Dr. Gleb Tsipursky – The Office Whisperer
Nirit Cohen – WorkFutures
Angela Howard – Culture Expert
Drew Jones – Design & Innovation
Jonathan Price – CRE & Flex Expert
About This EpisodeÂ
In this episode of The Future of Work® Podcast, renowned Stanford economist Nick Bloom shares two decades of research into the evolving remote work landscape. As co-founder of www.wfhresearch.com and a trusted advisor to governments and companies alike, Bloom brings unmatched insight into what the data actually says about remote work. Â
He joins host Frank Cottle to cut through misleading headlines and reveal why remote work is here to stay. Together, they explore the economic forces behind flexible work, how companies can retain talent without sacrificing productivity, and how AI and real estate trends are shaping decisions through 2030. This episode is essential listening for leaders navigating the complex future of where — and how — we work.Â
About Nick Bloom
Nick Bloom is a Stanford Economist who has been studying remote work for over two decades. He is the co-founder of www.wfhresearch.com, a platform that provides insights and best practices on working from home. Nick has contributed to the policy and public discourse on remote work, meeting President Obama, speaking at the 2014 Working Families Summit, and delivering a 2017 TedX talk. He has also consulted with hundreds of CEOs and managers, helping them navigate the challenges and opportunities of remote work. He has been featured extensively in national and international media, sharing his expertise and findings. His mission is to advance the understanding and adoption of remote work, and to empower workers and organizations to thrive in the new world of work.Â
What You’ll LearnÂ
- Why remote work levels have stabilized despite media claims of declineÂ
- How hybrid work models can save companies millions through reduced turnoverÂ
- The ROI of flexibility: Remote work valued as much as an 8% pay raiseÂ
- Why enforcing coordination and culture is key to making hybrid models workÂ
- The cost of turnover and real estate proves hybrid work is an economic strategyÂ
- Cultural challenges in Asia show remote adoption is also about traditionÂ
- Real estate decisions must align with workforce trends and AI uncertaintiesÂ
- Remote culture can be built — and sometimes thrives — without physical proximityÂ
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Transcript
Nick Bloom [00:00:00] Years of research shows that folks value the ability to work from home two, three days a week at about the same as 8% more pay. That is a critical figure for if you’re a business, if you are a manager out there and you’re thinking, how do I make more money for my business? You have to think, well, look, if I let folks work from two, three days week, is their productivity down by more than 8% because if it isn’t, there’s kind of a win-win deal on the table. What it does for you is it dramatically reduces turnover and makes it easier to recruit and retain.
Frank Cottle [00:00:32] Nick welcome to the Future Work podcast. Really excited to have you here with us today. And gosh, what a background. I’m in awe. So thank you very, very much for joining us. One of the things that your data points out is that despite the fact that headlines are claiming the remote work is dead or slowing down, your data says it’s stabilized. What do you think the difference is? Fake news versus real news, and where do you really think we’re going with remote?
Nick Bloom [00:01:06] Yeah, sure. Great question. And thanks so much, Frank, for having me on. Just to point out, remote work had an enormous surge, obviously, in 2020. That’s not really surprising. So to give you some figures, 7% of days in America worked fully from home in 2019. That went up to about 60% in 2020s. That was almost a tenfold increase, like a massive increase. It did then drop a lot back. Folks did return to the office, but far from fully. It dropped back to about 25% in 2023, but then since then it hasn’t really changed. And so folks seem like really surprised, like, you know, you’re telling me since 2023, that’s, you now almost two, two and a half years now, hasn’t already been a change. You know, how can that be? Cause I see in the headlines that you know Amazon and Zoom and Dell and you know apparently shortly Microsoft are having folks go back to the office. I think there’s two reasons why the headlines are a bit misleading. One is, it’s kind of like the media of shark attacks. When I talk to journalists, they say, you know, it’s like, if it bleeds, it reads, it’s just bad news sells. And, you have a story out there saying Amazon’s returning over to the office. People like angrily clicking away and sending it around on LinkedIn and Twitter. And, it flies off the shelf basically, but if it’s about some Goliath National Bank lets you work from home for a bit longer, they just ignore it. The other reason. I posted on LinkedIn actually about a month ago, it’s kind of complicated, but it’s called a composition effect, which is basically, big firms that aren’t growing very much tend to be reducing work from home. And often if you think of firms like Amazon, Dell, who else, you know, a bunch of the banks, they’re actually shedding headcount Starbucks, they’re actually reducing headcount.
Frank Cottle [00:02:54] Replacing that head count with, we’ll say, AI functionality or streamlining that head count.
