Nick Bloom 5:32
great question. It’s been kind of three phases. I would say, before the pandemic, I was working on it. rarely did I get that involved, you know, big picture stuff. I did meet President Obama back in 2014. I did about you know, I did a TED talk, etc. But then 2020 was the most extreme. So 2020, everyone had just no idea what was going on. And so I spent a lot of time talking to, you know, exact CEOs, leaders of massive companies, it was kind of astounding, you’re like, there’s a who’s who in the business world, and one on one calls with these guys, like, you know, Sat Sat in a Dell or David Solomon, all kinds of folks. And then what happened more recently is I’ve been talking much more to see hrs heads of human resources. Some folks that run real estate, they often sit under the CFO of the CHR. So it’s really more of the CEOs. Now, you know, that their mind is turned a bit, but they’re talking to the folks that execute saying, Look, we’re gonna get this work from home thing, right? Figure it out for the employees figure out how to manage it, think about what it means by real estate.
Rolando Rosas 6:32
Well, you know, the real estate piece is so fascinating, because I just, I was just reading this to Dave, about CNN tweeting out this $800 billion in office value declines. I know that you’ve studied this, you’ve looked at this. What were your thoughts on on this in this $800 billion figure? At least the trend? You know, even if the numbers not right, but the trend? In what what the sentiment is saying about the $800 billion in office? Commercial Real Estate essentially? Yeah, so
Nick Bloom 7:02
I think that number comes on, actually McKinsey, my former employer, so I should be very nice about you right? Now, there is a great question on the trend. So what from a home the surge, you know, during and post pandemic has probably been the biggest change to the US economy, honestly, since maybe the oil price shocks or World War Two. And as a result, there’s massive winners and massive losers. And for sure, if you own office space, in city centers, particularly less nice, what’s often called Class B office space, you have lost a lot of money. So you know, the most extreme is San Francisco, these buildings, some of them are now just scrap value. Ah, so prices are down 5060 70%. There are definitely winners. So who’s that? If you own you know, some office space, but particularly residential out in the suburbs, you’ve done tremendously well. So folks are going into city center offices less, but they’re spending their time instead, either at home or going into suburban office space, so that that area has done really well there’s been a housing boom. So yes, city center office is struggling, you know, winter has come, eventually, it will recover like everything else, and it will recover because the supply will contract, people have stopped building new offices, some of its been converted to residential, so you know, retail hotels, and five years from now, I think we’ll be you know, back to pre pandemic occupancy rates, but it’s gonna take a while,
Rolando Rosas 8:26
you know, I live just outside of the Washington DC area, and prior to the pandemic, along so west of the DC area, as you’re going all the way out to Dallas, this quarter is known to kind of the tech corridor around the DC area. And one of the things that we had seen is office space. This is before the pandemic office space was being demolition, and they were putting residential office, you know, townhomes and rest, all just because there’s just nowhere to build, but people want to be in this area. And the demand was going up prior to the pandemic and kind of highlighting what you said and I would imagine this is just type of trend is going to accelerate in other places. I know even further out now of the metro area here. A lot of places that were office are on their way down in terms of like being demolished and and just being cleared out to make room for more residential space out in the suburbs. And I heard you say earlier, things like gyms are now booming and I know that that for us, the closest gym that was here, it had closed down who had a Gold’s Gym in the area closed down, and it moved further out of here. And the owner who was a franchise owner consolidated several of those gyms into one location. But just you were saying that gyms are a great asset, along with golf courses. Tell me more. Yes,
Nick Bloom 9:51
so I have a study looking at golf playing. I won’t get into the details. But basically what you see is post pandemic which is now kind of late 23, early 24, what we see is an explosion in people doing leisure activities during the week. Now imagine this, you are a typical, you know, former Stanford student, you’re a manager, mid level manager in a company, you now get to work from home two days a week, maybe Wednesday, Friday, on your home days, you’re mostly working for sure. And you’re doing a bit in the evenings, but you have some free time. And if you like playing golf, you decide on Wednesday morning to go play around the golf. And what that means for golf courses is rather than having all the demand crushed into Saturday and Sunday, there used to early mornings, it’s now spread throughout the day, throughout the week. And it’s really profitable for them and gyms is even more extreme. So gyms felt like a cursed business is July, August, September 2020, because you know, who, who wants to spend time in an enclosed Swenk. And now suddenly, we’re in you know, ended 2023. And suddenly, they’re absolutely booming again, tons of work from home folks, is there a mostly hybrid I’m thinking of, you know, all of us are probably most listeners are probably on hybrid, have, you know, two days a week at home, and they want to go to the gym, and they go during the day. So it’s really twisted the economy, you know, the the US economy is actually doing pretty well. So spending is there, it’s just moved, it’s moved out a bit from city centers to the suburbs, and it’s moved out from being so crushed in the weekends to being spread throughout the week.
