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Maturity transformation, to give it its proper name, isn’t inherently a bad business; it’s how your bank transforms your weekly or monthly pay packet into a 25-

Maturity transformation, to give it its proper name, isn’t inherently a bad business; it’s how your bank transforms your weekly or monthly pay packet into a 25-year mortgage. But - and here is the crucial point - it is not tech.

SilasX 7y ago
It is a bad business generally, because it requires an unfailing entity to exist as a stopgap ("lender of last resort") who will take the hit to prop you up as the short term payment becomes due, for the inevitable times when the payments don't line up. WeWork doesn't (yet) have that.
- goatinaboat 7y ago
  True, but that is a general property of fractional reserve banking, not specifically of maturity transformation. There is a lot of ideology around homeownership both for and against, I am on the for side, so when asked about the social value of banking, that’s my go-to answer.
  - SilasX 7y ago
    >True, but that is a general property of fractional reserve banking, not specifically of maturity transformation. But maturity transformation requires FRB.
    - goatinaboat 7y ago
      Not if you start with enough capital. But it is drastically more efficient with FRB.
dsl 7y ago
Uber isn't tech, it is a taxi company. Stripe isn't tech, it is a payment processor. Airbnb isn't tech, it is a hotel. SpaceX isn't tech, it is a defense contractor.
- chiefalchemist 7y ago
  They all need technolgy and came about because of the powerful handheld mobile device. The first three are at least software companies. Business and social changes aside, WeWork could have happened 20 years ago.
  - maratd 7y ago
    > They all need technolgy and came about because of the powerful handheld mobile device. I'm not sure why Uber is a tech company because you can order a taxi using your phone, but WeWork is not ... because you can reserve a room or space using your phone? Not all members pay for an office. Some of us are nomads and stay at whichever WeWork is convenient. We make reservations for space using our phone.
    - chiefalchemist 7y ago
      You could get a taxi with you phone. You could fax in a lunch order too. But that's not how the market is doing business. Early on, one of the UX joys of Uber was being able to see where your driver was and how soon before they would arrive. SMS wouldn't be quite the same, would it?
    - CrazyStat 7y ago
      Uber is a tech company because their primary business is providing an app. If they owned or leased a million cars to provide their service then they would not be a tech company. If WeWork was AirBnB for work spaces then I'd call them a tech company. But they're not.
      - rhacker 7y ago
        So you're saying Uber is a tech company for being what it is. But it wouldn't be a tech company if it is exactly what it is today but also owns the cars the driver's use? So by that logic if Uber ever does migrate completely to a self-driving taxi system, it is no longer a tech company.

SilasX 7y ago

It is a bad business generally, because it requires an unfailing entity to exist as a stopgap ("lender of last resort") who will take the hit to prop you up as the short term payment becomes due, for the inevitable times when the payments don't line up. WeWork doesn't (yet) have that.

goatinaboat 7y ago
True, but that is a general property of fractional reserve banking, not specifically of maturity transformation. There is a lot of ideology around homeownership both for and against, I am on the for side, so when asked about the social value of banking, that’s my go-to answer.
- SilasX 7y ago
  >True, but that is a general property of fractional reserve banking, not specifically of maturity transformation. But maturity transformation requires FRB.
  - goatinaboat 7y ago
    Not if you start with enough capital. But it is drastically more efficient with FRB.

dsl 7y ago

Uber isn't tech, it is a taxi company. Stripe isn't tech, it is a payment processor. Airbnb isn't tech, it is a hotel. SpaceX isn't tech, it is a defense contractor.

chiefalchemist 7y ago
They all need technolgy and came about because of the powerful handheld mobile device. The first three are at least software companies. Business and social changes aside, WeWork could have happened 20 years ago.
- maratd 7y ago
  > They all need technolgy and came about because of the powerful handheld mobile device. I'm not sure why Uber is a tech company because you can order a taxi using your phone, but WeWork is not ... because you can reserve a room or space using your phone? Not all members pay for an office. Some of us are nomads and stay at whichever WeWork is convenient. We make reservations for space using our phone.
  - chiefalchemist 7y ago
    You could get a taxi with you phone. You could fax in a lunch order too. But that's not how the market is doing business. Early on, one of the UX joys of Uber was being able to see where your driver was and how soon before they would arrive. SMS wouldn't be quite the same, would it?
  - CrazyStat 7y ago
    Uber is a tech company because their primary business is providing an app. If they owned or leased a million cars to provide their service then they would not be a tech company. If WeWork was AirBnB for work spaces then I'd call them a tech company. But they're not.
    - rhacker 7y ago
      So you're saying Uber is a tech company for being what it is. But it wouldn't be a tech company if it is exactly what it is today but also owns the cars the driver's use? So by that logic if Uber ever does migrate completely to a self-driving taxi system, it is no longer a tech company.