Moving Talent to Middle America

BRIAN KENNY: In his 2010 country hit, “Fly over States,” Jason Aldean opines, “30,000 feet above Oklahoma, just a bunch of square cornfields and wheat farms. Man, it all looks the same. Who’d want to live down there in the middle of nowhere?” The term “flyover states” is often used pejoratively or defensively to describe the vast swath of land of the United States between the East and West coasts. States that are often only seen from the window of an airliner. But the last few election cycles have zoomed in on the country’s heartland, shining a light on both the challenges and the vast opportunities facing middle America. Realizing those opportunities will require new approaches, new talent, and a diverse new set of perspectives. Today on Cold Call, we’ll discuss the case entitled, “Tulsa Remote: Moving Talent to Middle America,” with case author Raj Choudhury. I’m your host, Brian Kenny, and you’re listening to Cold Call on the HBR Presents network.

Professor Raj Choudhury’s research has focused on studying the future of work, especially the changing geography of work. And he has a terrific article in the December, 2020 issue of HBR called, “Our Work from Anywhere Future, Best Practices for All Remote Organizations.” Raj, thanks for joining me today.

RAJ CHOUDHURY: Thank you Brian, for having me.

BRIAN KENNY: This is a timely topic. Just sort of given what’s happened with the pandemic and where we are today and how every place is thinking about remote work becoming much more a part of our existence. We recently, in fact, just a couple of weeks ago, posted an episode of the podcast where I spoke to Mihir Desai about his case about the Tulsa race riots. We’re going to see two very different sides of Tulsa. I think in this conversation today versus the one I had with Mihir. So I think our listeners might have that in the back of their minds too, as we’re talking about this. So thanks for coming on to discuss the case. Let me ask you to start by telling us when you walk into the classroom, what’s your cold call to start this case?

RAJ CHOUDHURY: So it’s a great question. And I guess I’ve had to rediscover how to teach on Zoom. So, I just taught the case in a new elective called, Managing Global Operations and it comprises much of my research. And I guess the question that we started this case with this time was trying to understand how the Tulsa model could scale and what would be the constraints in scaling the model to different parts of the US because the Tulsa model is very unique, but there are some general principles that could apply to other smaller towns across America. And in fact, many of these smaller towns in Arizona, Arkansas, and Kansas have looked at the Tulsa model and they’ve been really excited. And so, the question really is: can this model scale to large number of small towns in America and even beyond?

BRIAN KENNY: Yeah, we know that there’s been some experiments along those lines, but mostly to draw industry into areas, not to draw individual workers. So I’d love to hear your take on that as we get deeper into this. I mentioned your recent article in HBR. I want to know why you decided to write about Tulsa and how it relates to the things that you think about as a scholar.

RAJ CHOUDHURY: So I’ve been studying Brian, what I call the geography of work for over a decade now, and that entails studying where workers work in the geography space. So I’ve studied migration, both in an international context, but also in a domestic context of workers moving from smaller towns to large cities in search of employment. And the problem that’s been a very important theoretical and empirical problem in that literature is one of brain drain with smaller towns bleeding talent for decades and emerging markets losing much of their talent to the West. And when I stumbled upon this form of remote work, which I call “work from anywhere” during my research at the U.S. patent office, this was back in 2015, 2016, that really energized my imagination because this was an opportunity to now reverse the brain drain, where now workers could have the flexibility of moving out of large congested cities back to towns like Tulsa, back to emerging markets. And that would really be a game changer.

BRIAN KENNY: I want to hear your thoughts as we go further into the conversation about how this will change things going forward for workers, but why don’t you start by telling us what Tulsa Remote is and what they’re trying to do? Who are they trying to attract?