Rolando Rosas 11:28
Fascinating. You know, I do notice that out here where I live that there is more buzz, normally, you know, Tuesday or Wednesday, you go shopping, you go get your hair cut, you could go go to the supermarket, you find very few people, there’s a lot of commuters out from the burbs, to downtown DC, for government buildings and all that. But now there’s just more traffic there. The supermarket’s have more the parking lot, they’re more full. So I concur. Professor that is true. We’re seeing that here in this area.
Nick Bloom 12:03
Yeah, I mean, I was gonna give you, you know, thinking of protests, if it were me running a business, thinking about all of this, it’s worth, you know, offices are not dead, by the way to be clear. A lot of companies what they’re doing is saying, Look, you’re gonna have one nice office in city in the city center as a place to meet with hybrid you need people in three days a week, say you want it to be nice, you want to attract people in but you probably don’t need all those satellite offices and every, you know, small city, around the country or around the suburbs, get rid of that stuff, you know, rent space, as in when you need it, and concentrate on one beautiful pleasant office that folks are going to come in, they’re going to be happy on their three hybrid days in the so
Dave Kelly 12:44
you can support so you can support a hybrid work environment and also reduce your, your expenses on that physical office space.
Nick Bloom 12:53
Exactly how right. Yeah,
Dave Kelly 12:57
you know, you know, we’re talking about three days a week right now I have a couple of different questions. And the people that were speaking to when we asked, you know, if you had to do if it was a hybrid work environment, what would how many, how many days a week? Would you want to go into the office? And what are those days of the week? And naturally, what I’m hearing is, you know, what, Tuesday, Wednesday and Thursday, we’ll go into the office. But didn’t you at one point, have some research that showed that two days a week, you know, two days a week at home? What was it two days a week at home? Two days a week at the office was was maybe ideal? What was some of that research that you found?
Nick Bloom 13:38
Sorry, so I’ll tell you roughly where we are it, it looks like hybrid, it does not reduce productivity. So there’s a bunch of evidence showing, look, if people are coming in at least two, certainly three days a week, they’re as productive as they’re in the old days when they’re coming in five. Why is that? You may be surprised? Well, turns out sure of your home, you don’t get as much FaceTime in person time. But there’s a couple of benefits of being at home. One is you save on commuting, and then a lot of time and some of that employees, we see about half of it, they used to work more, and the other is is quieter. And yeah, it’s easier to concentrate and think when it’s quiet. So hybrid has become pretty dominant for that reason. Then how many days in which days, there’s not really an exact science there. I would say, Friday is a pretty clear day to work from home. It’s become a very popular work from home day. Steve Roth, who heads for NATO said you know, they’re they’re basically given up on Friday said Friday, the office is dead. It’s like a weekend day. If you you know, I’m involved in working with and advising a few firms. Generally, if it were my company, I probably have people in three days a week. I probably have them come in Tuesday, Wednesday, Thursday. I’d also be reasonably rigorous on enforcing that. So the reason is this not the reason people want to come in and say want to work with others, you know, socialize with others that don’t want to come in to use the equipment or for the bagel or for the ping pong table. Let’s see there manager. So, as a result, it makes sense to coordinate on Anchor days. So I would say, look, go home Monday, Friday, enjoy it work from home, you know, take the flexibility. But make sure you do come in Tuesday, Wednesday, Thursday, we’re going to enforce that, in the same way reinforced attendance in 2019. So if your kid is sick, or someone steals your car, fine, I get it. But you know, you don’t get to stay at home to watch the World Cup, because it’s kind of a little cold outside,
Rolando Rosas 15:27
right? Or you could just head outside the building and watch a World Cup on your cell phone during break. Right. I want to ask you about something. You said that enough on another webinar that you invoked for NATO. I heard you say something that you spoke to the Goldman CEO recently or about a year ago. And then you said that the conversation was actually quite easy. And I was taken aback by that, specifically, because the financial CEOs have come out so strong against remote work. But you’re saying it’s a slam dunk when it comes to talking to these guys and gals at the C suite, because it’s a clear cut decision. But the public talk hasn’t quite reflected that yet. Can you elaborate on what you said to the CEO of Goldman, how it relates to remote work?
