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We should stop thinking in terms of "tech companies" and think of them in terms of "companies that use tech with a high degree of success". Ultimately any compa

We should stop thinking in terms of "tech companies" and think of them in terms of "companies that use tech with a high degree of success". Ultimately any company that makes money is not a tech company because pure technology on its own does not make a business. Also, with the right incentives and management it is possible, although hard, for legacy companies to start using tech better to compete.

dralley 5y ago
I agree. What most HN commenters seem to really mean when they say "technology" is "consumer software", or more cynically, "company is made of mostly software engineers". There is an incredible amount of advanced technology being created and used by more "traditional" industries like manufacturing, aerospace, or animation. Why should Facebook be considered a technology company but not Pixar, Ratheon, General Dynamics, Corning or TSMC? It makes zero sense and relies on a very self-serving definition of "technology".
- samhw 5y ago
  > company is made of mostly software engineers This hits the nail on the head. If you dig down into it, this almost always aligns with the companies people describe as 'tech companies'.
  - desas 5y ago
    Uber is mostly made of drivers, yet is considered a tech company. (I'm aware drivers are not technically employees). Maybe it's more to do with the strategy of the company.
mikeryan 5y ago
This whole argument seems a silly bit of semantics. Is a company's product is not "technology" a tech company? For the vast majority of companies technology is tool, not the product, but whether you call them a "tech company" seems a silly game. I'd think pretty much all companies are "tech companies" and the better you are at using those tools can provide a competitive advantage.
wcunning 5y ago
How would you compare GM and Tesla using this framework? They're both very tech dependent given the impact of the chip shortage and electric car manufacture, but one is certainly more "novel." I'm honestly not sure where I would come out, but I think it's a good point of comparison for the framework as a result.
- SkipperCat 5y ago
  Both of them are tech companies. One in battery and AI/ML self driving software, the other in supply chain management.
- gitfan86 5y ago
  Tesla is an engineering based company. GM is a MBA based company. It isn't that Tesla has no MBAs on staff or the GM has no engineers on staff. But a culture that leverages engineering culture can iterate and reinvent itself and include new technologies faster than one who is focused on management metrics. I'm not saying that MBAs are bad, there are plenty of companies that went way to heavy on hiring engineers and went bankrupt before their business plan was viable.
Buttons840 5y ago
I was thinking the same, but you said it better. How many "non-tech companies" are non-tech companies simply because they're too disfunctional to use technology effectively? Think of your bank with its shitty password rules, only offering 2FA using SMS, and no useful APIs; that's a non-tech company. They either aren't aware of their lackluster technology, or are unable to organize themselves well enough to improve it.
- tempest_ 5y ago
  I think it is pretty easy to define tech company. Is the IT/Software Dev a profit center or a cost center, easy as that.
  - tshaddox 5y ago
    What about companies that aren’t remotely profitable at all? Isn’t that a huge portion of notable tech companies?
    - tomrod 5y ago
      Better term would probably be revenue driver, which is typically what is meant by "profit center." In other words, IT brings sales contracts through the door.
      - burntoutfire 5y ago
        For banks, online banking is a huge driver of business. Some banks have even started claiming (I suspect mostly for recruiting purposes) that they are "in tech sector".
- browningstreet 5y ago
  Banks are run by the bankers and the tech team is typically very second fiddle. I work in fin tech.
  - barbecue_sauce 5y ago
phkahler 5y ago
>> Ultimately any company that makes money is not a tech company because pure technology on its own does not make a business. What is Microsoft then? What is Apple? Google I can accept as some kind of service provider and advertising company that uses a lot of tech. Amazon as well.
SkipperCat 5y ago
What about companies that use tech to make tech and that people buy to incorporate into their tech? GitLab, Atlassian, 1Password and others. No physical products, just tech for your tech so you can make more tech.
rvz 5y ago
> Ultimately any company that makes money is not a tech company because pure technology on its own does not make a business. So Intel, TSMC, Nvidia are not tech companies?
chipotle_coyote 5y ago
> Ultimately any company that makes money is not a tech company because pure technology on its own does not make a business. "X makes money, therefore they are not a tech company" seems rather oversimplified in the same way "X is a tech company" is oversimplified. Actually, it seems oversimplified to the point of maybe not being so useful. I think the way most people would define "tech company," if they were pressed to offer a definition, is that a tech company is one that derives the bulk of their revenue from selling technological goods and services, rather than using technology as the means to sell other goods and services. There's no way to keep that definition from being somewhat fuzzy, but if I say "Dell is a technology company and Cadbury is not," I don't think people will really object to that unless they're trying to be pedantically clever about it: Cadbury may use technology in all sorts of clever ways to manufacture chocolates and get them to retail shelves, but they're selling you chocolates. There are obviously companies that complicate this by having multiple divisions with different kinds of revenue streams -- Amazon and Apple both come to mind immediately -- but Netflix really isn't one of them. What they do requires a lot of focus on their technology, and from the perspective of someone perusing their job listings it's very easy to think of them as "a tech company." But what they're ultimately selling is access to their content.
