While I agree that salary is a huge expense, rent is usually a small fraction of the salaries being paid.

In my experience, teams who work from home for an extended period of time can start to lose focus and productivity. This means it takes longer to build your product, and you end up paying a lot more in salary.

By having an office (usually only a few hundred, to a few thousand dollars a month in expense), you are able to save a lot in salary (tens or hundreds of thousands of dollars a month), because your team will be more focused and productive.

True. There is a point where offices become useful. Early early stage offices ARE a huge expense and should perhaps be avoided.

I agree with dougludlow and AlexBloom wholeheartedly. It's more a matter of where you are at in the development of your project and/or if you need co-workers at all.

Yeah, and instead of getting an office, work from a co-working space. You get many of the benefits: everyone is in the same place, space to meet, whiteboards to brainstorm. On top of that, you get to be around a bunch of smart people who will be great resources.