Nick Bloom 16:19
Totally. So one piece I spoke to David Solomon, maybe for 40 minutes is about a year ago. And yeah, he was great to talk to. He said, I didn’t think there was a huge difference in opinion say that David said, Look, government’s has a very much a mentoring based apprenticeship based model. It is true that people learn and a best mentored in person. So when I advise my Stanford undergrads mine, I met my oldest two kids. So you know, in their 19 and 20, and they’re getting internships and about to take full time jobs, I generally say you’re gonna learn best if you’re in person, but it doesn’t mean you need to be in person every day. So for Goldman Sachs, they have a lot of folks in their 20s, it makes sense for them to come in, you know, four days a week, three days a week, it makes sense, therefore, for their managers to be in to, to train them up. Now, the point of disagreement, really not so much disagreement. And so whether you really go to a full five days a week, my view is, you know, having folks come in on Friday as well tends to piss them off. And it’s not clear it’s worth it. When I spoke to him, he said, Look, the media is somewhat over portrayed, you know, the media feels like it sometimes does, what Bollywood films do, it has the bad guys, and the good guys, and the bad guys are entirely in black clothing. And there’s dark music and the good guys entirely and, you know, like white color, it’s just ridiculously extreme. And the media loves to do this, too. So I don’t think I heard that Jamie Dimon it from JP Morgan interviewed and he actually said of their graduates and professionals, only about a third of them are coming in five days a week. So in reality, it’s less clear cut. These firms are focusing on having people come in more days of the week, but they’re typically not enforcing a full five days a week. And that that makes sense. And I agree with that. Right.
Dave Kelly 18:06
But do you do you feel that mentoring, which I also feel in, you know, in person face to face mentoring? That’s I don’t I don’t think I would have been extremely successful in my very early 20s. Working at home five days a week. But what today, do you think technology can still help with this mentoring, even if it is remote, you know, there’s video zoom does, you know all the way up new ways to communicate? Can that help support mentoring or does the evidence they’ll show you know it’s face to face, they need to be in person.
Nick Bloom 18:39
So mentoring looks like it’s better face to face. We’ve asked surveys and we’ve, you know, polled execs and stuff. And it looks like it’s maybe about twice as effective. Or put it another way, you spend twice as much time mentoring people when you’re working in person with them versus online. So it doesn’t mean that you know you’re fully remote, you don’t get mentored, you just get the best out of it. Roughly half think of dog ears is kind of like when you talk to people they say you know, two years fully remote is about the same experience grade as one year fully in person. But that doesn’t mean you have to be in every day. If you’re well organized. So think of pre pandemic, just to go back to 2019. I come into the office, where I’m spending a fair amount of time doing email reading stuff, maybe you know, honestly, surfing online and watching the Champions League, whatever it is, I’m definitely not working full time. You know, in meetings and presentations of folks, every every minute post pandemic, I now come in for three days. But as much better organize, everyone’s in on those anchor days and it’s much more intensive meetings, presentations training. And they get basically as much mentoring in those three days, as I did pre pandemic and then the when when is the other two days I do my reading, writing, cross off his zoom calls at home, save a bunch of times that I have to commute. I have a bit more time to reflect. So that’s why hybrids one out if you’re coming back to your earlier question. It looks like three days a week In the office isn’t enough for mentoring, you just don’t need all five, you certainly need. You know, some. The other point to make is depends on the age of the person you’re talking about. If you’re thinking of 20 Somethings, these folks are early in their career and need a lot of mentoring. If you’re looking at folks in their 30s, and 40s, they’re much more up the learning curve. So if your company is has tons of 20, somethings, you probably want a more in-person setup. If your company like GitHub, say, is more like 3040 Somethings more experienced, you can survive, I think, with a much more remote setup, and maybe you meet retreats, you know, every four to six weeks. Right, right.