- wffurr 5y ago
  There's a third category that you're missing, and it's where the definition gets real blurry. There are companies that effectively use technology to outcompete (or "disrupt") incumbent companies in a market. Amazon in retail, Netflix in media, Craigslist for classifieds, Uber for taxis, etc. It seems as if many existing companies, like Cadbury's perhaps, aren't able to effectively re-work their business models with the new possibilities available via tech. Thus they're "non-tech" companies even if they do make some modest use of technology, but ultimately their business model predates tech. "Tech" companies in this space are the ones creating or adopting brand new business models in an existing space enabled by technology. This is the "software eating the world" part of the tech market.
  - omarhaneef 5y ago
    I like this definition, but I think it should be associated with a strategy rather than a company. So Netflix is using a tech strategy, but it won't forever be a tech company. As the particular technology a company deploys becomes widespread, then everyone will deploy it and it will no longer be a tech company. To put it another way: Netflix was not a tech company when it launched and was mailing DVDs, it became a tech company when it started its streaming service, and as other companies also launch streaming services, it won't be a technology company in the future.
mbesto 5y ago
I'll just copy and paste my response from before because this comes up often: there is no real definition of a "tech company" or "tech industry", the word "tech" defines the operating model. This is the dirty little secret VCs don't like to tell you because it means they can call Tesla a tech company (its a car and battery manufacturer) to fetch tech-like valuations or Facebook a tech company (its a media company). Tech operating models typically net high gross margins (i.e. Facebook) which is one of its major defining characteristics. I therefore posit there is no such thing as a "tech industry", but rather businesses that sit on a spectrum of operating models from: - Back office IT supported - Tech enabled - Tech Led https://news.ycombinator.com/item?id=27693634 https://news.ycombinator.com/item?id=27693634
randomdata 5y ago
I imagine all successful companies use some kind of tech to a high degree of success. That tech may not necessarily be computer-based.
wpietri 5y ago
I think it's still a useful category, but we need to be careful with it, because "tech" is a moving target that only includes what's novel. As an example, pencils are an excellent technology for writing. (Petroski's "The Pencil" and "The Evolution of Useful Things" are great reads on how much innovation it takes to make something mundane.) But Faber-Castell is definitely not a tech company. Similarly, ~100 years ago, electricity was novel. Fortunes were made starting and investing in electricity and electrical-adjacent companies. Now it's mundane. Dealing with novel technology requires different skills. Both for the specific technology involved and for wrangling things that are less well understood and keep changing. A good example is the IT department and what they are and aren't responsible for. The breakroom toaster? Nope. The breakroom wifi? Yup. The breakroom TV? Well, that depends. For me the useful dividing line for "tech company" is where novel, volatile technology is at the heart of their business and vital to their success. That doesn't last. And indeed, the markets have been too generous about pretending certain things are tech companies. Most notably, WeWork, but I'm sure here folks here can name plenty more.
hyperpallium2 5y ago
A 'tech company' is that is internally built of software, so it is (theoretically) as easy to evolve as software - which is not that easy, except compared with anything else. So, amazon, stripe, airbnb, uber, reddit, github etc. Perhaps a bit like when companies started to be built around the new-fangled telephone instead of telegrams and dictated letters. More responsive and free-form. This does not guarantee a strong competitive opportunity, nor strong execution - but it makes it possible for the benefits of IT to be realized. Actually, there are several legitimate definitions of 'tech company', this is just a relevant one today that is significant long-term.
- dragonwriter 5y ago
  > A 'tech company' is that is internally built of software, Aside from weird blockchain entities, this doesn't exist. Companies may use software, but they are made of people.
- 3np 5y ago
  Why limit it to software? Manufacturing technological hardware makes you a tech company for any meaningful definition of the word, no?
stumpedonalog 5y ago
Yeah my idea of what a tech company is: a company who is product first and that product is digital.
3np 5y ago
How about TSMC, Intel, Dell, or Microsoft? I don't see the usefulness in arguing that running a successful business means it can't be a tech company.
abeppu 5y ago
> Ultimately any company that makes money is not a tech company because pure technology on its own does not make a business. Making money is what the _company_ part of "tech company" is about ... right? It sounds like you want to imagine a world where making tech for non-business purposes is more normalized. I also want to live in that world. But I think perhaps we're so far into a world where tech to be used by an open audience (as vs e.g. secret defense tech) is entirely the province of for-profit enterprises that people have ceased to consider that the players in tech need not be companies.
xtracto 5y ago
For me a tech company is one that sales APIs, SDKs or similar products. I was in 3 "tech" startups before that were both b2c and b2b. Their product was perpendicular to their technology (one video-tech 2 Fintech) my current company's product is a set of APIs. It means that the features that we sell ARE the technology, instead of some footnote that buyers send to their nerd department to make sure it checks a box. Needless to say, the difference on how the tech team is valued is night and day between this last one and all the others.

