My advice for those starting a new company: Stay virtual as long as possible.
One thing we did get right at Lookery was minimizing our infrastructure which let us focus our energy and cash on getting our product to market -- fast.
We're following a similar model at my new startup, Performable. So far there are three of us on the team, all working virtually. Unlike with Lookery, at Performable we all live reasonably close to each other so we meet at a local coffee shop several times a week to review our progress and co-work. The virtual setup works great for us since we knew each other previously, and we're comfortable working together.
At some point we know that we'll have to get an office space. You usually reach that point when you need to hire outside your personal network or grow beyond a certain size, the exact size depending on your situation. When it's time to move it out of your house or the coffee shop, you will know. It's time to move out only when the the answer to the question "Is getting an office space going to help grow my business?" is a firm, "Yes."
Back in 1996, when working for my first startup, finding office space was challenging; that was NYC (Silicon Alley) in the boom days, when everyone was paying a premium on huge loft spaces with room for ping-pong tables and Razor scooters.
Ten+ years later that all seems ridiculous; I've never witnessed a correlation between cool offices and successful companies. Today there are lots of options for startups: coworking spaces, part-time offices and shared workplaces; let someone else burn their cash on building out an office space (always a liability never an asset).
If you're in Boston, check out my friend Coach Wei's post on finding startup office space. But don't sign on the dotted line until it's a necessity. At the beginning, use the cash you'd be spending on rent to invest in things that grow your business.
If you like this post, please vote for it on my favorite news site. --David