Why Remote Work Could Lead to Less Innovation
A new study suggests that when employees from one company run into employees from another company, creative sparks fly
3 min
Do chance encounters among employees of different Silicon Valley companies in coffee shops, restaurants and other public places lead to innovation? The answer is yes, say researchers who examined such “knowledge spillovers” in a study that may have implications for today’s work-from-home culture.
The researchers—Keith Chen of the University of California, Los Angeles, and David Atkin and Anton Popov of the Massachusetts Institute of Technology—tracked the locations of 425,000 phones using commercially available cellphone-location data. Though the data is anonymous and linked only to the unique ID number of each phone, the researchers surmised where the phone owners worked by looking at where the phones spent large parts of the workday, using a map of buildings occupied by Silicon Valley companies that have filed patents.
Examining instances where phone owners went outside the office and ended up near someone from another Silicon Valley company, they found 218 million episodes in which two workers from different companies were in the same place between September 2016 and November 2017.
For their study, they considered only situations in which both people were near each other for at least a half-hour, and used a probability technique to eliminate meetings that might have been arranged in advance. They also assumed that many of these people bumped into someone they already knew, such as a former colleague.
Sharing knowledge
Such chance meetings “may spark a conversation that leads to a transfer of knowledge or a collaboration,” the researchers wrote.
Next, the research team pulled up patent applications filed by the companies of the employees. Such applications list relevant patents from other companies in so-called patent citations. Patent citations are “one measure of which firms are influencing each other and how firms are sharing ideas,” says Prof. Chen, who studies behavioral economics and strategy at UCLA’s Anderson School of Management.
The researchers then worked backward in time. They looked for places where employees of a patent-filing company may have crossed paths with workers from companies cited in the patent application.
“We rewind the clock to a year before when they would have been developing this technology,” says Prof. Chen. “What school were they dropping their kids off at, what mall were they shopping at, what bar do they frequent. And you infer who was at that bar when they were there,” based on the phone-location data.
The goal, Prof. Chen says, is “to connect workers of the firm that is going to file the patent, at the establishment where we infer that patent was innovated, with what other workers they were interacting with.”
Next, the researchers calculated the overall number of such citations that appear to have been linked to unplanned encounters. The upshot: The researchers say that without these encounters, there would have been about 8% fewer cross-firm patent citations in the period covered by the phone-location data.
“There is a tremendous correlation between my workers’ meeting a lot with your workers, and my workers’ citing your workers’ patent,” says Prof. Chen.
The innovation boost from the encounters, by the team’s calculations, is about twice as large as a similar effect found by other research that looked for knowledge transfer based on whether two companies’ offices are near each other, Prof. Chen says.
Their study comes with some caveats. The researchers don’t know whether these employees actually spoke when they were in the same location, or, if they spoke, what they talked about. And they don’t know whether the workers’ jobs would have facilitated a tech discussion—they might have involved a Google HR staffer and an Apple maintenance person.
Still, the report shines a light on what some experts have long suspected: that random conversations involving people in similar industries can increase innovation.
Enrico Moretti, an economics professor at the University of California, Berkeley, says the study “significantly advances our understanding of knowledge spillovers and how they shape the geography of innovation.” Prof. Moretti, who says he has been working on the topic for 25 years, says, “I find this paper to be one of the most direct and convincing pieces of evidence on this question. It provides important insights into why Silicon Valley-style clusters of innovation exist.”
Remote work’s impact
Though the study involved cellphone data from before Covid, the researchers say it has implications for an era when many people work all or part of the time from home.
The researchers looked at people who occasionally worked from home in the study period, based on where their phones were located during daytime hours, and then at how that affected their probability of attending planned or serendipitous meetings with someone from another company who didn’t work from home, Prof. Chen says.
Looking at two hypothetical companies, the researchers extrapolated that if one-half of employees at each business work from home, their meetings of all types—serendipitous and planned—would fall 35% and patent citations between the companies would decline almost 12%.
“We think this means information exchange between firms is decreasing,” Prof. Chen says. “It is worrying. These businesses co-locate for a reason. If they can’t learn from each other, we think that is a big deal.”
“Presumably,” he adds, “an even bigger effect is the harm that it does to serendipity and flow of information and innovation within the firm.”
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From making unpopular decisions to learning when to listen, leaders from five businesses reveal what nobody prepared them for — and how running a company has challenged their expectations.
Technology and semiconductor shares fell sharply as investors questioned the debt financing the AI infrastructure boom and confronted higher rates and Chinese competition.
Elon Musk is exploring a potential merger between Tesla and SpaceX, a deal that could reshape the future of AI, robotics, autonomous vehicles and space technology. With a combined valuation potentially reaching $3.5 trillion, the move could bring Musk’s vision of an interconnected technology ecosystem closer to reality, although a deal remains uncertain.
5 min
Elon Musk has engineered ties between Tesla TSLA 3.41%increase; up pointing triangle and SpaceX SPCX 7.79%increase; up pointing triangle that are hard to break, and now he wants to fuse them together permanently.
Musk has run both Tesla and SpaceX concurrently over the past two decades, using a schedule that dictated which days he spent focused on each business.