dralley 5y ago

I agree. What most HN commenters seem to really mean when they say "technology" is "consumer software", or more cynically, "company is made of mostly software engineers". There is an incredible amount of advanced technology being created and used by more "traditional" industries like manufacturing, aerospace, or animation. Why should Facebook be considered a technology company but not Pixar, Ratheon, General Dynamics, Corning or TSMC? It makes zero sense and relies on a very self-serving definition of "technology".

samhw 5y ago
> company is made of mostly software engineers This hits the nail on the head. If you dig down into it, this almost always aligns with the companies people describe as 'tech companies'.
- desas 5y ago
  Uber is mostly made of drivers, yet is considered a tech company. (I'm aware drivers are not technically employees). Maybe it's more to do with the strategy of the company.

mikeryan 5y ago

This whole argument seems a silly bit of semantics. Is a company's product is not "technology" a tech company? For the vast majority of companies technology is tool, not the product, but whether you call them a "tech company" seems a silly game. I'd think pretty much all companies are "tech companies" and the better you are at using those tools can provide a competitive advantage.

wcunning 5y ago

How would you compare GM and Tesla using this framework? They're both very tech dependent given the impact of the chip shortage and electric car manufacture, but one is certainly more "novel." I'm honestly not sure where I would come out, but I think it's a good point of comparison for the framework as a result.

SkipperCat 5y ago
Both of them are tech companies. One in battery and AI/ML self driving software, the other in supply chain management.
gitfan86 5y ago
Tesla is an engineering based company. GM is a MBA based company. It isn't that Tesla has no MBAs on staff or the GM has no engineers on staff. But a culture that leverages engineering culture can iterate and reinvent itself and include new technologies faster than one who is focused on management metrics. I'm not saying that MBAs are bad, there are plenty of companies that went way to heavy on hiring engineers and went bankrupt before their business plan was viable.

Buttons840 5y ago

I was thinking the same, but you said it better. How many "non-tech companies" are non-tech companies simply because they're too disfunctional to use technology effectively? Think of your bank with its shitty password rules, only offering 2FA using SMS, and no useful APIs; that's a non-tech company. They either aren't aware of their lackluster technology, or are unable to organize themselves well enough to improve it.

tempest_ 5y ago
I think it is pretty easy to define tech company. Is the IT/Software Dev a profit center or a cost center, easy as that.
- tshaddox 5y ago
  What about companies that aren’t remotely profitable at all? Isn’t that a huge portion of notable tech companies?
  - tomrod 5y ago
    Better term would probably be revenue driver, which is typically what is meant by "profit center." In other words, IT brings sales contracts through the door.
    - burntoutfire 5y ago
      For banks, online banking is a huge driver of business. Some banks have even started claiming (I suspect mostly for recruiting purposes) that they are "in tech sector".
browningstreet 5y ago
Banks are run by the bankers and the tech team is typically very second fiddle. I work in fin tech.
- barbecue_sauce 5y ago

phkahler 5y ago

>> Ultimately any company that makes money is not a tech company because pure technology on its own does not make a business. What is Microsoft then? What is Apple? Google I can accept as some kind of service provider and advertising company that uses a lot of tech. Amazon as well.

