person. This person has never shown up on a video and has never done an audio call. They do not know if this person is an AI or not, but that's asynchronous management. All I'm focused on is the outcome. What outcome can you generate for me? Are you passionate about where we're going?

Are you happy as a worker? Are you producing good work? These are the only things that are important in order to be able to run a successful organization, whether they're in an office or not.

The happy happenstance that occurred out of this whole mess is that we have now been given the opportunity to be able to communicate what I believe is the next best management philosophy, which is asynchronous management, to as many people as possible to be able to say there's a different way of doing it.

We talked before we jumped on the call here about SaaStr, which was a conference that I was at a few weeks ago. Jason Lemkin from SaaStr stated that 82% of new tech companies in San Francisco are remote or hybrid. Pre-pandemic, that was 16%. 

‍Daan van Rossum: That's a huge jump, Wow! 

‍Liam Martin: So, here's the thing that everyone needs to understand: If you're listening to this podcast right now and you think to yourself, “Oh, Liam's just this fundamentalist running remote work guy," The new companies are adopting this new methodology and management mindset very successfully because it's easy to be remote and distributed from day one.

It's relatively difficult to be an on-premises organization that switches to remote. And that's the issue that we've had right now. Forget about how happy it makes workers. It makes workers really happy, but forget about that for right now. It makes you more money. It produces a better return on investment for you as a business owner.

And those little teeny-tiny companies that have popped up in the last couple of years are going to become big boy companies in the next 10 years. And they're going to drink up your milkshake, and you need to be ready to adapt to that model and understand how to manage that because their big strategic advantage is “I'm going to run a business for 30 cents cheaper on the dollar than you because my number one cost, which is labor, is going to be significantly cheaper simply because I'm running a remote distributed model and you're not.” 

Daan van Rossum: That makes total sense. And that should be a total wake-up call for owners, for sure.

Interesting to think about: how can we help managers? Again, it's both a mindset and some very practical things that need to change.

One of those things is that I think there is a lot of noise in the system in terms of what people actually spend their time on. And it's actually really bothering people, but they don't know how to solve it. 

So a much better role for a manager would be to say, “Let's look at the data together” and “You said you had a really busy week last week. You said you were totally overwhelmed and overloaded. Let's look at where you spent that time.”

It's like, why did this happen? Why did that happen? And like you said, one of the things that we then always see is that it's, “Oh, I was looking up this information. So I sent this person a message, and then I was waiting for their reply. And then these are these five steps to just get a problem solved.”

They're actually totally solvable, and it's not a matter of future work. It's totally solvable today.

‍Liam Martin: Oh, absolutely. Not only can it be solved today, it's being done today with a lot of organizations that are successfully executing on asynchronous management when you have the mindset of, “What if I could never talk to anyone inside of the company? How would I get work done?”

Just switch your mind to that mindset. Amazing shit happens on the other end. I'm seeing companies now that are growing at a clip. And we're talking hyper-growth companies that are employing asynchronous management because they've been able to get through all of the BS and bureaucracy of how to run a business and are realizing that you can bring in contractors.

You can actually run a large organization of simply contractors because the manager is not an individual anymore. It's a platform. So, they can come in and learn how to actually do that job quickly and easily, and that's a big shift in 20th-century management that I think is going to take probably a lot longer for everyone to really recognize.

When COVID happened in February of 2020, we had 4% of the US workforce working remotely. By March, it was 45% of the US workforce. That's the biggest shift in work since the industrial revolution. But the industrial revolution took about 80 years, and we did that in March.

No one really understands how crazy that is. That is the biggest thing to happen to work ever, and so we're three years away from that, and now we're just thinking. “Oh, yeah. Okay. Well, let's just go back to the way it was before.” I'm sorry, but the genie is out of the bottle. And there are people that have figured out how to do this more effectively just because a bunch of 50-plus-year-old MBA types are like, “Oh, listen, that's not the way that you do work.”

Wait 10 years! I don't want to get too fundamentalist with you, but wait 10 years. I've been doing this for 20 years. I'm very happy to wait another 10 to be able to figure out that everyone was wrong and we were right.