The companies have often shared resources and personnel, signaling their close ties. Last year, SpaceX looked into creating a spacesuit for Tesla’s humanoid robot Optimus, a person familiar with the matter said. Tesla last week showed off its new Roadster, a vehicle featuring SpaceX rocket thrusters that it hopes to soon bring to market.
And in recent months, Musk has repositioned both companies by expanding beyond their core operations toward a shared mission centered on artificial intelligence.
The world’s richest man on Tuesday signaled his interest in tying up SpaceX and Tesla, marking what would be the biggest corporate merger of all time. Because he serves as chief executive of SpaceX and Tesla, Musk said committees of independent directors at both companies are evaluating a possible deal, adding that a transaction might not come to fruition.
The committees will likely evaluate, with lawyers and bankers, how each company would fare in a potential deal and how a deal might best be structured. They then present their conclusions to their respective boards, who typically vote on whether to proceed.
“It’s an odd Kabuki dance where two groups of people are talking and I can’t be in the conversation,” Musk told SpaceX investors on Tuesday in response to an analyst’s question about a potential deal.
For Musk, the merger supports his vision of a world full of autonomous cars, humanoid robots and weekly rocket launches, as well as the data centers and satellites required to keep the whole thing running.
Some investors and analysts said they expect a transaction would be structured as an all-stock deal, with SpaceX potentially paying a modest premium for Tesla shares.
SpaceX, which has a market value of about $2 trillion, said it is seeing sharp growth in revenue across its businesses, which include operating data centers, launching rockets and operating satellite networks such as the internet service Starlink. Tesla is valued at about $1.5 trillion and is expanding its operations beyond its automotive and energy business. Shares in both companies traded higher following the news Tuesday.
Musk’s substantial ownership stakes in both companies, along with voting control at SpaceX, has enabled him to set the deal in motion. Analysts and investors said the deal will probably face regulatory scrutiny internationally, though some see Musk’s close relationship with the Trump administration as an asset to getting approval.
Blurred lines
The companies haven’t said which directors are on the special committees evaluating a potential deal. Several SpaceX and Tesla board members have either personal or business ties to Musk. And like Musk, venture capitalist Ira Ehrenpreis sits on both boards.
In a filing this week, Tesla outlined millions of dollars in business agreements with SpaceX and its subsidiaries last year, including $143 million in car sales to SpaceX, $3.3 million in advertising that it bought on the social-media platform X and $430 million in revenue from the sale of Megapack batteries for SpaceX’s data centers.
The companies also split the cost of resources including the use of Musk’s SpaceX jet and the bill for his personal security, which he runs through a private company.
Employees at both companies routinely move between companies to work on special projects, and some executives have dual roles, including Charles Kuehmann, vice president of materials engineering at both SpaceX and Tesla, and Ashok Elluswamy, the vice president of AI software at Tesla who runs a joint venture with SpaceX called Digital Optimus.
Over the years, Musk has launched new startups within his empire, including brain-implant company Neuralink, underground-tunnel developer the Boring Company and xAI, the AI startup that merged with SpaceX in February.
It is that AI business that Musk thinks can serve a market worth tens of trillions of dollars, justifying the need for a merger.
The business case goes like this: Tesla is developing robotaxis and robots, which it calls “physical AI.” SpaceX is working on the back end of physical AI: the data-center capacity and internet connection required for those robotaxis and robots to operate continuously.
“I don’t see what the value of Tesla is if it’s not merged with SpaceX,” said investment adviser Ross Gerber, a former Tesla bull turned critic invested in both companies. “If they don’t merge, the brains of everything that runs Tesla is owned by another company.”
On top of it all, both companies face constraints on the supply chains they need to make this world a reality, particularly when it comes to chips. To address this, Musk earlier this year announced a joint venture between Tesla, SpaceX and Intel to design and manufacture chips in Texas. “The most epic chip-building exercise by far,” he has said.
Musk at the wheel
For Musk, a merger would also solve two problems: demands on his attention and his lack of control at Tesla.
Tesla for years was Musk’s only public company, a status that came with greater scrutiny. There, Musk reports to a public board, as well as individual investors who make up around 30% of Tesla’s voting power, according to FactSet.
The question of Musk’s attention became a particular focus for investors and the board in recent years after he acquired Twitter in 2022 and launched xAI in 2023, and again in 2025 as he spent time in Washington, D.C., running the Department of Government Efficiency in the early months of President Trump’s second term.
As Tesla’s car business suffered in 2025, Musk threatened to take his AI ambitions outside the company if he wasn’t granted 25% voting control. Last November, Tesla shareholders approved a new pay package for Musk, which created a path for him to vastly expand his stake.
As of Sept. 30, Musk owned a roughly 20% stake in Tesla, according to the company’s proxy filing.
The SpaceX IPO gave Musk a different path. When SpaceX went public in June, the deal’s structure enabled him to have more than 80% voting power at the company—so much that he can’t be fired and decisions can’t be made without his support.
If SpaceX acquires Tesla, he will likely stay in control.
For Central Element, the start of work at Pearl represents another step in the company’s growing eastern suburbs pipeline.
The megamansion was built for Tony Pritzker, heir to the Hyatt Hotel fortune and brother of Illinois Gov. JB Pritzker.
