{"id":32925,"date":"2020-02-24T14:42:37","date_gmt":"2020-02-24T06:42:37","guid":{"rendered":"https:\/\/zegal.com\/?p=32925"},"modified":"2020-05-13T11:08:37","modified_gmt":"2020-05-13T03:08:37","slug":"entrepreneurial-arbitrage","status":"publish","type":"post","link":"https:\/\/zegal.com\/en-gb\/blog\/post\/entrepreneurial-arbitrage\/","title":{"rendered":"Entrepreneurial Arbitrage"},"content":{"rendered":"<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-large wp-image-33106\" src=\"https:\/\/zegal.com\/wp-content\/uploads\/2020\/02\/close-up-photo-of-assorted-color-of-push-pins-on-map-1078850-1024x683.jpg\" alt=\"\" width=\"1024\" height=\"683\" srcset=\"https:\/\/zegal.com\/wp-content\/uploads\/2020\/02\/close-up-photo-of-assorted-color-of-push-pins-on-map-1078850-1024x683.jpg 1024w, https:\/\/zegal.com\/wp-content\/uploads\/2020\/02\/close-up-photo-of-assorted-color-of-push-pins-on-map-1078850-300x200.jpg 300w, https:\/\/zegal.com\/wp-content\/uploads\/2020\/02\/close-up-photo-of-assorted-color-of-push-pins-on-map-1078850-768x512.jpg 768w, https:\/\/zegal.com\/wp-content\/uploads\/2020\/02\/close-up-photo-of-assorted-color-of-push-pins-on-map-1078850-1536x1024.jpg 1536w, https:\/\/zegal.com\/wp-content\/uploads\/2020\/02\/close-up-photo-of-assorted-color-of-push-pins-on-map-1078850-2048x1365.jpg 2048w, https:\/\/zegal.com\/wp-content\/uploads\/2020\/02\/close-up-photo-of-assorted-color-of-push-pins-on-map-1078850-640x427.jpg 640w, https:\/\/zegal.com\/wp-content\/uploads\/2020\/02\/close-up-photo-of-assorted-color-of-push-pins-on-map-1078850-1200x800.jpg 1200w, https:\/\/zegal.com\/wp-content\/uploads\/2020\/02\/close-up-photo-of-assorted-color-of-push-pins-on-map-1078850-1920x1280.jpg 1920w\" sizes=\"auto, (max-width: 639px) 98vw, (max-width: 1199px) 64vw, 770px\" \/><\/p>\n<\/p>\n<h4><span style=\"font-weight: 400;\">Cost of Living<\/span><\/h4>\n<p><span style=\"font-weight: 400;\">It used to be that we built our engineering teams in one place. Not anymore.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It used to be that startup founders all wanted to move to San Francisco. Not anymore.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It used to be that early stage investors would only fund local startups. Not anymore.<\/span><\/p>\n<\/p>\n<h4><span style=\"font-weight: 400;\">What\u2019s going on?<\/span><\/h4>\n<p><span style=\"font-weight: 400;\">We\u2019re finally seeing several trends reach their logical conclusion. More importantly, people are recognising the inevitability of these trends. It\u2019s about time.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">I\u2019ve built engineering teams on three continents. Until a few years ago \u2013\u00a0with one exception \u2013\u00a0those teams worked in the same location. Twenty years ago, that made sense. We didn\u2019t have the communication infrastructure or the tools to support distributed teams. Ten years ago, that wasn\u2019t really true anymore, but we soldiered on ignoring the inevitable. Humans are funny that way. We don\u2019t adapt quickly.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">I mentioned one exception. It was unusual at the time, 20 years ago. I\u2019d found some first-class developers who wouldn\u2019t move to New York. One lived in\u00a0 Australia, one in New Zealand, and one in Spain. I wanted to hire them and, against a lot of advice, I did. Mostly, the experiment worked, but we invested a lot of time and energy into making it work. The remote work culture didn\u2019t exist yet, so we were on our own, inventing everything. We didn\u2019t have Internet telephony; we didn\u2019t have cloud computers; there was no Slack; and we didn\u2019t even have Git. It was hard. The experiment left enough scars to dissuade me from building a distributed team again, for a long time.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Two years ago, my current co-founder and I discussed where and how to build our team. He pushed for decentralisation. I pushed back. He won, and we committed to a fully-remote workforce. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Today, I\u2019m glad I lost. We\u2019ve been able to hire some incredible talent. No one will be shocked to hear that those people didn\u2019t all live next door. In fact, you\u2019ll find members of the Credmark team in the US, UK, Italy, Thailand, Japan, Taiwan, and Kenya.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Thanks to the tools we use, this distributed setup works 95% of the time. All-hands meetings are inevitably rough on some of the participants, but that\u2019s not reason enough to rethink our approach.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Taking advantage of collaboration technology is smart, but it\u2019s not so interesting. What\u2019s a lot more interesting is the driving force behind this organisation: arbitrage.<\/span><\/p>\n<h4>Arbitrage<\/h4>\n<p><span style=\"font-weight: 400;\">I stretch the notion of arbitrage beyond its original definition, but that\u2019s only because there is no word to describe what I mean.