The cross-continental startup: How to build a business despite a 16-hour time difference

Veteran entrepreneur and former Dolby Laboratories executive Jason Johnson and his technical co-founder Hugo Dong recently raised $10 million from IDG-Accel for their security apps business, BlueSprig. Theirs may sound like your typical Silicon Valley start-up story but there’s one important twist – Dong lives and works in Chengdu, China; Johnson in San Francisco. So how do two co-founders separated by the Pacific Ocean and a 16-hour time difference make their business work? We called Johnson to find out.
Why did you decide to look to China for collaborators?
There are only three ways to acquire talent. Steal people. That’s basically what you do in the world of development — there are not good Python or Java (s orcl) or Rails developers sitting around with nothing to do. Number two, you acquire small companies, and number three, you go overseas and either hire people or more commonly, you contract to a contract firm. We’re basically employing techniques number two and number three, number three being unique in that we’ve built our own team of developers in Sichuan province, China.
How did you meet your co-founder?
We were introduced. I was looking for a technical co-founder. He, a fairly brilliant product developer in China, was looking for a partner, so it kind of was the perfect pairing where I needed a development team and he needed access to markets and relationships. IDG-Accel really gets the credit for marrying us together and giving us the capital to build some great products.
How many other team members do you have now and where are they located?
Right now we have about 15 people in China. Nearly everyone is in China at this point because it was easy to quickly hire and get our products developed in record time. Now I’ll backfill positions here in San Francisco, but our intention is to keep the majority of our development in China.
Why build your own team of employees rather than use contractors?
I don’t have any particular issues with contracting. I’ve hired contracting firms in the past. The challenge is, particularly when you’re developing sensitive software like security software, we need people that are committed to our product. With a contract firm you just never know what’s going to happen. You don’t have the ability to incentivize people to stay on a product. Generally, the contract firms don’t guarantee anybody on the team. So frankly we wanted the control that would allow us to build a team that could gel together, build a relationship and be committed.
One nice thing about having such a committed team in Chengdu is that while there’s a lot of burgeoning companies in China, there’s not nearly as many as in Silicon Valley, so I don’t have to worry about my developers getting poached by other software startups in the area. It can and will happen, of course, but not nearly at the rate it happens in Silicon Valley.
What other advantages are there to having a remote, cross-cultural team?
As much as I’ve always been impressed by developers in Silicon Valley, I’m thoroughly impressed with Chinese engineers’ level of commitment and willingness to work very difficult hours and perform superhuman feats. I did not expect to see the level of results I’ve seen and I can’t possibly overstate how dedicated and hungry these young Chinese engineers are to prove themselves and build great products.
What tools do you use to stay in touch and collaborate?
I wish I could say that we had some kind of special tricks and tools. The truth is, aside from the scrum methodology that many startups use to have people standing in a room for a couple of minutes reviewing a project, most teams even here in Silicon Valley are doing a lot of their collaboration using online tools. Long meetings sitting in conference rooms and reviewing project plans, people don’t do that anymore. With 37signals and some of these tools it doesn’t really matter if the person is in the cube next to you or thousands of miles away.
How do you handle the time difference?
It’s very interesting. Here’s kind of my routine. I wake up about 6:00am. It’s around 10:00pm in China and generally they’re still working. I have maybe a couple of hours overlap with them and then they go offline for eight hours. But then they come back online just about the time that my two-and-a-half-year old goes to bed, around 8:00pm my time, and we can review things together. The really neat thing is, I will go to bed, say, 10 or 11:00pm. I will have shot over some requests or some feedback and they then have seven hours to work on those deliverables, to prepare some things for me to review, so that when I get up and I grab my iPad at 6:00am I have an inbox full of messages.
The beauty of this is we operate 24 hours a day, and we have periods of being online at the same time to collaborate but we also have the benefit of these blocks of time where they can do what they do best without any interruption. During my workday I’m not getting all these emails, getting interrupted all the time. I can focus on the things I need to focus on. Likewise, when they’re cranking away, I’m asleep and I’m not bugging them and disrupting their flow. We each get seven or eight hours in which there’s no interruption. So it works really well.
Do you physically visit the office in China?
Yeah, I pop over there every 12-14 weeks.
Do you feel that face time is necessary for the smooth functioning of the team?
Honestly, I can’t tell you that it’s necessary because, Hugo, my co-founder, is there and it’s his team. He built this team. He manages this team and he has a great relationship with his team. I do believe that companies are built on people. I don’t care how good the technology is. I don’t care how great the market opportunity is. If you don’t have a good culture and a good relationship amongst the team, you will fail. So from a tactical perspective, me being over there isn’t necessary, but from a relational perspective I do believe it’s important that I spend time with them. We’re human beings. We each have our specialties but we have a relationship, and I think when I go over there, we are just strengthening our relationship in a way that you can’t do online via email or Skype.
You speak really highly of the talent in China. Do you think the U.S. should be letting more of these highly skilled people come to our country to work?
I think there are lots of people that are discussing this subject and I defer to their expertise, but we obviously have a problem of a shortage of developers in this country, and so we have a need for a near-term solution and a longer-term solution. Longer term we need to modify our educational system. There are several excellent startups that I think are going to upturn this antiquated, four-year college model and hopefully allow us to help the next generation to build great products. Near-term I do believe that it is in the best interests of our country to modify immigration laws and to allow us to bring in highly talented people to help us build our companies.
What are some of the educational startups that are shaking things up that you’re most excited about?
Obviously there are just the simple tools like Khan Academy. Khan Academy is a great thing, and now there are some games — I think Code Wars — that are specifically designed to help people have fun learning how to write code. One particular startup, New Charter University, comes out of Mitch Kapor’s incubator here in San Francisco.
Any other thoughts on the experience of starting a business remotely?
Just to really overplay the Thomas Friedman topic that the world is flat. We need to move away from this anachronistic way of thinking that there is us versus them. We are a global economy and we now have the tools in front of us to eliminate these geographic boundaries that have traditionally kept companies from growing and building great products. I think at some point in time we won’t just be thinking about country geography but also this whole concept around what does it mean to go to an office every day? This whole concept of driving to a box, sitting in a box all day and driving back is going to change. The way we look at a company is going to move away from being a physical building to being something much more virtualized. I think that this is going to be a growing trend and my kids will look back at it and ask the question: ‘Why weren’t all companies built that way?’
Image courtesy of BlueSprig.