RAJ CHOUDHURY: Yeah. So, Tulsa Remote is an organization that is funded by the George Kaiser Family Foundation, GKFF and incidentally, George Kaiser is an HBS alum. And so the organization has been working on education broadly. And what they started in 2018 was the Tulsa Remote program because they primarily wanted to break this, what they call, chicken and egg problem. So Tulsa has been trying to attract workers for many years and the workers wouldn’t come there because there are no companies. And Tulsa has been trying to attract companies and companies wouldn’t go there because there are no workers. And so they essentially said, “we can probably break this chicken and egg problem by attracting remote workers. And so, if remote workers move with their families slowly, they can become part of the community. And then that really improves the quality of talent in Tulsa.” They initially were very, very skeptical of this model. And they said, “We will offer a $10,000 as an incentive for anyone to move to Tulsa and work there remotely.” And they only had 10 slots, not because of lack of funding because they thought no one would move. And they were really pleasantly surprised when for those 10 slots, they received 10,000 applications. Since the pandemic that model has now really grown.

BRIAN KENNY: Tell us a little bit about Tulsa. I mentioned before, sadly, one of the things that they are known for are the race riots that happened in 1921 and that centennial has just arrived. So there’s been a lot of discussion about that. But what does Tulsa look like today? Well, what opportunities are there for people who live there?

RAJ CHOUDHURY: So it’s a small town just shy of a million people. And I actually showed this to my students on Zoom. It’s like literally the middle of America. So when you say middle America, it’s geographically pretty much the middle. As you said, Brian, as Mihir has written about it, is a city with a very difficult racial past. But the new Tulsa, with the last two mayors have really tried to make it a much better place to live in. And of course, Mihir’s case study goes into the aspect of how they’re trying to mend the racial relations there and how to create a better paradigm. The case study I wrote really was focused on understanding what they did to the city. So they invested in a nice meeting zone, which was a great park and they really invested in the waterfront. And today’s Tulsa, I think, should be thought of as a small town, still, with a very attractive cost of living proposition for any worker, and also an opportunity to engage in the community because the community is small enough that a new resident could get involved, but it’s large enough that you could have an impact.

BRIAN KENNY: Yeah. So they’re looking for a particular type of person as well. They don’t just want anybody, right? So you get 10,000 that gives you a lot of people to choose from, I guess. What are the kinds of qualities they’re looking for to give people this opportunity?

RAJ CHOUDHURY: They’re looking for an individual who would make a commitment to working and contributing to the community. So they’re really looking for pro-social contributions. And that’s not just in the verbal interviews, they’re looking for actual evidence of that. So what is the proof that you would move to Tulsa and become part of the community in a very proactive way? And the other thing they’re looking at is a fit where the Tulsa community would say, “Yes, we want this person.” Because what they’re also trying to prevent is a situation where Tulsa residents would say, “Why are we paying $10,000 to these people to come to Tulsa? Why don’t you give Tulsa residents that $10,000?” And so in the selection process, they actually involve the community. And the community gets to go through the resumes and then vote on who they want to join and be part of the community.

BRIAN KENNY: Yeah. Because you worry about sort of organ rejection as the image that comes to mind, where you bring somebody in and the community just says “No.” And I guess the other question that I thought of as I was looking at the case was, are you creating a class system within Tulsa? I mean, people who were born and raised there may not have the level of education of the people that they’re bringing in, they may not be able to have the same economic opportunities. Are you creating or exacerbating a problem with this?

RAJ CHOUDHURY: And that’s where the pro-social contributions by these remote workers become so important. So I interviewed one of the remote workers and this gentlemen who was an African-American man had moved from New York to Tulsa. And he is now the debate coach in the high school team. And what better contribution can you make to a community? So these are the individuals they’re looking for.

BRIAN KENNY: That must’ve been like a shocker for him to go from New York to Tulsa. And I think many of the people that they’re looking at are probably coming from places like, I don’t know, Silicon Valley and other places, the San Francisco Bay area and the Northeast. What was the general reaction to people when they made this move?

RAJ CHOUDHURY: So are you asking about the reaction of the people who moved or the community welcoming them?

BRIAN KENNY: Yeah. Exactly. The people who moved there. What was their experience, I guess?