Nick Bloom [00:03:01] Yeah, exactly. And so one of the you know, that’s why that’s why in a sense, they’re having folks come back to the office, they’re saying, we don’t mind if 510% of our staff quit, we’re quite happy with it, because we need to slim down. If you look at young fast growing firms, they tend to be all in on kind of hybrid less fully remote, but all in hybrid. And as a result, the two effects of balancing off that the more hybrid remote firms are growing faster, they becoming a bigger share of employment. And the big kind of old firms are, some of them are forcing folks back to the office. So on average, total work from home is about stable, but you know, everyone focuses on the big firms. So yeah, go ahead, Frank, but that’s really what’s going on.
Frank Cottle [00:03:43] You’re still right that everyone focuses on the big firms and yet, and you’re using the United States as an example, in the aggregate they aren’t the biggest employer.
Nick Bloom [00:03:55] No, that’s right. So, you know, Amazon is massive, is an enormous employer, but even so, it’s still only, I think, 400,000 employees in the US. It sounds a lot. But remember, there are 200 million Americans working. So that’s, you now, a quarter of a percent. What you see is the typical person actually works in a firm with 500 employees. And that firm is typically only 20 years old, or 10, 15 years old. And you know it’s growing reasonably fast. So This is somewhere where you don’t want to believe the headlines. And it’s not that each individual story is wrong. It’s in the same way that it’s not that shark attack stories are wrong. But you know, no journalist ever writes, you know there’s not been a shark attack for a year on this beach. It’s a boring story. Instead they look at the beach, you know.
More stories for you
Frank Cottle [00:04:38] Whether there was an attack or not, you know that you know, it’s funny you have some interesting data there. I’m going to throw a piece out of my own that I got the other day from Rennstead, massive employment management company, as you know and probably the largest in the world. They say that they get a five to one increase in CVs when they use the word remote. Remote work, remote opportunity, or hybrid in the job description itself. The workforce is looking for these opportunities. The employment force seems to be moving it around a little bit, but the workforce still seems to. And we saw that back in 16 and 17, pre-pandemic, that these large companies you’re talking about, they couldn’t win the battle for talent of technology talent. Unless they included an option of a flexible workspace plan of some sort. They couldn’t, people would say, well, I can go to Amazon or I go to Microsoft or Microsoft gives me this flex. So that’s where I’m gonna go. So, so much of this movement, if you wanna call it that or this adjustment, predates the pandemic entirely. And I wonder, based on what Randstad says, if it’s a war for talent, ultimately, Who’s going to cave? The employee who has multiple options or the employer?
Nick Bloom [00:06:17] You are exactly right. So I will give you a figure, years of research and a lot of it post pandemic actually shows that folks value the ability to work from home two, three days a week at about the same as 8% more pay. So that is a critical figure for, if you’re a business, if you are a manager out there and you’re thinking, how do I make more money for my business? You have to think, well look, if I let folks work from two, three days week, is their productivity down by more than 8% because if it isn’t, there’s kind of a win-win deal on the table. Effectively, you know, you could pay your employee in a sense a little bit less. You know, typically you see productivities about flat. So it’s not that hybrid typically increases productivity, doesn’t reduce it much either. What it does for you is it dramatically reduces turnover and makes it easier to recruit and retain. So if I look at, you now, if I looked at Stanford where I’m in my own company, We have thousands of people on hybrid and remote. Why? Because it keeps down our wage burden and stops turnover.
Frank Cottle [00:07:19] Yeah, I think that’s a cost that has to be broken into that 8% benefit, by the way. The cost of turnover is massive. If you had a 5% difference in the cost of turn over, your productivity element of 8% could go to 13, 15, 20% in terms of the benefit back to the company. Training, retraining, shuffling, all the things that come with turnover, which is just so disruptive to a company overall. So I wonder if that ultimately won’t be the deciding factor in the decision-making of do you allow for remote. When we talk remote, we don’t mean or maybe we do, fully remote. Like 100% of the time, we mean a variety of flexible workspace plans. It could be one day a week or five days a week, on a given week during a given month. It’s flexible overall. Or are you speaking about purely remote?
Nick Bloom [00:08:27] No, so I’m going to focus on hybrid. Now I use one very concrete example. It was actually in a paper I published last year in 2024 in nature. So it’s a company called trip.com. They’re worth about $50 billion. I know them because their founding CEO and now chairman was in my class in Stanford about 15 years ago. And we then as that listed, they’re a massive company of like 40, 50,000 employees. And we did a randomized control trial. So we took one and a half thousand grads and If you have an even birthday, so you’re born on the 2nd, 4th, 6th, 8th of the month, you got to, you had to come in every day, have an odd birthday like me on May the 5th, you got work from home on Wednesday and Friday.
