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Decentralizing a Tiny Company

As my friends know, I took a strange and crazy decision to found a software development company in Macedonia, a little unknown place on the planet, where I don't even speak the language, let alone know anybody personally. This crazy decision doesn't seem so crazy today 2 years later, now that  it serves our customers better than the development-centers we utilized before. 

As we start our 2nd year of evolution in Macedonia, we are confronted again with another crazy decision, this time related to growth of our operations in this country. 

Now, Macedonia is an increasingly centralized country, which has seen it's capital-city Skopje attract vast migration of population in the last 10-20 years. This has been particularly true in the IT-industry. Some of my best employees are immigrants from other parts of the country. While that is true, it's disheartening to see people being uprooted from their families, especially Macedonians that have a cozy multi-generational family traditions. I carry a strange entrepreneurial-guilt in helping the process. 

So as we try to grow in Macedonia, I ask myself if we should stay put in Skopje, or open operations in smaller towns like Kavadarci, Bitola and Ohrid, so that people can continue to live their traditions and enjoy their families going back to all generations alive, hopefully even extending that fortune to generations to come. 

While I am driven by principle, this thinking about decentralization has a profit angle too. Skopje's costs of living are on average 30% higher than those in other Macedonian cities, which reflects 1-to-1 in payroll-costs, for a software company amount to over 80% of operational-costs. Also, since there are more software companies in Skopje, the market for talent is fiercely fought. We may avoid this battle if we spread the turnover-risk across multiple locations. 

However, does size matter? We are one of those small sub-50 strength companies, which will likely not change in the next 3 years. Is it sensible, and profitable, that companies at this size decentralize?

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