Rolando Rosas 20:38
I heard you say, on another podcast, what you all do at Stanford. And that like to me was a lightbulb moment. You said that at Stanford, you have a buffet of options, you have people in-person, you have people that are hybrid. And then you have people that are fully remote. And just what you just said piggybacking on what you said about you have 20 Something year olds, folks that are straight out of college, you have folks that have in an organization that have a family, maybe they want to be more home based. And you have some folks that are probably empty nesters also in the organization. And then along the way, you have different needs for different folks. How can an organization if we were to use? Or can you use Stanford as a model where you have an all in kind of buffet option for folks that are all the way through different parts of the spectrum in terms of their life, their career? how do organizations pull that off? So firstly, I
Nick Bloom 21:38
should clarify, we do have different setups, but it’s dependent on the role. So why don’t explain okay, what we do, then come back to your question. So, Stanford has approximately 20,000 employees. And I’ll give you a very rough numbers, but something like 10,000 of them a bit less a fully in-person. So think security, food service, janitorial, I mean, all teaching pretty much all happens in person, but you have a bunch of folks that come in every day. And in fact, in the US that 60% of employees think of retail manufacturing, they’re coming in every day, you need to work with customers, or products or machinery, there’s then another group and Stanford that’s, you know, roughly another, you know, 1000, or hybrid, they tend to be more professionals and the managers staff, their office based jobs, they’re typically coming in three days a week. Then there’s a third group, that’s the smallest group, there are about one to 2000 that are fully remote. These are people doing things like IT support, some health care support, payroll benefits, some data entry call centers, they just don’t need to come in at all. And the huge upside of having those folks fully remote is, of course, we’d have to pay for office space, which saves maybe 10% of costs. And we can hire them wherever we want across the US. And in some cases, you can hire them internationally. And that’s a lot cheaper. If you’re in the Bay Area. Salaries are really expensive. So you can hire someone to do it support for Mississippi, and you’d have to pay for their office, you’re saving a lot of money.
Rolando Rosas 23:08
So it’s a clear cut winner of pulling this off, which is what organizations want to do every organization right now that I’ve talked to, and you pick up the paper, they’re all looking to cut costs, and remote work in all its flavors offers the option to do just that. But I also think in your piece from the New York Times, I believe that you put out an op ed. And you said it was a win win win for employers, employees and the planet. And it’s very few initiatives that actually have this kind of synergistic effect, or all three things win. Can you talk a little bit about that? Yeah, totally.
Nick Bloom 23:52
So if you think of the three groups in society, first group, let’s think of employees, so all of us. We like working from home. Typically, most people want to work hybrid. I’m hybrid. I don’t know what you guys are. But when we survey people we’ve surveyed, you know, 100,000 Americans, they say the ability to work from home to three days a week is about the same as 8% pay increase. So employees are winning, and they are winning big time. This is a really valuable part. What about firms? So firms are winning, too, because it’s profitable. So why is it profitable, and it’s profitable, because hybrid is about flat and productivity, but drives down recruitment and retention costs and losing staff retraining them rehiring them is really expensive. If you look in aggregate US data 2022 is the highest level of profits you’d ever seen. It was almost doubled 2019 economy’s doing well. So firms are benefiting. So hold on a second. Nick,
Rolando Rosas 24:45
Hold up a second. Hold on. What you said, and I don’t want to gloss over that because that’s important. 2022 profits were very high for firms across the board. Jeff really right? On our
Nick Bloom 25:01
total. So if you look at national accounts, you can look at total profits of all US businesses, and almost double what they were in 2019 is unlikely why the stock market is so high. Right in so
Rolando Rosas 25:15
So if if remote work were folks sitting at their couch watching Champions League all day long and watching Liverpool right beat the beat the bejesus out of Arsenal, right? Or Manchester City under a What team do you root for? I know your route 14. I
Nick Bloom 25:32
told them hotspot and unfortunately they were top of the season and then just lost three in a row.
Rolando Rosas 25:37
That early, early hulland is unstoppable right now. So hopefully they can figure that out as the season goes on. But, yeah, double the profits. That’s nothing small. If people were tuning it, the Champions League all day long and golfing all day long. Productivity would have would have done this. Oh, right. So and I believe you wrote somewhere, that net effect of productivity is a plus for organizations when they adopt this as well. Is that right?