RAJ CHOUDHURY: So the operating model really involves a selection that we talked about briefly, but then there’s a huge component of integration. Just trying to make sure that these people are happy about Tulsa, just as Tulsa is happy about having these people. So one of the things they do is once they select someone, they invite that person for a weekend fly out. And this is sponsored by the George Kaiser Foundation. So the individual with the family would go there, look around Tulsa, talk to people who have already moved, talk to local residents, check out property, and then really make a well-informed decision that this is a place I can see myself raising my family for the next foreseeable future.

BRIAN KENNY: One question I would have is, what’s the long play that the Tulsa Remote team has in mind? There must be down the road, they’re seeing economic advantage to doing this, community building advantages? What does success look like, I guess? A decade from now, if they do this job well.

RAJ CHOUDHURY: So my recollection is that the Foundation has said that if they could move somewhere in the ballpark of 10,000 workers, not just through their program, but through similar other initiatives, that would be a contribution. And I think the government of Oklahoma has recognized this. So one of the things that’s going on, and I believe the legislation has just passed, is a new house bill. I think it’s called Bill 3887, which says that if Tulsa Remote is able to relocate a worker and that worker stays for at least a year, then the government would reimburse Tulsa Remote that $10,000 relocation costs. And the reason the government really wants to support this is of course, there is this contribution to the community. You are bringing a diverse set of remote workers who are contributing to the community, but then you’re also attracting new property tax. You are attracting new state income tax, you are attracting new sales tax. We did some numbers for the case study and just the income tax numbers are in the range of $4,000 per year, per remote worker. There’s a multiplier effect on the economic side, there’s a multiplier effect on the social side, and this could really change the talent pool in Tulsa in a conceivable way.

BRIAN KENNY: Yeah. 10,000 people is a lot of people. The Tulsa Remote team, I think if I’m correct has three people on it, or had three people, I guess, for the first couple of rounds. Can you tell us a little bit about that team and sort of what their composition looks like? And then how did they start to scale this so they could meet a greater demand in larger numbers?

RAJ CHOUDHURY: So it started almost as a one or two person team. So there was a gentleman, Aaron who’s now left. So he had a career. So he graduated from the Berklee College of Music. And then he had a career in Silicon Valley working with Apple, I believe. And then he wanted to come back to his hometown. So he came back to Tulsa and he had no clue of what he would do in Tulsa, but he really wanted to contribute to the community. And then he came across the George Kaiser Foundation project, and he took charge of that. And the project team was very lean because they only wanted to get 10 people. They didn’t have a plan to scale up to the extent that they’re scaling up now. But now they’re getting organized. And one great thing they’ve done is, in addition to investing in systems, they have a really good database of everyone who applies. Actually, I’m doing some research with them to look at the database and we are estimating all kinds of multiplier effects. But they also have great human capital on the team. And so one thing they ensured was that the team, the Tulsa Remote organizational team, should reflect the racial diversity and the gender diversity that they’re trying to attract to Tulsa. And so they’re very impressive members on the team who are able to connect with these remote workers and give them some personal comfort that it’s a welcoming community that’s good for them and their families.

BRIAN KENNY: This is obviously a huge life decision for the people that are planning to do it and I realize young people perhaps that don’t have as many obligations, they may not be married or have children yet. It’s easier for some people to pick up and leave than others. Are they also looking though for people with families, married couples with children or partners with children? Is that part of the diversity of people that they’re looking for?

RAJ CHOUDHURY: Absolutely. And actually, one of the things that stunned me when I looked at this carefully was most of the people who have relocated, I think the total number is 700 families have now moved. The vast majority of the 700 are not Tulsa natives. So these are people moving from San Francisco, from Chicago, from New York, from Austin, and most of them are actually young families. And one of the things that they uniformly told us when we wrote the case was that Tulsa was a much more affordable place to raise a young family. They could afford daycare, they could afford a bigger house.

BRIAN KENNY: The numbers were pretty shocking. Because you’ve got an exhibit in the case that shows what the rent and daycare and things like that look like in places like San Francisco and Philadelphia compared to Tulsa. And it’s an amazing difference in terms of the cost of living.

