Commentary

Andrew Conry Murray
 

Meat Space Still Matters In A Web 2.0 World

Web-based communication and collaboration tools are supposed to make physical proximity irrelevant by letting employees work together regardless of where they happen to be. But when it comes to building -- and investing in -- those tools, it turns out proximity is relevant as ever.

Web-based communication and collaboration tools are supposed to make physical proximity irrelevant by letting employees work together regardless of where they happen to be. But when it comes to building -- and investing in -- those tools, it turns out proximity is relevant as ever.For instance, the VC firm Y Combinator requires recipients of its seed money to move to either Cambridge, Mass., or Mountain View, Calif., for three months. And not because Y Combinator provides office or living space (it doesn't).

Y Combinator puts company founders in one location because face-to-face communication is best for solving complicated problems (such as building a software application). Proximity also is essential for Y Combinator's principals to monitor their investments, provide advice, and mediate disputes among founders.


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Another example is Foo Camp. Founded by Tim O'Reilly, Foo Camp is an annual gathering of smart people doing interesting work in a variety of technology fields. Foo Camp helps innovators connect through the lowest of low-tech communication methods: live presentations in front of live audiences.

A recent Deloitte & Touche survey on global VC investing also speaks to the power of proximity. Some 54% of U.S.-based VC companies do not have foreign investments, and 74% of those have no plans to invest overseas in the near future. These numbers are interesting given the increased pace of globalization and the billions of tech-hungry consumers emerging in China, India, and elsewhere around the world.

Of VCs that do invest overseas, the report states "51% invest only with other investors who have a local presence." That's because the VCs want to be physically close to the companies they are investing in, in part because it helps them manage these companies, but also because a local presence provides better knowledge of the culture and environment in which the companies are situated.

It's important for enterprises to recognize the limitations of Internet-mediated communication and collaboration. While the Web has transformed the way we work, there's still no substitute for being there.


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