As more and more companies force employees to go back into the office full time, one company is letting staffers make their own choices about where they want to work. 

Like the rest of the world, Zillow’s employees were forced to work from home at the onset of the COVID-19 pandemic. In the autumn of 2020, company leadership told employees that they would not be asked to return to the office full-time. As a result, hundreds of workers decided to relocate, prompting the company to establish a “CloudHQ” model: the company considers its headquarters to be online, not in one physical location. 

Approximately 84% of Zillow’s 6,900 employees are fully remote, meaning they’re not associated with a permanent corporate office, and they aren’t required to be in office regularly. The rest are a combination of mortgage roles that require high levels of in-office attendance because of compliance laws, or regional sales workers who are asked to report to a specific field office. 

Dan Spaulding, chief people officer at Zillow, spoke with Fortune about the company’s approach to asynchronous work, what exactly a “Z-retreat” is,” and how often he actually goes into the office (spoiler: not a lot). 

This interview has been edited and condensed for clarity.

Fortune: Tell me about Zillow’s CloudHQ approach to work. 

Dan Spaulding: CloudHQ really started in the confusion of “post” the beginning of the pandemic [fall 2020], when you just kind of didn’t know when you were going to be able to get back to the way that work used to be. We started asking ourselves the questions of: ‘We’re learning a lot working in this distributed way. How do we build on that and how do we think differently about what our employees want and need coming out of the pandemic?’ And that grew into our CloudHQ strategy.

Our CloudHQ strategy is that we want employees to have the ability to choose where they live and work [based on] what is most effective for them on a daily basis. And then we want to be hyper-intentional about when we are together in person.

How has Zillow’s relationship to the physical office changed?

We had 11 offices across the country before the pandemic. And to put it in perspective, 95% of our employees lived within daily commuting distance of those offices. Today, we have six offices across the country within major hubs: Seattle, San Francisco, Irvine, New York, to name a few. And we have employees now in all 50 states. 

We still use those offices on a daily basis for one of two scenarios. One is that we have a lot of employees who still like to come into the office on a fairly frequent basis. We don’t have mandates about time spent in office. The broader use case is for what we call “Z-retreats,” which are intentional gatherings that we plan and execute centrally that line up with a calendar that we build from the beginning of the year. It’s based on: when do we need teams to come together? When do we need leaders to come together? When do we have important product launches where we need cross functional work streams coming together and spending focused time together? And then we rotate those across the country and bring employees in for for all sorts of meetings.

The first full year of “Z-retreats” for us was 2022, when [there were] vaccination levels that we felt really comfortable [with] from a health and safety perspective. That year, of course, there was also pent-up demand. Teams were so desperate to come together.

What kind of results are you seeing from the remote and hybrid work strategy? 

We’re in our ninth quarter of outperforming residential real estate. We’re shipping product faster than we’ve shipped product historically. Our voluntary attrition is down. Our employee sentiment about working at Zillow—pride and excitement and working at Zillow—all of those measures continue to be up.

We haven’t seen a dip in any productivity measure that we track since we’ve moved into this modality. 

What are the impacts on talent recruitment and retention? 

I have four times the applicants for every job opening that I had pre-Cloud HQ. So if you look at those measures directionally, that tells us that we’re doing something that’s compelling to job seekers. 

We do internal surveys three times a year to measure employee sentiment—94% of our workforce are proud to work at Zillow and 84% believe they have the resources to do their job effectively. 

Then some of the things that really matter to us are about inclusion—84% of our workforce feel that they can be their authentic selves at work. If you look at some of [Zillow’s] hiring numbers, pre-pandemic, 41% of our employee population were women. Today, 46% of our employee population are women, and that’s on a growing headcount basis. That is a huge demographic shift. I’ve worked in HR for 25 years, I’ve never seen the demographic shift that I’ve seen since moving to Cloud HQ. And we believe that’s a differentiator for us in terms of not just attracting those employees to Zillow, but retaining them for a longer period of time. 

How often do you go into the office? 

I would say I go into the office probably four to five days a month. But never four to five days in a row. 

What do you think are common mistakes that companies make when it comes to RTO?

I obviously can’t speak to other companies, but for us, the question is always the same: why go back to the past when you can understand the challenges that your workforce is facing today, and push forward into the future? 

Trying to figure out asynchronous work, trying to figure out intentional gathering strategies, trying to give employees flexibility. These are all things that you can look [at] on one side and say, “Well, that’s too difficult.” But pushing everybody in the company—from our senior leadership team to our frontline employees—to be more intentional with the way they think about their work, the way they partner with each other? There’s a benefit for all of us. 

One common complaint that workers have about RTO is that they feel like it’s more about control than productivity. What would you say to that?