Frank Cottle [00:09:06] Wait a minute, your birthday is May the 5th?
Nick Bloom [00:09:09] My brother, I’m thinker the mayor. Yeah, I should.
Frank Cottle [00:09:11] Oh my, is that right? Yeah. Yeah.
Nick Bloom [00:09:15] Here we go, we’ve discovered something new. That’s fantastic. So is my wife as it happens. Oh, we have to have a kind of three-way birthday party.
Frank Cottle [00:09:24] I’m ready, I’m all ready.
Nick Bloom [00:09:28] So I was going to say, we do this big randomized control trial and what they find is productivity is unimpacted by being hybrid. So yes, if you’re in the office only three days a week rather than five, there’s maybe a little bit less mentoring, maybe a bit less innovation and building culture. But on the other hand, the employees say, look, it’s quieter at home and I don’t have to commute. So productivity is unchanged. What they do see is turnover rates drops by about 35%. And on your point, the firm says, look, we estimate every employee that quits on us costs us about $30,000. Because if somebody quits, we’re gonna go out, re-advertise, re-interview, get them on, get them onboard and get some other managers to spend a day a week with them for the next six months, et cetera. And they say, look, hybrid is phenomenally profitable because it doesn’t affect revenues at all. It’s kind of flatten productivity. But massively reduced costs. And I reckon for the company, it would save them 10, $20 million a year. And that’s why 70% of the Fortune 500 are on hybrid. So it’s just about making more money.
Frank Cottle [00:10:34] Yeah, well, it is. And I think another element, too, to consider there is when a company has everybody coming into the office, well, they actually have to have office space, infrastructure, resources, et cetera, to support them physically. When they go hybrid, and let’s say two days a week, they reduce that requirement by potentially 40%. Doing so if they look out on a long-term basis and they start shedding. Leasehold debt as a result of not needing as much space, that leasehold debt off their balance sheet gives the company, a growing company in particular, the ability to raise capital more easily and to have higher returns to their shareholders. Hybrid work was 100% neutral, but you only had less turnover and a reduction in leasehold debt on the balance sheet. Still the numbers are staggering to a come.
Nick Bloom [00:11:29] Yeah, I totally agree. I, you know, I completely agree. I don’t tend to, in that paper, we didn’t focus on that because it was a short run study, but you’re correct. One of the reasons actually trip.com had been focused on hybrid and indeed fully remote. I’ve been working with them for about a decade is because they’re growing. And they said, look, we’re growing fast, but we don’t want to have to buy more and more office real estate. And it precisely say it’s very balance sheet heavy, debt heavy. And so they discovered In fact, in this study, they had hybrid on Wednesday, Friday, but look, you have 20 teams, and they don’t tend to overlap much. Team one is, you know, Monday, Tuesday, team two is Tuesday, Wednesday, and you know they share space. Another concrete example is Zoom. So we mentioned Zoom earlier. I had lunch with Eric Yuan and I know Zoom and I knew the founder of it. And he said, look, the sales teams, they do Monday, Wednesday and the engineering teams do Tuesday, Thursday. And that way we can get twice as many people into the same square footage.
Frank Cottle [00:12:24] Yep, no, it makes a huge, huge difference. And I also think that it gives you more options of a talent. And if I were to hire you and I’m in Fort Worth, Texas, and say, Nick, I want to hire and I am going to give you X amount and we agreed on salary, and then I say, oh, I need you to move to Fort Worth. You probably wouldn’t come. So there’s two elements when it comes to in office. There’s the people that all live there and have to just commute locally. Of the new hires that you want to bring from Ohio or Kentucky or Texas and bring them to California, that’s yet another cost that’s massive and restricts the number of people that you can hire or you start losing that battle for talent, at least you’re losing it economically. So I think that, you know, we’re building, we are agreeing as we build this case for flexibility overall. What about the people that fail at it though? What about the people that don’t coordinate a hybrid space while within their company and they say, oh, this just isn’t working for us? Is that a top-down problem or where do you see those problems occurring?
Nick Bloom [00:13:36] Generally, might you know, I endlessly talking to companies doing a lot of exec head, I think the two critical things to get hybrid right one is coordination. So look, you have a team of you know 15 people kind of makes sense that when you come in, you want to come in on the same days. And the problem is you have teams where you have rules like you’ve got to come In 30% of days in a given month, you find people are in on random days when they’re in half the others are you know not there and they complain it’s quiet and dead. Coordination is critical. Mostly people like to work from home on Friday. So if you have a policy where you’re in two days a week, don’t choose Friday, typically you might choose Tuesday, Thursday. So first thing I think is you wanna coordinate. There was an anecdote, a friend of mine in London, I said, oh, she told me her law firm has hybrid. And I said oh, which days do you go in? And she said, I go on Monday and Friday. And I was like, Weird days to go in, you know, Jackie, why do you choose Monday, Friday? And she said, Oh, because I don’t like my colleagues.