‍Daan van Rossum: You made a really good point about the startups and the percentage of startups that are going remote first in the Bay Area.

This is basically the innovator's dilemma, like you either see what's happening around you or not. Obviously, your operational model impacts so much of how a company runs, why it's competitive, and why it's attractive for talent. You can adapt to it now, or, let's say, you can wait 10 years and then see what's happened.

And it's like, “Oh, now we're suddenly falling behind because we don't know how to get work done through the talent marketplace,” for example, which I think we have Edie Goldberg on from SHRM this season as well. She has been studying talent marketplaces and fractional work for decades.

Now that shift is finally happening, because if you're working remotely, you're also not dependent anymore on the employees near you or the people near you. You can get someone who may be really good at this one thing, whether they're based in the US or based in the Philippines. That's where suddenly it does make sense, but it requires you to manage in a very, very different way.

Because I think again, even looking at our team, it is the old-school way, and Vietnam is a super office-centered culture. The old-school way is very much like work: showing up and then looking at your inbox and looking at your, maybe Slack in this case, and looking at the people around you. What are we going to do today? What meetings do I have? What are people talking about? That's most urgent. What is my manager shouting about? That's what I'm going to do. 

So there wasn't really that kind of systematic approach even to how we use our time, and maybe it's because of our age or because we have kids, but we've realized how insanely precious our time is. So why would we waste it on anything but extremely meaningfully productive work?

‍Liam Martin: You actually brought up a learning for me right there, which is, what is my manager angry about? Or what is my manager screaming about? That's what I'll respond to. We don't think like that.

One of our values is a self-guided missile. Essentially, everyone knows everything has the same informational advantage as the CEO of the company. So if you have the same informational advantage as the CEO of the company, then you can think like the CEO of the company, and you can think to yourself. I'm a support rep, or I'm a customer success rep that manages a book of business of three million dollars, as an example.

I'm really frustrated about this thing here, which is that there's this process that doesn't work, and I've come up against it, and I can't seem to get it to work properly. I'm waking up on Monday morning, and instead of figuring out what my manager is angry about, I'm instead going to work on that thing.

It's just like that really isn't done in corporate; that's not really done in the classic office environment. It's more of a reactionary way of working as opposed to thinking what I can do to be able to improve my particular situation inside of this organization or improve the organization in its entirety, and I think you hit the nail on the head right there, which is that it is actually true that a lot of these companies that are asynchronous at this point are thinking in that way because they just have access to all that information.

‍Daan van Rossum: It makes people a lot more proactive. So, going back to the theme of agency at work and autonomy at work, you cannot really have that if you're dependent on other people to tell you what to do because there is that information asymmetry. “I don't know what you know.” 

So the moment that you open it up, it actually becomes way better for people because now they know why they're doing what they're doing. And the connection between what I'm doing and what the company is achieving and why that's important is huge for things like, why am I engaged or why would I stick around in this company?

Beautiful. I have so many fantastic insights, and we could talk until it's midnight your time, but I will not do that to you. 

We'd love to close with the same question that I ask everyone and that I've stolen from Tim Ferriss, which is, “If you could put one wish for humanity on a billboard, what would it be besides go remote?" 

‍Liam Martin: I mean do we want one that's remote work related or do we want one that's related from an existential. 

‍Daan van Rossum: It should be Liam-related, so maybe... I was just writing on LinkedIn this morning about David Ogilvy, the founder of the agency I worked for, and he always said, “You get your best work done when you've had two glasses of wine. Not less, not more.” So maybe you're in the perfect position.

‍Liam Martin: I would put up a billboard that would say, “Be comfortable, being uncomfortable.” So, I've recognized that the more that I can be comfortable with uncomfortable situations, uncomfortable conversations, and uncomfortable interactions, the more successful I've been in life, and if I optimize for discomfort in my life, I counterintuitively become a lot more successful.

‍Daan van Rossum: Beautiful. Okay. On that note, we'll end the conversation here. I highly recommend people check out the book “Running Remote” and follow you online. You are on LinkedIn, and obviously check out Time Doctor. I hope to have you again soon because you've had a lot of really great insights here. Thanks for being on. 

‍Liam Martin: Appreciate it. Thanks a lot.