Nick Bloom 26:11
totally right. So yes, exactly. You can look at it bottom up or top down to bottom up is looking at individual firms and studies of firms that generally shows hybrid certainly is can you know, zero to slightly positive and productivity or even look at top down, look at the entire US economy and understand incredibly well since the pandemic. And in fact, if you look at productivity growth, it’s accelerated from 2020 onwards versus the five years pre pandemic. So this is why it’s a win on average, for firms, I’m aware that some firms are losing. So, you know, we looking at the entire economy, that’s the second whim. And then the third is just for society. There’s a big benefit and reduce pollution. And it’s also a big benefit that parents is getting to spend more time with kids. We know the lockdown was horrible for children. And one of the you know, the reverse was partly this is when folks work from time look, sorry, work from home, looking at time use diaries, it seems that they spend almost an hour extra a week or they have kids with their kids. So that’s the third one I think is you know, in terms of reduced pollution and more time as parents or kids. And
Rolando Rosas 27:19
I think you’ve said something around along the line, I’ve got a note here, that 50 billion 50 billion fewer miles annually, when it comes to the reduction in commuting as a result of work from home. That’s nothing. I mean, that’s not insignificant, right? It has an immediate effect. And as well as a compounding effect on on the planet, on the roads on on how we shape our society. I mean, for the last 100 years, we’ve been up all of all in using the the Henry Ford model of work, which is nine to five coming into the office five days a week. And that’s been the standard. And I think the next 100 years are probably going to look different. As you said in your economist piece. I want to I want to make sure I get this right, because I want to quote you on this one. You said the shift to hybrid work has been perhaps the most radical change to the office since the introduction of the computer.
Nick Bloom 28:27
Totally and I was gonna I was gonna go into another pro tip on
Rolando Rosas 28:30
the Oh yeah. Okay, let’s get let’s do that already. For a pro tip Go ahead. It’s resilient.
Nick Bloom 28:40
You probably seen in the in the paper three weeks ago that in LA there was a massive fires wiped out one of the freeways I don’t live Yes, well, but of course chaos. And it happened in Philly. And you know, this keeps happening. And then there’s train strikes. And then there’s big freezes and massive snow dumps and tornadoes etc. Basically, you know, there’s that when I was in London as the Olympics shut the city down. I was in Las Vegas actually a couple of weeks ago and Grand Prix close the city center. So what we know is randomly sometimes unexpected, sometimes Expectedly, you can’t as a firm, get your employees into the office, it’s just not possible for three, four days. If you’re operating a hybrid, you have the agility to say, look, we can’t come in for this week, just work from home. It’s an easy thing. You’re doing it every Monday and Friday already this week, we’re just gonna do it full time. It makes you so much more agile and able to deal with shocks if you have this set up on a you know, two days a week to suddenly switch to two weeks to being fully remote. So that turns out if you look in LA the companies that I’m sure that are dealing with this well, are those that have a highly effective work from home schedule. The company has to force people back to the office five days a week. We’re probably panicking when they can’t get people back in because they don’t know how to do the alternative.
Rolando Rosas 29:55
No doubt, no doubt. And one of the things that, you know that has come out about with, with this really, you know, the shift, I would call it a shift in work in workstyle work management is people’s attitudes when it comes to their work and what they do. And I love it that you are a professor at Stanford, because I would love to do a social experiment with you. Would you be willing to play along with this social experiment, Nick,
Nick Bloom 30:27
go ahead, I was now turning the tables. I’m the one being experimented on the mouse in the flywheel? Let’s go. Well,
Rolando Rosas 30:36
you know what, Stanford’s done some of the class I was a psychology major in college, in a lot of the classic studies that we can’t even do anymore, because they’re unethical, I came out of Stanford, right? But I’m
Nick Bloom 30:50
not sure we should be proud of them. But yes, you’re right. I learned a lot of STEM, right?
Rolando Rosas 30:54
We learned a lot, right? We learned a lot from those experiments. But what I want to do is one that’s really simple. It’s more based around what people are saying. So I’m going to play two clips for you. I’m going to play one clip, we’re going to talk about that clip. And then I’m gonna play the original for you and see what your thoughts on on this. So already, go ahead, play that first clip.
Nick Bloom 31:17
I know I’m probably just being dramatic. I’m in person, and I am commuting in the city. And it takes me forever to get there. There’s no way I can afford living in the city right now. So I get on the train at 730. And I don’t get home until 615 at the earliest. I don’t have time to do anything. I want to shower, eat my dinner, then go to sleep. I don’t have time or energy to cook my dinner, or workout or anything that’s out the window. I’m so upset. Nothing to do with my job at all. But the nine to five schedule in general is crazy. If it was remote, you get off at five and you’re home and everything’s fine. But it takes me long to get home. People who drive to the office don’t get off at five. And I know it can be worse. But I get off. It’s pitch black and I don’t have energy. How do you have friends? Or have time to meet people? I don’t have time and I’m so stressed out?
Rolando Rosas 32:15
Am I so dramatic? Alright, what do you think about that?