Frank Cottle [00:14:35] Yeah, it’s so quiet. It’s so quite.
Nick Bloom [00:14:37] Yeah, exactly. And I was kind of like, well, this is totally backfired. I mean, the reason they want you in is to, you know, work with, you know, so one is coordinate, the other sounds a bit kind of hard ass, but I would actually monitor and kind of enforce this. So if I’m in a team of 10 people, and I’m coming in on my Tuesdays and Thursdays, or Tuesday, Wednesday, Thursday, I’m supposed to, but you know Frank, you’re not and I have to have a meeting with you, it becomes annoying to me that I’m on Wednesday, and you’ve decided to stay home to watch the World Cup or whatever it is. And look, if your kid is sick, I get it, but there are folks that are kind of skiving off. And then what happens is it doesn’t work very well. The CEO finds out. The CEO then says, look, we’re gonna scrap it. We’re gonna make everyone come in five days a week. So I think in order to save hybrid, we need to make it work. And to make a work, you have to coordinate and you actually have to enforce to make sure folks do come in on the days they’re supposed to.
Frank Cottle [00:15:26] Well, if you have a five day a week policy, you have to come in on the days. Exactly. Right. It wouldn’t be any different, um, uh, than any other, we’ll call it physical presence requirement policy that you’ve got, I don’t see anything like that. So what you’re saying simply is in order to work, you have to think a little bit and have a plan. Exactly. Right. You know, one thing I will say about people’s, your comment that you made a moment ago. You made a comment about people not getting as much mentoring, um, uh, which I think could be very, very valid. But on the other hand, they’ll start thinking independently better. I would surprise them eyes and they’ll make decisions on their own more actively, which should speed up everything that everybody’s doing.
Nick Bloom [00:16:19] Yeah, I think there’s one of the big advantages to hybrid, in fact, are fully remote. You’re right, though. You know, one thing is they can think more independently, be more independent. The you know, there’s a classic study on this, actually, there is a paper in the Proceedings of National Academies of Sciences that gets whole groups of people to solve what’s called the traveling salesman problem. So this is a problem whereby they’re trying to figure out, like, the optimal path for someone selling stuff. It’s a kind of classic problem going back to the 60s. And they have them in three groups. So group one, they have this team and they force them all in the room together for six hours in a row. Team two, they put them all apart for six hours and get them to meet at the end. Team three, they basically have them in a hybrid setup. You’re on your own for an hour, you’re meeting for an hour on your for an hour meeting for now, et cetera. Turns out team three performs by far the best. The reason is, of course, you kind of need a bit of quiet time to think and reflect, but you need a little bit of together time to meet, bounce ideas and go. You know, so hybrid kind of sets up this perfect situation of whereby you have some downtime to think quietly, to concentrate what’s called deep work and then sometime with others.
Frank Cottle [00:17:23] No, I think that’s right. And I do think, though, that people left to their own devices with a goal and an objective will quite often come up with better solutions. A committee. You know, they say a camel is a horse designed by a committee, okay? So, a lot of times when you get everybody together, you don’t come up with your best ideas. And if you look at the most productive individuals that have had made breakthroughs in the world, were they part of a committee? Or do they sit quietly in their own labs, studio, whatever they were doing and say aha I have an original thought an original idea I’m going to figure out how to execute it.
Nick Bloom [00:18:09] I mean, you’re exactly right. If you look, I’m a, you know, I am a professor at Stanford University. I live and die by research and by publishing, you now I’m in economics, many of my colleagues here are in sciences, hard science, computer science, etc. But you know biophysics, when you look at the way they operate, they basically operate in a kind of hybrid schedule. So they’ll be in the lab, go into research seminars, be spend time with others, but they may be spent half the time reading, quietly thinking in their offices at home. You know, you can’t do great, innovative, creative work if you’re just in a room full of people talking all the time. It’s impossible to concentrate. But you do need some interaction. So yes, you are totally right. The other comment I heard was I was talking to Zillow, I was talk to the CEO of Zillows, who was saying, you know, they are remote first. They don’t really have that much of an office presence. And the same way I’ve been talking to Instacart, Upwork, Dropbox, et cetera. One of the stories and themes that came out is being remote first has been very helpful for the adoption of AI. And they said, look, one of the advantages it gives you is you’re really footloose. And if you’re footloosed, you can rapidly reorganize teams. Imagine if you have teams on the ground, you’re saying like, go to reorganize this team, but Stacey, she’s in Chicago and John, he’s in Atlanta and I can’t move them together. Suddenly when you’re remote first, I’ve heard over and over again, it’s easier to move people around. It’s also easier typically to hire and fire. And it gives that flexibility to be more innovative. More flexible hybrid has some of that, not quite as much. But again, this sense that you have to be in an office to be innovative actually seems to be the reverse from the companies I’ve talked to that are adopting AI.