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Strictly-speaking arbitrage is a financial transaction that takes advantage of price differences across markets. Physical oil futures, for example, maybe be selling for $100 in Nairobi but $102 in Singapore. A vigilant trader will notice the difference and buy as much as possible in Nairobi to sell it in Singapore. That arbitrage opportunity will exist as long as the two prices don\u2019t converge, which they inevitably will.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">I think of the arbitrage more generally: taking advantage of any market imbalance to satisfy a goal.<\/span><\/p>\n<h4>Cost of Living<\/h4>\n<p><span style=\"font-weight: 400;\">We wanted the best talent our money could buy, and we didn\u2019t have an infinite budget. Intelligence is evenly distributed. Thanks to online resources, education for a lot of professions is evenly distributed. Given that, <strong>we focused our talent search in places with low costs of living<\/strong>.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Thanks to this arbitrage, we\u2019ve been able to build a fantastic global team. As we grow, each member of the team will connect us to their local talent pool thus giving us both wide and deep access to talent. This setup is beneficial to all of us.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Cost-of-living arbitrage \u2013\u00a0which inevitably leads to distributed work \u2013 isn\u2019t a trend. It\u2019s our new reality. Anyone who ignores it is at a disadvantage.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">There are still a few good reasons to work in the same room as our peers, but technology is quickly overcoming even those. AR\/VR will demolish the few remaining advantages of physical proximity.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Of course, not everyone agrees with me yet. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">My friend Gil Dibner, one of the smartest investors I know, recently tweeted:<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-33163\" src=\"https:\/\/zegal.com\/wp-content\/uploads\/2020\/02\/Screen-Shot-2020-02-25-at-8.54.41-PM.png\" alt=\"\" width=\"621\" height=\"115\" srcset=\"https:\/\/zegal.com\/wp-content\/uploads\/2020\/02\/Screen-Shot-2020-02-25-at-8.54.41-PM.png 621w, https:\/\/zegal.com\/wp-content\/uploads\/2020\/02\/Screen-Shot-2020-02-25-at-8.54.41-PM-300x56.png 300w\" sizes=\"auto, (max-width: 639px) 98vw, (max-width: 1199px) 64vw, 621px\" \/><\/p>\n<p><span style=\"font-weight: 400;\">At Credmark, we haven\u2019t set out to prove him wrong, but we\u2019re proving him wrong. Eventually, I\u2019m sure that even Gil will change his mind.<\/span><\/p>\n<p><strong>Watch for Paul&#8217;s next post in this series publishing March 23rd.\u00a0<\/strong><\/p>\n<p><em>Paul Murphy\u2019s software career has primarily focused on financial services and voice. On Wall Street he worked on a broad range of front and back office systems. He then became obsessed with the human voice as interface, building tools and applications that interacted with users over telephones. This obsession culminated in the founding of Clarify, which developed cutting edge speech recognition and language processing software for conversations. With\u00a0<a href=\"https:\/\/credmark.com\/\">Credmark<\/a>, Paul is re-entering the finance space because he firmly believes that crypto is the foundation of the next global financial system.<\/em><\/p>\n<p class=\"p1\" style=\"text-align: center;\"><b><i>This article does not constitute legal advice.<\/i><\/b><\/p>\n<p class=\"p2\" style=\"text-align: center;\"><i>The opinions expressed in the column above represent the author\u2019s own.<\/i><\/p>\n<p class=\"p3\" style=\"text-align: center;\"><span class=\"s1\"><a href=\"https:\/\/register.zegal.com\/\"><b>Start managing your legal needs with Zegal today<\/b><\/a><\/span><\/p>\n<p><a href=\"https:\/\/zegal.com\/blog\/post\/opinion-identity-and-crypto\/\">FURTHER READING:OPINION: Identity and Crypto<\/a><\/p>\n<p><a href=\"https:\/\/zegal.com\/blog\/post\/customer-story-credmark\/\">READ MORE: Customer Story: CREDMARK<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Cost of Living It used to be that we built our engineering teams in one place. Not anymore. It used to be that startup founders all wanted to move to San Francisco. Not anymore. It used to be that early stage investors would only fund local startups. Not anymore. What\u2019s going on? We\u2019re finally seeing [&hellip;]<\/p>\n","protected":false},"author":84,"featured_media":33106,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_editorskit_title_hidden":false,"_editorskit_reading_time":0,"_editorskit_is_block_options_detached":false,"_editorskit_block_options_position":"{}","inline_featured_image":false,"footnotes":""},"categories":[41,133],"tags":[10080,10448,10307],"usecases":[],"businesstypes":[],"country":[],"class_list":["post-32925","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-funding","category-startup","tag-crypto","tag-entrepreneurial-arbitrage","tag-z-syndicate"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v20.8 (Yoast SEO v27.3) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Entrepreneurial Arbitrage | Zegal UK<\/title>\n<meta name=\"description\" content=\"The first in a series, Paul Murphy debates what he calls entrepreneurial arbritrage. 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