Nick Bloom 32:21
Dude, I didn’t sound very happy. You know, it reminded you reminds me a bit of my life at McKinsey that I have to say my hours were much, much worse than that. I mean, I quit. I have to say I did a year and a half and I left but my last six months, I was leaving the house at 6am to be a client for a that took almost two hours and then leaving, you know getting home at 10pm. So yeah, I empathize. I gave up. So having socializing in the evenings, I just thought, forget it. It’s just not possible. My weekends, I dread the call from my manager and she might ring up and ask me. So yeah, I just to put numbers on like the average American commutes about an hour a day. And if they said that if you work from home, you save one hour, you also amazingly save about another 10 minutes of less grooming. You know, believe it or not, we collected data on this is somewhat horrifying, but people are much less likely to shower, wear clean clothes, put on deodorant, brush their teeth, shave, wear makeup, etc. And that saves them about another 10 minutes they are work from home. So you’re saving about 70 minutes a day, every day what for me, that’s a lot of time,
Rolando Rosas 33:25
that’s a lot of time you you could put back into your personal life and use it for a long, long, long bath, or no, not. Ya
Nick Bloom 33:34
know. And for any manager that’s listening, I say this over and over again. We know we ask people what they do with that time saved now that 70 minutes, about 30 minutes they spend working for their job, the other 40 they take his leisure, some or chores or you know, looking after kids etc. But this is why it’s a win win. Again, I’m not pushing remote every day. But for a couple of days a week, as a manager, you’re getting maybe an extra 30 minutes off your employee from their commute. And then of course, they’re getting extra 40 minutes for them to spend on their own stuff.
Rolando Rosas 34:06
Before we go to the next clip, let’s help those managers because we had another guest on the show. He was a former HR executive at LinkedIn. And he recently told us that he’s being rehired, he’s being being called back to organizations to help middle managers pitch the CEOs in the C suite on hybrid work on remote work and that it should be something they should do across the organization. And how should they do that? So if if a middle managers listening in this thing, Nick, tell me what are the key points? What do I need? What are the hot buttons that will get their attention? And then we’ll jump into the second clip because I want to stay on that that point there about middle managers. Sure. So I
Nick Bloom 34:53
would pitch it as I mean I talked to I’ve talked to 1000s of managers by now on this. The reason I pitched it is it’s profitable, it makes money. How does it make money. Hybrid makes money because productivity is about flat, you don’t win, but you don’t lose. But it saves you costs in terms of recruitment and retention to just to put $1 figure on it, we have a study that’s about to come out, where we did a randomized control trial of 1600 employees at a tech firm trip.com. And they were randomized by even or odd birthdays into either you came in five days a week, or you got to work from home two days a week, and came in through three. And we found in the experiment, allowing people to work from home two days a week dropped, quit rates by a third by 35%. So hybrid is profitable, because it reduced, you know, and they trip estimated it cost him about $20,000. For every person that quit and had to rehire, they said, you have to go out and do recruiting and training, it’s just a lot of money. So that’s hybrid, fully remote is a different proposition. So fully remote, there’s a lot of studies on productivity, we talked about mentoring, there’s culture innovation, it looks like it, you know, the average, it depends on how you manage it, but let’s just take it as given maybe it’s minus 10%. On productivity, there’s a big range, I want to get into the details. But even if it’s minus 10%, it’s still very appealing. Why? Because firms care about profits, not productivity. And fully, we’re unsure, let’s take minus 10%. But you don’t have to pay for an office. And that’s about 10% a cost. So you’re now square, B, you can hire folks, you know, nationally or internationally. So you can get a lot cheaper people for the money, a lot more talent for your dollars. So a classic, fully remote, if you’re thinking of tasks that can be done that way think of you know, benefits, HR, some high end coding, your maybe 90% productivity, but you’re 50% cost. So your output per dollar is way up. So these are different strategies, but they’re both profitable. And I wouldn’t suggest for most firms to fully remote the whole thing. I’d say let’s go hybrid professionals, for managers, a lot of the seniors, middle staff, let’s maybe go fully remote, but I some of IT support payroll data entry call centers, that’s like 10% of staff. And they’re both going to make great money for the business. Well,
Rolando Rosas 37:11
you’re echoing what, what? Shark Tank? Mr. Wonderful. Kevin O’Leary says, you know, it’s it enhances the bottom line in he was able to realize a, an extra two percentage points in margin free cash flow at the end of the year by doing what he’s doing with his staff, across all his firms and enabling remote work for them. And they frankly, quite say that they want to be more remote. And he was surprised by that. Because he himself was very, not very in favor of remote work at the at the start of the pandemic. But he’s come around to that. But I want to jump back to Yeah, so
Nick Bloom 37:51
Rolando, give you a great anecdote. I was actually when I was in Las Vegas two weeks ago, I went to talk at an event of 1000s of people that run franchise chains of restaurants across the US and somebody was afterwards came up to talk to me and said, they ran a chain of taco places down in Southern California. And he was saying, Look, I’ve just moved my accounting division to Mexico. And he said, well, there may be 80% as effective and rapid as my accounting division, man, it was in LA, but it cost me 40%. You said it’s like a no brainer. I’m saving an enormous amount of money. And I wish I’d done this sooner. And there’s exactly as you say, it’s, you know, it’s a very profitable thing to do.