Frank Cottle [00:19:49] Well, question, are you in an office right now?
Nick Bloom [00:19:51] I am not in office, I’m at home, you know, just before the…
Frank Cottle [00:19:56] I’m at my remote workplace at home right now. Yeah, we are a remote first company and have been such for 20 years Okay, so this is just part of who we how we decided to build the company We so we wanted the best people we didn’t care where they lived We didn’t carry anything about them except that they were the best. People we can find Now for our service department our sales departments and things of that nature which do work as teams, we bring them in for a three to six month period to a central location for training, all the things that are necessary to get through. And then the option for remote is up to them. And we have found about, while it’s an option, about half of them take it. Half of them say, yeah, I really want to do that, and they succeed on the same ratio as the people that don’t take it, the other half said, no, I I really like working around a team. I think I need the structure of that myself. It’s more rewarding to me. So I want to come to the office, but we make it totally flexible. We’ve always done that. And gosh, we’ve got people spread out from Africa and Europe and all over North and Latin America. And it works well. And the other thing that I’ll say is people say that it’s hard to build a culture. And I would say not. It’s just as easy to build a culture remotely as it is in person, and sometimes easier because all the little things that irritate people about each other sometimes in person never surface when you’re remote. Yeah. Well, you can focus on the things that are important and the things matter to each of you without the little petty irritation things.
Nick Bloom [00:21:45] Frank, I’ll ask you, I mean, I’ve interviewed a lot of primarily tech, but not entirely tech, fully remote companies, I mean, a very large fortune 500 companies, they all still meet on a reasonably regular basis. So, for example, to Zillow, Zillows, they, you know, they have the Z retreats, which are quarterly, and then teams small, which is the whole firm. And then they’ll have lower level meetings typically once a month. It’s not that remote means you never meet, it just means on a day to day basis. And I assume it’s the same with you.
Frank Cottle [00:22:16] We meet or we bring people in for periods of time. Remote for us usually doesn’t mean long distance. It usually means somewhere near a facility. So the option is there in our case, makes it makes it fairly easy. But when you talk to Astrid, our podcast producer earlier today and have spoken with her, she was hired at our offices in Monterrey in Mexico. Which is the main service facility. Where do you think she is the last four or five months? Astrid had a personal goal of in the arts and the best place for her to achieve the things she wanted to achieve in the Arts was in Manhattan. And it did not matter a bit to us and I’ll ask you, has she done a good job with you? Would you know where she was?
Nick Bloom [00:23:16] No, she’s been great. And exactly on point. I had this the other she’s been fantastic. And I had exactly the other day, I was dealing with a grants person at Stanford University, emailing backs and forwards. And I said, Oh, where are you, by the way? And he said, I’m in Chicago. Huh? And then, you know, of course, it came out that he’s fully remote. And it’s like, well, that makes sense. I mean, we don’t need to interact. So yeah, I mean, what you tend to see in large companies is a mix of in person, hybrid and remote. So classically, managers, execs, much of the C-suite will be on some kind of hybrid schedule. There’s a bunch of normally lower paid folks. There are a lot of the kind of frontline workers that may be in every day. And then there’s a third group. For example, at Stanford, we have 3,000 fully remote employees and they’re a range of roles. I mean, teaching folks like me, professors are in, you have to teach. So you have teach in person. That really doesn’t seem. But for research and days like this, when I’m not teaching class, I can work from home. And then there are some people that are fully remote, some of the back office systems, HR, payroll, data entry call centers. There’s just no need for these folks really to ever come in. So I mean, they meet once a quarter, once a month, but otherwise on a day-to-day basis, they’re at home.
Frank Cottle [00:24:28] Well, do you think that working remotely or independently, we’ll say, within a company, of course, but having more independence, changes the way your brain functions? That you think of things you wouldn’t otherwise have considered, or your decision-making process changes, does it get more efficient because you have less time to be with the group? So you spend less time talking about the World Cup when you get together more time getting done what needs to get done. Do you think it really changes that dynamic at all?
