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This trope is going to die soon (as its discussed on twitter and HN like weekly now). "Tech company" is an operating model, not an industry/market. "We" is a r
by mbesto 7y ago
This trope is going to die soon (as its discussed on twitter and HN like weekly now).
"Tech company" is an operating model, not an industry/market. "We" is a real estate leasing/operating company heavily enabled by tech.
- JMTQp8lwXL 7y agoI wonder how WeWork uses technology to enable them. I'd imagine it'd be along the lines of using AI or ML to identify properties that would be profitable to sublease.
- edw 7y agoYes, they do have a team that uses "AI" and/or "ML" to identify properties. How effective that team has been or the extent to which that team's existence makes them a tech company are entirely different questions.
- redisman 7y agoProbably something like the Whole Foods algorithm. Find a wealthy area that fits your target demographics.
- JMTQp8lwXL 7y agoThat sounds like a very simple algorithm. Get census data, sort by zip code median income, and filter results to above a minimum dollar amount. Doesn't make it any less of an algorithm.
- heurist 7y agoI'm in real estate analytics and know that at least for my area, they used a real estate broker to find properties like anyone else would. Brokers know f-all about AI/ML/analytics (I tried to sell it to them for years all over the country and never got through to them. My fault or theirs, who knows.). They might be using AI/ML in other ways but RE in general is data-averse. Especially in office, most cities have a small area with most class A space and local brokers know it like the back of their hands.
- mortenjorck 7y agoCutting-edge ML and PhD data scientists aren’t essential elements of being a tech company. A traditional business with a mobile app in front of it is solving a problem with technology; it’s just not solving sexy HN problems. The point here is that WeWork has been hyped and seen valuations as if it were solving the aforementioned sexy HN problems, when it’s really just a regular, unsexy tech company that is solving more mundane problems of office rental with a nice tech stack and UI. I’m sure it’s a solid $5B business.
- KaoruAoiShiho 7y agoGenuinely don't know here, what are they doing that is enabled by tech that other companies like Regus isn't?
- redisman 7y agoOr any hotel chain? They have big IT operations from online booking to managing staff and properties etc.
- dmitriid 7y agoWhat’s a tech company: https://stratechery.com/2019/what-is-a-tech-company/ https://stratechery.com/2019/what-is-a-tech-company/
- dclusin 7y agoThanks I was trying to remember who posted this. Very thoughtful and informative.
- jacquesm 7y agoThat's a pretty limiting article starting off with the premise that tech companies are companies that produce goods with a marginal cost approaching zero and then illustrating that with those companies for which this is true. But there are plenty of tech companies who were not IBM (Xerox, HP, Tektronix etc) who did just fine while still having quite a bit of cost on their purchasing side and enjoying substantial returns on their investments. This article is similar in nature to the one where Paul Graham claimed the word 'startup' to mean some narrowly defined entity that somehow embodied the ideal company to invest in for YC.
- dmitriid 7y agoIt’s still a better definition than “everyone who does accounting on a computer is a digital company”. I don’t believe WeWork is a tech company by any stretch of imagination.
- jgon 7y agoThis is just off the top of the head spitballing, but what about this as a definition: A tech company is a company who could not continue their business in largely the same fashion if computers did not exist. Is Uber a tech company? Well I personally don't see it, they just offer a dispatching service for cabs and without computers you could call in and book a ride much like people did for decades. Is Microsoft a tech company? Yes, what is an OS without computers? Is Amazon a tech company? I'll say no in one sense they are the next evolution of the Sears catalogue, but AWS, which is a huge part of their revenue, is obviously a tech company. Is WeWork a tech company? Definitely not, they compete with hundreds of other real estate management companies, and all of their work could be accomplished with phones and paper. I don't know I am sure someone can probably find some good corner cases, but my basic definition is that if a company is just using software to automate the bureaucratic processes that are required to run the company but could otherwise function without that automation I don't see them as a tech company. I think this goes to your thought that just because a company uses software for their accounting department, they aren't a tech company.
- dclusin 7y agoThe distinguishing feature of a tech company is a marginal cost of servicing an additional customer approaching 0. Spending insane amounts of money carelessly and calling yourself a tech company doesn't make you one.
- erikpukinskis 7y agoIs that true of Apple? I guess it might be if we’re tracking dollars per use-minute. It is probably true of Xiaomi.
- rightbyte 7y agoThat might be a software company without customer service.
- KaoruAoiShiho 7y agoThere has to be a better definition than this, that's true for any company with great economy of scale.
- dclusin 7y agoThere's a sibling post to mine that has a link to a blog post elucidating on what a tech company is. They go further than just 0 marginal cost. But that's the biggest one, and why tech companies justify such a big PE ratio.
- lozaning 7y agoIm a big fan of this article defining what is and isnt a tech company: https://stratechery.com/2019/what-is-a-tech-company/ https://stratechery.com/2019/what-is-a-tech-company/
- mbesto 7y agoThe fact that there is no generally agreed upon definition tells you everything about its definition.
- CPLX 7y agoIt’s really not. The distinguishing feature of “tech company” in this context is extremely low marginal cost, often coupled with network and lock-in effects that create increasing returns to scale
- deleted 7y ago[deleted]
- paxys 7y agoI would agree with the "enabled by tech" part for companies like Uber, but not at all for WeWork. There's no special tech they have that every other company in their space hasn't already for years. Motel 6 has a fully functional website and app where you can look up all their properties and reserve rooms/spaces. No one is calling it a tech company.
- redisman 7y agoOnce "having a website" and "idiosyncratic company culture" makes you a tech company, you know the term has jumped the shark. Some of this is starting to feel a little bit like 1999 again.
- maehwasu 7y agoIt's bits vs atoms. Anyone who has run a company of both types feels the difference instantly and intuitively.