Rolando Rosas 38:29
It’s no doubt and I think savvy businesses owners can get with that. I mean, that’s, that’s understandable dollars and cents at the end of it from other folks that I’ve talked to it compounds. So the savings in year one, roll over to year two, and three and four. So over time, the effect of saving that and enhancing the free cash flow is enormous on the bottom line. So I want to roll back to our our social experiment here, because we’re running out of time and I know Professor, you got to get back in class intentional students. So let’s go and roll that second. Clip. Go ahead. Sorry.
Guest Speaker 39:11
I know I’m probably just being so dramatic and annoying. But this is my first job like my first nine to five job after college and I’m in person, and I’m commuting in the city and it takes me puking forever to get there. There’s no way I’m going to be able to afford living in the city right now. So that’s off the table like fucking da if I was able to walk to work and it’d be fine, but I’m not so it literally takes me like I leave here like I get on the train at 730 and I don’t get home till like 615 earliest and then like, I don’t have time to do anything I don’t I want to shower, eat my dinner and go to sleep. I don’t have time or energy to cook by dinner either. Like I don’t have energy to work out like that’s out the window like I’m so upset. Had nothing to do with my job at all. But just like the nine to five schedule in general is crazy being an officer Ready to fight like, if he was remote, you get off at five, and you’re home and everything’s fine. But like, I’m not home, it takes me long to get home and like, like people that drive to the office like it doesn’t you don’t get off at five. And I know it could be worse. I know I could be working longer, but like, I literally get off, it’s pitch black, like, I don’t have energy. How do you have friends? Like, how do you have time to like, meet? Like, a guy? I don’t know, like, how do you tell I’m really dating. Like, I don’t have time for anything. And I’m like, so stressed out. And I’m also getting my period. So that’s why I’m all emotional. But like, am I so dramatic? It’s fine.
Rolando Rosas 40:35
So this went viral. And I remember once when this was sent to me, the the React, I had to had to watch it three times, in my opinion changed from the first time to the third time. And I and I thought, Okay, well, before I tell you what I think I want to see what you think. But the comments that were posted on Twitter, when this went viral, are mostly negative, mostly negative. But the words that we just played you. We took out a few things from the first one, but it’s essentially word for word. What do you think what you just saw now?