Nick Bloom [00:25:05] You know, it’s a hard question. I’ll tell you about the research evidence, which is like, you know, looking at hundreds and hundreds of companies. Typically, what you see is hybrid. When you’re in say, two, three days a week looks the same as being fully in person on various innovation productivity metrics. So you know this is looking over hundreds and hundred of companies, typically fully remote can be problematic for innovation, but it has some big upsides. As you you tend to get much better people. There’s some trade and you save an office space. So often when you talk to companies, it’s like, well, you know, it was expensive to have people come in two, three days a week. And if it isn’t worth it, I mean, take Amazon. Amazon, rather than have your food delivered by a bank, you’d have it delivered by Ferrari. And I’m sure a Ferrari would be a little bit faster to deliver the food, but is it worth it? Would the customer pay for that? No. So it just doesn’t make sense for the business.
Frank Cottle [00:25:53] Only in Dubai, only in Dubai.
Nick Bloom [00:25:57] Yeah, I’m sure you know, in some places, but you know it’s kind of like the same thing, you have to figure out whether it’s worth it forcing folks in five days a week, four, three days a week, because it costs the business, it costs a business, as you say, in space. And it costs it because you basically have to pay people more money because on average, they don’t want to do it. And It really ultimately depends role for role. So I’m involved in some startups, and some of them are hybrid, and Some of them are fully remote and some of them, mostly in person. So My experience is it’s really driven by the task and the person. I mean, the task is kind of obvious. The person is interesting. What you tend to see is folks in their early to mid twenties are pretty keen on coming in because they want to get mentored. They typically want to socialize and they often don’t have great places to go at home. I mean they’re sharing an apartment for other people. Folks in their thirties and forties in particular tend to be keen on remote because they have, or at least more home days. They’ve got young kids and then kind of, you know, I’m 52, my age Which tends to be more return to the office a bit because, you know, they start to become empty nesters.
Frank Cottle [00:26:59] Well, I wonder, you mentioned the importance of having a plan or coordinating earlier. That’s what helps people to succeed. What causes people to fail, aside from not having a plan? But what’s the failure point in return to office programs that you see and the failure points that is consistent that you’ll see for the C teams that are making those decisions?
Nick Bloom [00:27:26] Um, so one reason RTOs fail is employees just are not on board and they’re basically resisting from the ground up. So if it just does not make sense to anyone as to why you should be in five days a week, it’s hard to persuade people and you get coffee badging and managers are in compliance, et cetera. A second problem is example, what you saw at Amazon was just getting the logistics right. Amazon calls everyone back to the office for five days a week, but then it turns out there’s not enough parking space, there’s no enough desk space, people are coming in and claiming there’s nowhere to sit. I think the final reason is what’s the you know, the underlying logic I’ve spoken to many people that say, look, I’m part of a team. And no one else in my team is in my local office, there is no point going in. And they find it intensely frustrating. They may go in for you know a month or two because they’re being observed and monitored, but they just move on and find another job. Generally, what you see, if you look at the Fortune 500, as I mentioned earlier, they’re 70% hybrid. That seems to be kind of where things have shaken out. Interestingly, from talking to companies that collect data and even the companies that supposedly are back five days a week, compliance rates are like 60, 70%. So take Amazon, that you’re supposed to be in five days, a week. From what I’ve heard, people are coming in three, four days.
Frank Cottle [00:28:43] Well, even before all this, go back 10, 15 years, the amount of hours spent effectively at a desk, an assigned desk, in an assigned space was only 42%. So people just aren’t there a lot. They never have been, honestly, I think, on things. Do you think this is more of a, it’s been pointed out this. Hybrid work and remote work is succeeding more in English language countries. Is Asia or are parts of Europe lagging in this regard? And by lagging behind, I don’t mean they’re behind, but it’s just they have a different approach to the same problem. I’m going to three-part this one. I’m gonna three-port this one, because earlier you said Companies are making people, are causing people to do something they don’t want to do. And so I want to make a point, regardless of whether you’re a hybrid or in person, full time, whatever, you never succeed paying people to paying people, to do something they want to, do that’s a very short sighted plan. Um, so you have to have something that comes up that breaks that mold or, or honestly, you won’t win against your competitors.
Nick Bloom [00:30:09] Yes, I mean, you’re right. Globally, we’ve been collecting data globally. And you see the same stories, by the way, and he talked to big multinationals, the US or North America in general, Northern Europe, are most kind of adopted hybrid or working from home. So you can hear him have a British accent, but back in the UK, much like US, Canada, Australia, New Zealand, kind of Sweden, Germany, hybrids, pretty dominant. The other extreme, If you look at Asia, particularly East Asia, it is very rare. And in our analysis, it looks like, you know, there’s a number of reasons, but I think perhaps the largest is this whole kind of culture of FaceTime. So in Japan, there is a big thing about being in the office and being seen and being around people. I actually think they probably have it wrong. And I think in the long run, they’re gonna move more the way of Northern Europe and North America. You know, one reason, you know one big factor, and I talked to government officials out there is, turns out it’s a lot easier to have families if you don’t have to go into the office every day. And Asia has a massive fertility problem. So there’s a big government push as well as now a business push to like say, look, you’re only gonna come in three days a week and please spend the time to think about having families and don’t have to have these punishments.
