Insights U.K.


Digital Nomads: Turning a romantic notion into a serious prospect for the future of work

Think back to 2019. How many digital nomads did you know? Depending on your age and the industry in which you work the answer would vary. By and large, the digital nomads I knew were freelancers, software developers or entrepreneurs who weren’t shackled to a specific location and preferred to work while traveling.

The appeal of becoming a digital nomad is blindingly obvious. Pre-pandemic, my friend Josh spent two months in Cartagena, Colombia, a month in Tulum, Mexico, a couple of months in Bali, a few months back at his home in San Francisco with a brief interlude at Burning Man before a few more months in Tel-Aviv, Israel.

And why not? Without a mortgage or children to tie you down, being a digital nomad makes a ton of sense. After all, who actually wants to spend January in London? However, relatively few employers would have given the green light to this lifestyle in 2019.

Enter coronavirus: the work-from-home genie has sprung out of the bottle, and there’s no putting it back in. Most businesses that have successfully operated remotely for the past year would struggle to deny that employees can now effectively work wherever they’d like. As we (hopefully) bring the pandemic under control, we will see more and more people demanding the life of a digital nomad.

And yet, we have significant logistical challenges to overcome before digital nomading can truly transition from a romantic dream to a serious reality for millions of workers around the world. And grappling with these headaches will be a boon to many entrepreneurs and the VCs who back them, and I will be spending a lot of my time thinking about how we capitalise on a few of these themes.

Operating remotely: travel, tech, and taxation

Before digital nomads take over the world, legal and commercial frameworks that enable employees to operate internationally are required. We have already begun to see many nations offer visas for digital nomads: from Croatia to Dubai to many Caribbean islands, countries are spotting the opportunity to attract remote workers outside typical tourist seasons to boost their economies.

Once nomads have identified a beach to base themselves on, they also have to make sure that they have the infrastructure to operate legally and efficiently. First, they will need to work out how their new base will impact their pay, particularly their taxation. Does working from a beach in Thailand create a tax nexus for my employer, and where should I be paying my taxes? Would I get taxed again when I’m back home?

There are already start-ups tapping into the demand for services that solve these painful questions such as Oyster, which raised $20m in February to accelerate the growth of its platform for managing payroll, HR, and benefits for distributed workforces. Other platforms that can help employers and employees to navigate the complexities of international work will flourish in the coming decade.

Working remotely is increasingly a requirement of today’s hyper-mobile and in-demand workforce. As a result, companies are seeking to offer the freedom to travel internationally as a benefit to attract and retain talent. For example, Revolut announced recently that its entire workforce of more than 2,000 would be allowed to work abroad for up to two months a year.

Businesses want to be able to offer flexibility when recruiting and retaining talent, but they cannot compromise efficiency or security, so I expect a boom in specialist work-travel operators that can provide pre-vetted locations with excellent Wi-Fi, coffee and ergonomic workstations for working abroad, as well as advanced cyber-security tools to enable remote working. Flown, founded by serial entrepreneur Alicia Navarro to provide workers with tools and spaces to do “deep-work” away from home, is one early mover.

Living remotely: co-working, co-living and childcare

Digital nomads are typically buying into a flexible, fun lifestyle, so they will demand spaces to live and work that reflect these priorities. Selina, which offers “beautiful places to stay, travel, and work abroad indefinitely” was the Queen (or King?) of flash-packing pre-pandemic and may be the winner post-covid. Going forward, the boundary between offices and leisure will start blurring as hotels offer long-stay work and vacation combinations, and office spaces will offer additional accommodation and social opportunities.

Until now, parents have struggled to embrace the lifestyle of a digital nomad, but I wouldn’t rule out the rise of education providers that enable children to remain in school while traveling around the world with their parents. Combine remote learning with membership at schools around the world with coordinated curriculums, and imagine spending fall term in San Diego, winter term in Cape Town, and spring term in Barcelona.

Healthcare and insurance could also be tailored for digital nomads to provide specialist services that guarantee a consistent, affordable, global offering for families as they travel from country to country. Similarly, could mobility companies begin to offer digital nomad subscriptions that provide consumers with access to a car in any nation in the world?

Collaborating remotely: beyond Zoom

Working remotely across time zones became a norm during covid when everyone was working from home, and while remote-only organisations are becoming increasingly common, I still see a lot of opportunity in communication, collaboration and culture tools that take us beyond Zoom and into much more deliberate remote and hybrid working environments.

Personally, I feel the main drawbacks of not being back at the office are seen in reduced ability to communicate informally (think having to coordinate a call a week in advance with someone over Zoom for a ten-minute chat, when if you were in the office, you would have just popped over to their desk) and the challenge in maintaining a culture, particularly when it comes to onboarding new employees. I learned a lot about “how to work” by observing my colleagues at McKinsey, and I struggle to see how this can be done efficiently over Zoom.

I am not sure how technology will solve these issues, but I have a strong suspicion someone smart will come up with creative solutions. It may also be the case that the workplace and workforce of the future will just be different in how they operate, without losing productivity vis-a-vis traditional models. (In the above example, breaking someone’s train of thought by popping-over, may result in more loss of productivity than having to schedule a 10 min catch-up).

Digital nomads are certainly here to stay, and there is a mountain of opportunity for entrepreneurs and investors that help workers embrace the romantic notion of working anywhere in the world.

But as with any opportunity, there are also downsides — if you can do your job from anywhere, someone from anywhere can do your job. And that someone may have significantly different compensation expectations than your average Silicon-valley, London or Tel-Aviv tech worker.

If you are an entrepreneur building a business shaping the future of work and you’re interested in learning more about Beringea’s approach to investing, please get in touch with us at info@beringea.co.uk.

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