RAJ CHOUDHURY: Yeah. It’s an order of magnitude. So the median rent for a two bedroom apartment, we estimated in Tulsa was $675 compared to $4,000 and north of it in San Francisco.

BRIAN KENNY: We talked earlier about the fact that some other regions have tried this. Some are looking at Tulsa, maybe as a model. But in the past, it has been tried successfully in places like Arkansas and in North Carolina. But again, the way they came at it was to attract industry as a way to bring more jobs in. So that’s how they solved the chicken and egg issue I guess. What Tulsa is doing is fundamentally different, but it relies on the fact that remote work is going to continue to be a thing going forward. What are your thoughts on that? Where do you think we’re headed in terms of business acceptance of remote work on a sustained basis, even after we’re back to some level of normalcy? Will people and businesses still be able to rely on remote work?

RAJ CHOUDHURY: There is no doubt in my mind that remote work is here to stay. We’ll never go back to what I call the “all cubicle model” of 2019 ever. That genie’s out of the bottle. And actually I was studying remote work before the pandemic. So my research with the US patent office, which focused on two forms of remote work, work from home and then work from anywhere where the worker could relocate to a town like Tulsa, was all done before the pandemic. And then I, I was looking at these all remote organizations, such as GitLab, which have no offices, not even one single office. And every worker starting from the CEO down below is remote. And that work was also done before the pandemic. So I think the phenomena was already there. It was getting gaining momentum, large companies like Dell had committed to the model, the old remote organizations, such as GitLab and Zapier and Automattic were also gaining momentum. I think the pandemic has really broken myths for thousands of companies and millions of workers are on why their job needs them to go to an office. So this has been a game changer and I think what I’ve been studying and discussing and urging companies to think about is how do we get to an efficient hybrid remote model, which takes the best of the old office and combines it with the best features of remote work. And I think that is going to be the steady state in my mind.

BRIAN KENNY: One of the questions I would have is for a city like Tulsa, what does it mean to have a lot of workers who are there that aren’t economically anchored to the area? In other words, they’re remote and they could pick up and go at any time, does the Tulsa Remote team worry about that like, “Geez, these folks came here, maybe they’re just here for a couple of years and then they’re going to pull up roots and go someplace else.”

RAJ CHOUDHURY: I’ll talk about what they’re doing to avoid that in a second, Brian. But just on the question of working in an office versus working at home. Actually most of the Tulsa Remote workers, vast majority of them do not work from home. So what the Tulsa Remote organization did, even back in 2019, before the pandemic, was to invest in a co-working space called 36 Degrees North. And they provided that facility at a very subsidized rate to all the Tulsa Remote workers. And that really gives the Tulsa Remote workers this choice, if you want to work from home, so be it, if you want to work from an office, you could work from 36 Degrees North. But on the question of how to retain these workers, I think that recent thinking, which I really like is to say that instead of giving people $10,000, could we help them make a down payment towards their first house. And the thinking is, once people invest in property and you start raising a family, you just become part of the community and that’s where the adhesive will come. And I think as large number of remote workers moving to Tulsa, start buying property because now they have a way, there’s a down payment, which is free for them. I think many of them would probably stay back.

BRIAN KENNY: Yeah, that’s a very good point. So, it all sounds great, but I’m sure there’s been some troubles along the way. And one thing, we’ve talked about the pandemic, we haven’t talked about how it affected the ability of Tulsa Remote to continue doing this work at a time when people are literally grounded. So what are some of the issues that they’ve had to grapple with as they’ve moved towards their goal of 10,000?