We like to think we hire adults. We like to treat people like adults. At Zillow, we think it’s a real privilege that we get this flexibility. Now, what I would say as an HR leader, I believe that great work contributions come from the marginal efforts that employees make. I don’t think that letting employees have flexibility to run that errand or to coach Little League or go to the yoga class that works with their schedule [will diminish that]. Our employees understand that in exchange for that flexibility, when the company needs you to step up, you step up. Giving employees a little bit more flexibility during their day, I think you get paid back 10 fold from that marginal effort when you really need it from employees. 

This story was originally featured on Fortune.com

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• The vice president’s comments came to light when Jeffrey Goldberg, the editor-in-chief of The Atlantic, revealed Monday that he had been sent war plans after being added to a group chat that appeared to include JD Vance, Defense Secretary Pete Hegseth, and Secretary of State Marco Rubio. Trump’s decision to strike, analysts said, signaled his administration is becoming increasingly focused on combating Iran, ideally without causing energy prices to skyrocket.

An Iran-backed militant group has wreaked havoc on shipping in the Red Sea, a major chokepoint of global trade, for over a year. The Trump administration decided to intervene, launching airstrikes on Houthi rebels in Yemen on Mar. 15, but Vice President JD Vance initially called the plan a “mistake” in a text conversation with top national security officials, saying the move bailed out Europe and was a tough sell to the American people.

Vance’s comments came to light when Jeffrey Goldberg, the editor-in-chief of The Atlantic, revealed Monday that he had been sent war plans after being added to a group chat that appeared to include Vance, Defense Secretary Pete Hegseth, and Secretary of State Marco Rubio. According to Goldberg’s account, a fascinating policy discussion ensued when Vance aired his concerns a day before the strikes. 

The Suez Canal attracts 12% to 15% of all global maritime trade, but only 3% of U.S. trade runs through the artificial waterway connecting the Red Sea with the Mediterranean, Vance claimed.

“[Forty] percent of European trade does,” he wrote. “There is a real risk that the public doesn’t understand this or why it’s necessary. The strongest reason to do this is, as POTUS said, is to send a message.”

Vance was correct and mistaken at the same time, said Marko Papic, who advises institutional investors about geopolitics as chief strategist at BCA Research. Objectively, he said, the Suez looms much larger for European commerce than U.S. trade.

But the American rationale for addressing disruptions in the Red Sea also involves the Trump’s administration’s strategy toward Iran, which experts say helps train, arm, and supply intelligence to the Houthi rebels. Beyond the obvious humanitarian concerns, preventing a wider conflict in the Arabian Peninsula is key for the global economy considering the likely ruinous impact of a spike in oil prices. 

While it’s unclear what exact numbers Vance was referring to, 40% of trade between Asia and Europe travels through the Red Sea, according to a January 2024 note from Allianz.

“Energy prices are the most vulnerable factor, as 12% of seaborne oil and 8% of liquefied natural gas pass through the Suez Canal,” Allianz wrote, “causing energy prices in Europe to remain highly volatile.”

Still, Papic said Vance was shortsighted to assume the U.S could force Europe to foot the bill for protecting Red Sea shipping lanes. The Suez Canal is a tremendous convenience in that ships can travel between Europe and Asia without going around South Africa’s Cape of Good Hope, Papic acknowledged, but he said it’s hardly a necessity.

“It’s kind of an act of a neighborhood mobster to burn down the grocery store,” Papic said, “and then hunt for who did it and send the bill to the proprietor.”

That said, the journey around Africa adds roughly 10 or more days to Asia-Europe voyages, according to the Atlantic Council. As ships spent longer in transit when the Houthis first disrupted Red Sea shipping in late 2023, the think tank explained, global shipping capacity shrank by about 20%. 

“Over the long run, those things can become problematic,” said Matt Gertken, chief geopolitical and U.S. political strategist at BCA Research.

In the government group chat, Vance eventually indicated he was on board. Hegseth acknowledged the vice president’s concerns about “European free-loading,” calling the continent’s inaction “PATHETIC.” The defense secretary said he felt it was a good time to act, however, given President Donald Trump’s “directive to reopen shipping lanes.”  

At the time of publication, the White House had not responded to a request for comment.

Who are the Houthis?

The U.S. Navy has taken charge of protecting free maritime navigation since the 1956 Suez Crisis, Gertken noted, when U.S. President Dwight D. Eisenhower forced former colonial powers in the U.K. and France to stand down when Egypt took control of the waterway.

Therefore, one would have typically expected a forceful American response when the Houthis began targeting military and civilian ships in the Red Sea. The insurgent group, which controls Yemen’s capital city of Sana’a and much of the country’s west, where most of the population is located, considers itself part of Iran’s “axis of resistance” against Israel, America, and the West.

According to the BBC, the Houthis have targeted over 100 merchant vessels with missiles and drones between the start of Israel’s war with Hamas in late 2023 and the tenuous Gaza ceasefire reached in January.

