Leading Cause of Death of Startups: Real Estate

Ross Mayfield, CEO of SocialText, and a long-time blogger himself, is finally getting an office.

For two years his company has operated virtually, with employees working from their homes across the United States. He calls it "net-enabled bootstrapping" because the company has used technology tools to operate at a low cost and grow from within.

He says real estate is the leading cause of death of startups, and notes:

"I am convinced that being virtual is the best way to start a company. The benefits go beyond cost (although the culture of frugality can go a very long way). In our case, it improves the product. But generally it is more productive. When the bandwidth for collaboration is constrained at times, you gain a certain focus."

Be sure to read the entire post, including the comments. He also notes the downsides of virtual businesses.

Two other blogs have picked up on the post and added their own insights -- check them out too: Steve Shu, and WordPress founder Matt Mullenweg who notes that the WordPress team operates virtually, also. (WordPress is a popular Open Source blogging software.)

I find blogs such as Ross's and Steve's and Matt's -- which discuss their own experiences and observations -- to be excellent sources of insight to "see" trends.

In this case, they give a great sense of how technology startups operate today.

Forget three guys in a garage -- that was your father's startup. Today it's 3 people spread out across the country or even across continents, each in their home offices or back porches with laptops, mobile phones, and WiFi.

For more, read my essay "Trend: Small Businesses Go Virtual."