Nick Bloom 41:17
Well, partly, I think that’s why Rolando, you and I both been more active. Now LinkedIn has to say Twitter, being anonymous online comments are probably better, you know, and I put stuff out I try not to read anonymous comments. But their name to them, I read them, but it doesn’t really change my sentiment. I mean, I look, I can see why people may have got annoyed about look, there are folks that have been working like this and much longer hours for many years. They’re gonna say I manage you, that’s called the workplace, you’re gonna get used to it. It’s still true, though, that commuting takes up a lot of time. You know, I mentioned I had much longer hours when I was at McKinsey, when I was probably working not quite twice as many hours. But I’m in my timesheets for about 100 hours a week. And yes,
Rolando Rosas 41:59
if you didn’t have a heart attack, or you’re still alive. Yeah,
Nick Bloom 42:03
I look older than you know, anyway. But yeah, sir. On top of that, we had a long commute or going out to a client site outside London, it was about an hour each way. And so suddenly, you’re like, wait 100 hours plus, I lose another 10? From you know, yeah, there’s not much there was literally very little time to do anything else. So yes, yeah, as I mentioned, you can save 70 minutes a day from working from home, looking, I don’t know how old she was. But for folks that aren’t looks like she was her first job, I would advise him and much of it, my kids and my students, you do want to go in the office, particularly in your 20s, probably three, maybe four days a week early on, just to get mentored. And in fact, that’s one of the reasons often when I talk to companies middle and senior managers do need to come in. So it’s an interesting challenge often hear from companies will say, look, the newbies, the folks in their 20s Want to come in, they want to get mentored, they’re social, they want to go out they also their apartments aren’t great, and it’s hard to work from home. But the middle managers, they’re like, Well, I’m, you know, I’m in 40s, I’ve been doing my job for many years, I don’t need to learn I’m very effective remote. And the CEOs will say to these folks, well, look, the issue is your job is not just working with clients, it’s coming in mentoring other people. So if we need people at the beginning, you know, entry level folks getting mentored, somebody needs to do the mentoring. So that’s kind of why a hybrid is ended up sticking on why, you know, everyone throughout the organization probably needs to come in typically for three days week, because in both directions need mentoring and mentor. And coming back earlier, I don’t have an exact formula on two versus three versus four days. I think it’s going to depend very much on the business, the age of the employees, how much learning how much individual stuff is but typically 234 days coming in is what I hear. If you’re only coming in for one day a week, maybe just get rid of the office, maybe just move to a kind of more infrequent offsite model. And I we really wouldn’t advise getting professionals managers in for five days a week because that means you’re forced to come in on Friday. And that really pisses people off, you know, is the best way to lead to a lot of resignations, quits make it hard to hire anyone and doesn’t seem to help them productivity. Wow,
Rolando Rosas 44:12
I am I am completely just tickled by what everything you’ve said. You know, I love consuming your posts on LinkedIn, the research that you all that you’re doing that your team is working on. It’s just an every single week. I’m amazed I was amazed by your posts we were talking about earlier. That’s when we referenced about being flat for a year almost with the data from from Castle, the occupancy rates. It’s just there we go. There we have it right here. And how, you know, you predict that from here to 2030 We’re going to have a swoosh and Nike swoosh effect and that the there’ll be more a greater demand for them. work for several reasons. So if you are consuming this today, in your watch, or you’re watching this on YouTube for us, Professor Nick Bloom, you want to follow me on LinkedIn where if people want to get ahold of you, where should they go follow you or try to get a hold of you?
Nick Bloom 45:17
Yeah, LinkedIn is the bad LinkedIn has become so dominant actually. So I post on LinkedIn. And at that thing, I also happened to post on Twitter, but a Twitter is a different format. I don’t use other social media really, as interesting if I have to do something for Tik Tok. The pizza New York Times went completely crazy even for the New York Times, apparently, that was a very heavily clicked and shared piece. They wanted me to do a tick tock video, it’d be my first and probably last ever
Rolando Rosas 45:45
gone to be like going, we have a following on tick tock. So if you want to get some warm ups, you know. So warm ups before you go to the big leagues. We’ll go ahead we’ll be your your farmlead team for that.
Nick Bloom 45:56
Practice doing my dance moves. My kids are all on tick tock, and they’re like, I can’t believe that. You’re gonna do that. So embarrassing. Please don’t let anyone else know. But yeah, LinkedIn has been really good. LinkedIn. Probably the I think they’ve changed their algorithm, their algorithm. I mean, lambda you and I know the same thing. It encourages discussion debate. When I post I reply to people, I have a website, but that’s generally the best place that I read. I really value the feedback. i It’s interesting. It’s a quite a few times, I’ve been asked to write opinion pieces for newspapers. And I actually often do a dry run on LinkedIn first put it out, look at the discussion. Use the feedback, use it to improve it, because it’s so useful. Awesome.
Rolando Rosas 46:38
No, that’s, that’s, that’s the professor and you have this this really good, inquisitive, putting all these different pieces together. So you’ve been listening to a wonderful class, sort of a master class, we need more time because there was so many questions, but the professor’s got to run off to another class and teach more students and get to other business affairs. So you’ve been listening to Professor Nick Bloom, I believe you do root for Liverpool Champions League, right? I know you said Tottenham. Tottenham will have to watch if Tottenham makes it to the top and gets into the Champions League at the end of the season, or if Man City makes another run for it. So you’ve been listening to Professor Nick Bloom. And if you enjoyed this conversation with Nick and ourselves today, you want to check out the conversation we had with former CHRO of LinkedIn, Steve Cadigan, as well as Professor Ellen Frank Miller, that talked about labor and how good labor relations is also a profitable venture for businesses. So Dave, and I will see you in those episodes. Check those out.
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