ClickZ was born in May 1997, in a couple of spare bedrooms. With a real need to make this baby profitable as quickly as possible, we kept costs low. We modestly outfitted our home offices with separate phone lines, used fax machines and cast-off office furniture. The offices had the lovable grunge aura of your first college apartment. We cautiously hired first one, then two employees, who worked as contractors from their own home PCs.

Raising a company, we discovered, can be a lot like raising kids. Sometimes, you’ve got to plug in and nurture them with abandon. And sometimes, you’ve just got to know when to get out of the way. And when you get too attached to doing things a certain way, the child changes and makes you readjust your thinking. The experience of growing ClickZ, the company we started, has been very much a study in parenthood.

This Internet marketing newsletter was born of humble roots. Today, ClickZ publishes over 50 articles a week from bicoastal offices with almost 30 employees combined. But nearly four years ago, it published just a single article every business day. And even that stressed our small staff, all of whom were working out of their home offices. For the first two years we managed to do it all—get the articles, get the advertisers, put up the site every night, do the mailings, pay bills, send bills—as a virtual company.

Unlike many dot-com companies, ClickZ was funded by no more than a few barter deals and a low-balance credit card. Early on, Andy negotiated a modest barter agreement with SimpleNet for Web hosting and e-mail service. He used his two-year-old Macintosh clone and some vintage page-creation software to design the page. Yes, it was crude, but it did the job.

Is Face Time Necessary?

Andy convinced Ann to work for equity as his partner. That worked out in the long run. But at the time, a significant share of nothing was still nothing. Being part owner of an Internet company with no revenue and zero funding wasn’t exactly anything either one of us could take to the bank. What really spurred its growth was the need to make this small venture profitable.

There was something special about launching a new business this way. It was romantic, it was adventurous. It was also incredibly inefficient. The real challenge, it turned out, was not turning a profit but staying in touch. We e-mailed constantly. We chatted on the phone when the issue required more interaction. But as time went on, we were spending way too much time bringing each other up to speed on our own individual endeavors.

A real-time messaging software tool, ICQ, helped add immediacy to our communication. But pretty soon, it still wasn’t enough. The business was growing and demanding more of our collaborative time. We were partners who fed off each other’s energy and ideas. We needed face time.

Is Communication Up to Speed?

So we instituted weekly meetings, then twice-a-week meetings. We became a fixture down at the local Starbucks. The barista behind the counter would nod and ask, “The usual?” It seemed enough. It seemed to work, even as we added employees–all virtual–and communication became increasingly complex. We were burning through 14- to 16- hour days, falling into bed at 2 or 3 a.m. and running a modest profit. ClickZ was growing. We were thrilled.

What we didn’t realize was that running our company virtually required a huge component of communication. As a communication-based company, we made an error in judgment. We assumed that because we were highly wired, well connected with one another, that we were efficient and executing at top speed. But, guess what we discovered? We weren’t. We were actually incredibly inefficient. And we were far slower to execute on our business plans than we could have been otherwise.

A full two years after launch, we finally broke down and rented a small, 600-square-foot office. Even at the time, we weren’t sure we needed it. But the pressures of being in a home environment with all its distractions were approaching an intolerable level.

Less Time, More Money

What we discovered – almost immediately after we moved into our new office – was that the amount of time we needed to communicate was cut in half, simply because our desks were all right next to each other. We could speak in shorthand, spending no time on ICQ, e-mail or sipping Friday morning lattes. We could cover a whole lot more territory.

Our workday went from 14 hours on average to far more tolerable eight or nine-hour days. We were better focused at work. And, we were more focused on family when we were home. The lines between the two were no longer blurry.

With access to each other, our vision of what we were capable of, as a company, began to change. We saw that we had far greater capacity than we ever imagined. In the year and a half following that move, the company grew from five to 25 people, launched a conference and book division, and added a new discussion forum and many smaller newsletters. All that paid off when we were acquired by internet.com, an Internet-industry portal, for a healthy sum of cash and stock.

The Real Lessons

The fact is, while going virtual in the launch phase made a great deal of sense, as time went on, it really hindered our growth. We had become too attached to the old way of doing things. We had to rethink the fact that our baby wasn’t a baby anymore, and nurture our offspring in a whole new way. And in the end, we had to get out of the way for it to grow.

If you are in virtual mode, you might consider how much time you are spending–or wasting–on communication. There might be some efficiency in being in the same physical location as your partner and employees. More critically, you may also find, as we did, that the spare room limits your vision to your back yard. Getting out of your own backyard can expand your vision and make a far bigger world available to your business.