Frank Cottle [00:31:21] In that regard, too, and you’ve spent time in Asia as I have, the home setting is not necessarily the same. In the United States, your average home or apartment is a certain size, and it allows for dedicated workspace. In an awful lot of other parts of the world, Asia in particular, the apartment size or home size is not such that… You really afforded that ability to have a workspace that’s dedicated, comfortable, and isn’t constantly invaded by other family members.
Nick Bloom [00:32:02] That’s true. So for the US, you’re absolutely right. If you look at, you know, look at my homeland, the UK, or some of Northern Europe, like Holland or Belgium, they tend to also have, you know not particularly large, they’re mostly living in apartments. So there you still have three times as much work from home as you do, say, in Japan. So you’re right, there are a number of factors. I mean, there’s, you, know, internet connectivity, like industrial structure, it tends to be easier for services than it is for manufacturing, apartment size, the length of lockdown. It looks like the biggest one from what we can see though is this cultural phenomenon. It’s kind of odd. You know, it’s funny when you talk to American multinationals, they tend to be hybrid even in Google. I spoke to Google Japan and even out in Japan, Google still has employees from home two days a week. So for the Japanese in those organizations, they’re fantastically happy. They’re like, this is amazing. No Japanese employers are gonna give me that. So, you know, if you have a subsidiary out in China or in Japan it’s an enormous advantage actually that allow them. To adopt what a standard practice is in the US.
Frank Cottle [00:33:05] Interesting, interesting. Where do you see the future? Where do you see the future 2030? How does third workplaces tie into hybrid work? Not just home and office, but third work places as teams are developed, things of that nature are specialized requirements. How does AI tie into a hybrid work in your view? And who’s who’s who’s best positioned to benefit from
Nick Bloom [00:33:37] AI is a complicated and ever-changing topic. Third workplaces, I think, our flex space is definitely on the up. The reason is, there’s a lot of companies that have these legacy long leases that’s totally letting this thing expire. If you only have employees coming in three days a week or two days a weak, or even if you’re uncertain, it really doesn’t make a lot sense to invest millions and millions into leases and also, of course, furnishing the space because it causes issues with flexibility. AI I think plays into that a bit too. The biggest theme I got out of AI is, who knows what’s gonna happen? And if you don’t know what’s going to happen, you do not want to be signing a 10-year or 12-year lease and furnishing some expensive piece of real estate. So you want to, you know, be nimble, be agile, and that means probably leasing rather than buying. So I actually, you now, I’m kind of in, you know much like you, I did to a much lesser extent involved in the sector a bit. And it’s, you one of the reasons that I think it’s very much around the future is this greater flexibility.
Frank Cottle [00:34:33] Well, you know, I think the pandemic taught everybody that, that what they didn’t know before confirmed it. In 2010 or 2000, if you and I started a company, we needed to have a good product and then access to capital in order to scale them. In 2022, three, we had to have those same two things, but we also had to add flexibility. Flexibility is now a core strategic element in the growth of any company, as is the capacity to do business and hire across borders. I mean, you might have a three-person company, but you’re gonna have an international client and probably an international teammate member. That’s just the way of the future also, I think. Do you see us making big strides in this regard, or do you think that we are gonna level out and the changes will be, the growth will be based on the growth of economies, you know, two, three, four, or 5% a year of one way or the other? How’s your thinking as we look towards 2030?
Nick Bloom [00:35:45] I mean, if we look at the last two years, things have been very stable. So there was a long period of which flexibility work from home is slowly growing. That was, you know, the kind of 40, 50 years up to 2019. There was a period of enormous turbulence, 2020, 2021, 22, and then things have settled down again. It’s a bit like, if you imagine the planet when it was hit by the asteroid that wiped out the dinosaurs was chaos for a bit, and then it settles down into a different world.
Frank Cottle [00:36:10] Well, shut up. Hello.