RAJ CHOUDHURY: The pandemic has created some short-term pain because even people who were accepted into the program couldn’t move because they didn’t want to move in the middle of a pandemic. But in my conversations with the Tulsa team, they see the long-term shift towards remote work as a great opportunity, because now even prior to the pandemic, if you had 10,000 applicants for 10 remote slots, after the pandemic, presumably those numbers would be much larger. So they would have more choice on who to select, they would be probably more on a path to realize their dream of moving thousands, not hundreds of workers to Tulsa. It’s a question of how to keep the integration with the community going when the program scales from the hundreds to the thousands. How do you keep finding those debate coaches for the high school? How do you keep finding those connections between residents and the remote workers, and how do you make all of this much more of a science than three people with a spreadsheet trying to find these attractive remote workers. So I think just to make this a process-based model where there are processes which are taking care of selection, and the relocation, and the long-term integration is where I think the management innovation is needed. So that’s where I think their minds and hearts are.

BRIAN KENNY: So you mentioned that there are a couple of other places that are looking at this as a potential model for them. Any more detail that you can offer on that?

RAJ CHOUDHURY: I know many programs were announced after Tulsa. So Topeka, Kansas announced a program. There was a city in Arkansas, which announced a similar program, a city in Arizona. And I feel many other mayors and many other leaders in smaller towns should take a look at this model. The good thing about Tulsa was it was a foundation driving the effort, taking the risks if you can think of that as a risk. And now that that model has been proven to be successful, the government is getting behind it. So I feel that kind of a public private partnership is probably needed in many of these towns.

BRIAN KENNY: What does it cost roughly to recruit a candidate?

RAJ CHOUDHURY: So it’s a $10,000 for the sort of relocation costs, and they don’t pay that $10,000 in one goal. So now I told you about how they’re thinking about making a down payment for the first home, but even in the first three years, they gave the $10,000 in a very smart way. They disbursed it every month in this monthly dinner. And the dinner was really to bring the community together. So they got some residents, they got some remote workers, the remote workers received a check at the end of the dinner, and they explored the city’s restaurants. And the remote workers got to dine with the residents.

BRIAN KENNY: That’s very smart, very smart.

RAJ CHOUDHURY: It’s very smart. And then the other costs they had was the weekend trip before the move. So they sponsored that. So that was one of the costs. And then the third cost was just the subsidy for the co-working space. So everything put together, I don’t think they spent more than $15,000 on each worker. And the ballpark numbers we have estimated is just the income tax and the sales tax that these workers have given back to the city, is in the range of $6,000 to $7,000 per year. So it’s a breakeven of two years. So it’s a very financially attractive model.

BRIAN KENNY: Yeah. And you hope that they’re going to stay far longer than two years. Raj, this has been a very interesting conversation. I have one more question before we let you go. Actually, I have two questions. The first is, are you going to move to Tulsa? You sound like you’re a big fan.

RAJ CHOUDHURY: No, I would love to visit them. I’ve actually never visited them. So all my work with them has been done remotely. I’ve become good friends with them, I really know them well, and it just tells you how we can all work remotely now, but I would love to visit that city and walk through the parks that I have written about, and meet some of these people and dine with them. So definitely I would love to visit Tulsa.

BRIAN KENNY: Great. So, really my final question for you would be, for our listeners, if there’s one thing that you want them to remember from this case, what would it be?

RAJ CHOUDHURY: It’s really about the reversal of brain drain. That for decades, small towns have bled talent, have lost talent to the large coastal cities, emerging markets have lost all their elites to the West. And I feel this is a great way of reversing the talent flows. I don’t see personally this as a loss for the Silicon Valleys of the world. I really feel it’s giving a way for people to self-select where they want to live. So if you love San Francisco, New York, good for you, but if you want to raise a young family in a more affordable place, now you have a choice. So I really see this as a win-win for large cities and smaller towns.

BRIAN KENNY: Raj, thanks so much for being on Cold Call to talk about the “Tulsa Remote” case really enjoyed it.

RAJ CHOUDHURY: Thank you, Brian, for having me.

BRIAN KENNY: If you enjoy Cold Call, you should check out our other podcasts from Harvard Business School, including After Hours, Skydeck, and Managing the Future of Work. Find them on Apple Podcasts or wherever you listen. Thanks again for joining us. I’m your host Brian Kenny and you’ve been listening to Cold Call, an official podcast of Harvard Business School brought to you by the HBR Presents Network.

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