The Biden administration ordered strikes but struggled to form a broader coalition in the Middle East and Europe to address the crisis. Gertken suggested Biden’s team was “paralyzed” by fears of a wider conflict in the Middle East sparking an inflationary shock to oil prices amid a tight election race. Vance voiced similar concerns last week.

“I am not sure the president is aware how inconsistent this is with his message on Europe right now,” he said. “There’s a further risk that we see a moderate to severe spike in oil prices.”

But Gertken said Trump’s decision to strike suggests the new administration, having started with Ukraine as its first foreign policy priority, is now also focusing on combating Iran. In the text chain, Hegseth said waiting to attack the Houthis risked allowing Israel to act first, preventing the U.S. from getting to “start this on our own terms.”

“It’s not really surprising at all that we’re building towards some major crescendo with Iran,” Gertken said.

It’s preferable, he added, to fight with Iran’s Yemeni proxy in the Red Sea rather than on the other side of the Arabian Peninsula in the Strait of Hormuz, where roughly 21 million barrels of oil travel per day, accounting for a fifth of the world’s total oil flows, per the U.S. Energy Information Administration.

Attacks on tankers or, worse, a wider conflict in that crucial waterway, Gertken said, could spur stagflation, the dreaded combo of negative growth and higher inflation.

“It could really send the stock market into a tailspin,” he said.

Apparently, some of that calculus in Washington is discussed over text.

This story was originally featured on Fortune.com

If there’s anything buzzy in the tech world, chances are Xavier Niel has caught wind of it. The hacker-turned-entrepreneur owns a sprawling telecom empire, sits on TikTok parent ByteDance’s five-member board, and is a major startup champion, counting French darling Mistral AI among his investments. 

The billionaire has had a keen eye on tech developments throughout his career. But he has also witnessed Europe slip behind the U.S. and China in innovation. 

Europe has produced some promising startups amid the generative AI frenzy, such as Mistral AI and Aleph Alpha. However, the region will have to do a lot more to keep up with the global AI race.

Niel warns that Europe has a real shot at showing its promise and creativity on the AI front. But if it misses the boat, it could cease to be relevant. 

“If Europe doesn’t do this right, it will become a very small continent abandoned for a few generations,” he told the Financial Times in an interview published in November.

What differentiates European AI startups are their “values,” such as privacy and transparency, Niel said. It’s also generating engineering and mathematics-focused talent at its universities, which could give the region an edge—if it moves fast and breaks things, as the saying goes. 

“Sure, the world moves faster now; the resources are greater. But there will always be two clever kids somewhere in the world, working out of a garage, with a technological vision or a new idea,” Niel said. 

The French mogul, who is estimated to be worth $8.7 billion according to the Bloomberg Billionaires Index, is at the center of AI developments. His optimism in Europe’s AI prowess has led him to develop the world’s biggest startup incubator in Paris, Station F. He has also coinvested $300 million in a nonprofit AI research lab alongside Eric Schmidt and Rodolphe Saadé.

Still, he worries that if Europe fails to ride the AI wave, it will be reduced to “the nicest place in the world for museums,” Niel told Wired in September. He likened the current AI moment to when search engines became mainstream. Today, they are largely run by American players, such as Google and Microsoft Bing. 

“If you want to create a search engine now from scratch, you cannot win because you were not there 25 years ago,” he said. 

Other experts have also been concerned about Europe trailing behind and how that might impact the region’s security and defense prospects compared to the rest of the world. 

What Niel touts as one of Europe’s strengths has also led to the perception that it regulates AI too harshly, pushing competitors out of its market. The European Union passed a first-of-its-kind draft of AI rules, which some see as groundbreaking while others think it’s restrictive. 

In an in-depth report into Europe’s competitiveness, former ECB President Mario Draghi highlighted that AI could open up new opportunities if deployed correctly.

Meanwhile, German tech company SAP’s CEO Christian Klein said overregulation risks holding Europe’s startups back. The likes of Meta’s Mark Zuckerberg and Spotify’s Daniel Ek issued an open letter in September echoing similar concerns, urging Europe to fix its “fragmented and inconsistent” regulations on AI.   

Companies on the Fortune 500 Europe list, which ranks the region’s biggest companies by revenue, are slowly but surely integrating AI into advanced applications. Ultimately, Europe’s strategy for addressing challenges could determine whether it’s a winner or a loser. 

“Put simply, developing, launching, or just using technology is harder in Europe than it is anywhere else in the world. To stay in the global race, the EU needs a new approach: mitigating the risks of new technology while enabling innovation,” Google’s EMEA president Matt Brittin told Fortune in October.

A version of this story originally published on Fortune.com on November 18, 2024.

This story was originally featured on Fortune.com

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