Nick Bloom [00:36:14] Yeah, so now, you know, I think now, we’re late 2025, looking ahead, I see 26, 27, 28, it’s going to look similar. I mean, the big so what an AI is to stay nimble. So do not make massive long run investments and enormous pieces of real estate. For example, on the space dimension, because you don’t know, you don t know what your head counts going to be. I actually visited the other day, Google. And in Google, they have this big empty plot of land that I noticed and asked them what it was on their campus, and they said, oh. We bought another building here, we demolished it. We’re about to build a big new office building, twice the size with much more space. And then we decided we may not be hiring anymore because AI is kind of capped head count. So now the space is lying empty. But for them, that was a very expensive mistake because they bought some office building off some other company that happened to own it, ripped the thing down and now it’s, they basically. Yeah, and it was, they’re actually growing, I looked out because initially asked, what are those folks doing in that garden growing cucumbers and tomatoes? And they said, Oh, and then this story came out, that was, you know, they didn’t know what to do with the land. And so they were just kind of growing vegetables on it until they sorted it out. But it was weird that Google had taken a six story building, ripped it down, turn it into a vegetable garden. Because they, you knows, discovered they made a mistake if instead they just stuck with flex space. Whereas I mean, I think they’re doing that now, you know, a lot of these firms are now like, okay, we’re frozen on our real estate, we’re gonna be much more cautious when we need it at the margin and go out and get space on the go.
Frank Cottle [00:37:45] We see one, not changed, but a dynamic growth in the flexible workspace industry, business centers, co-working centers, etc. Sector has been growing through the stability period that you’re talking about at 10 to 12 percent a year Which isn’t a lot? But it’s more than anything else has grown. No, it’s done very well, you know, so it’s not it’s been very well and we see The strategic use of facilities like that rather than the tactical use We also don’t see any startups going anywhere else That is the home for starting a business now, whether it’s a virtual office or a coworking center or a classic business center like a Reaches or something. That is where startups go because they don’t, because of their sensitivity to the expenditure of capital and their need for flexibility. I don’t think that’s going to stop dynamic. If that dynamic doesn’t stop, and of that industries. Footprint and it’s now probably one of the largest consumers of empty space in all the major markets if that that industry’s Footprint continues to grow. Do you think just the availability of quality space of that nature will have its own dynamic And impact on the way we look at flexible work in the future or the way. We look at hybrid work and return to work overall
Nick Bloom [00:39:21] Maybe, I mean, my sense is flex space. I mean it’s always been around, it’s been growing. You’re right, it said an enormous shot in the arm from the takeoff of hybrid. It’s an aid to hybrid. I think the things that have been a much bigger deal to it are things like video calls, cloud computing. So just to take what we’re doing now, we’re working together. We can video call all the time. That wasn’t really around in 2010. I mean that’s really in the last. 10 years, five years has been good. And then cloud, we can share documents. I’m living out in Silicon Valley. I talked to a lot of tech firm startups that there’s amazing stuff coming down the pipe. I mean, I’ve seen a 12 by 12 foot screen with cameras all throughout it. So, we could be having a full body discussion, whether you, I don’t know if you wanna see what pants I’m wearing or not, but we could being doing this if we wanted. This company is doing holograms. Oddly enough, when I was having lunch with Eric Yuan, I said, what are you working on at Zoom? He said, oh, a lot of stuff. And he listed some stuff and he said, and we’re trying to make it like touch so you can touch things. So you can put your hand into the screen and the other person can reach through and shake your hand. And I said, really? Is that really possible? He just laughed and changed the topic. So I don’t know whether it was possible, but there’s good stuff out there.
Frank Cottle [00:40:38] Funny, I’m an old guy. But I had my first video conferencing system in 1982. And in 1984, we actually built a holographic receptionist was kind of goofy was in a box, they had to have a have a mist in there to make it work kind of like an old bad Disneyland thing. And everybody hated it because they actually like the real person instead, even though the real person was just in another room, we have three facilities at the same time. This stuff, the tech around it, which has evolved amazingly. Has been around for years, years and decades even. And it’s just now becoming completely normalized. Yeah. And to where everybody accepts it and everybody actually seeks it out as a first solution instead of as an alternative solution. And I think that that’s, as we continue down that path towards 2030, everything that we have to do with return to office. Hybrid, et cetera, more flexibility has to be the engine that drives us all. If it’s not, then we might as well throw all AI away, because that’s going to require us to have a whole other massive amount of flexibility in general in the way we think. So maybe we’re in good just for a good brain hitting and smacking us around a little bit right now. But I could be more excited about the future myself. Well, Nick, thank you so much. I really appreciate your support, your contribution to our listeners is very, very much appreciated overall. And I’ll look forward to the next time we chat.
Nick Bloom [00:42:31] Me likewise. Thanks so much for having me on, Frank.
Frank Cottle [00:42:36] If it’s impacting the future of work, it’s in the Future of Work podcast by allwork.space.