SkipperCat 5y ago

What about companies that use tech to make tech and that people buy to incorporate into their tech? GitLab, Atlassian, 1Password and others. No physical products, just tech for your tech so you can make more tech.

rvz 5y ago

> Ultimately any company that makes money is not a tech company because pure technology on its own does not make a business. So Intel, TSMC, Nvidia are not tech companies?

chipotle_coyote 5y ago

> Ultimately any company that makes money is not a tech company because pure technology on its own does not make a business. "X makes money, therefore they are not a tech company" seems rather oversimplified in the same way "X is a tech company" is oversimplified. Actually, it seems oversimplified to the point of maybe not being so useful. I think the way most people would define "tech company," if they were pressed to offer a definition, is that a tech company is one that derives the bulk of their revenue from selling technological goods and services, rather than using technology as the means to sell other goods and services. There's no way to keep that definition from being somewhat fuzzy, but if I say "Dell is a technology company and Cadbury is not," I don't think people will really object to that unless they're trying to be pedantically clever about it: Cadbury may use technology in all sorts of clever ways to manufacture chocolates and get them to retail shelves, but they're selling you chocolates. There are obviously companies that complicate this by having multiple divisions with different kinds of revenue streams -- Amazon and Apple both come to mind immediately -- but Netflix really isn't one of them. What they do requires a lot of focus on their technology, and from the perspective of someone perusing their job listings it's very easy to think of them as "a tech company." But what they're ultimately selling is access to their content.

wffurr 5y ago
There's a third category that you're missing, and it's where the definition gets real blurry. There are companies that effectively use technology to outcompete (or "disrupt") incumbent companies in a market. Amazon in retail, Netflix in media, Craigslist for classifieds, Uber for taxis, etc. It seems as if many existing companies, like Cadbury's perhaps, aren't able to effectively re-work their business models with the new possibilities available via tech. Thus they're "non-tech" companies even if they do make some modest use of technology, but ultimately their business model predates tech. "Tech" companies in this space are the ones creating or adopting brand new business models in an existing space enabled by technology. This is the "software eating the world" part of the tech market.
- omarhaneef 5y ago
  I like this definition, but I think it should be associated with a strategy rather than a company. So Netflix is using a tech strategy, but it won't forever be a tech company. As the particular technology a company deploys becomes widespread, then everyone will deploy it and it will no longer be a tech company. To put it another way: Netflix was not a tech company when it launched and was mailing DVDs, it became a tech company when it started its streaming service, and as other companies also launch streaming services, it won't be a technology company in the future.

mbesto 5y ago

I'll just copy and paste my response from before because this comes up often: there is no real definition of a "tech company" or "tech industry", the word "tech" defines the operating model. This is the dirty little secret VCs don't like to tell you because it means they can call Tesla a tech company (its a car and battery manufacturer) to fetch tech-like valuations or Facebook a tech company (its a media company). Tech operating models typically net high gross margins (i.e. Facebook) which is one of its major defining characteristics. I therefore posit there is no such thing as a "tech industry", but rather businesses that sit on a spectrum of operating models from: - Back office IT supported - Tech enabled - Tech Led https://news.ycombinator.com/item?id=27693634 https://news.ycombinator.com/item?id=27693634

randomdata 5y ago

I imagine all successful companies use some kind of tech to a high degree of success. That tech may not necessarily be computer-based.

wpietri 5y ago

I think it's still a useful category, but we need to be careful with it, because "tech" is a moving target that only includes what's novel. As an example, pencils are an excellent technology for writing. (Petroski's "The Pencil" and "The Evolution of Useful Things" are great reads on how much innovation it takes to make something mundane.) But Faber-Castell is definitely not a tech company. Similarly, ~100 years ago, electricity was novel. Fortunes were made starting and investing in electricity and electrical-adjacent companies. Now it's mundane. Dealing with novel technology requires different skills. Both for the specific technology involved and for wrangling things that are less well understood and keep changing. A good example is the IT department and what they are and aren't responsible for. The breakroom toaster? Nope. The breakroom wifi? Yup. The breakroom TV? Well, that depends. For me the useful dividing line for "tech company" is where novel, volatile technology is at the heart of their business and vital to their success. That doesn't last. And indeed, the markets have been too generous about pretending certain things are tech companies. Most notably, WeWork, but I'm sure here folks here can name plenty more.

hyperpallium2 5y ago

A 'tech company' is that is internally built of software, so it is (theoretically) as easy to evolve as software - which is not that easy, except compared with anything else. So, amazon, stripe, airbnb, uber, reddit, github etc. Perhaps a bit like when companies started to be built around the new-fangled telephone instead of telegrams and dictated letters. More responsive and free-form. This does not guarantee a strong competitive opportunity, nor strong execution - but it makes it possible for the benefits of IT to be realized. Actually, there are several legitimate definitions of 'tech company', this is just a relevant one today that is significant long-term.

dragonwriter 5y ago
> A 'tech company' is that is internally built of software, Aside from weird blockchain entities, this doesn't exist. Companies may use software, but they are made of people.
3np 5y ago
Why limit it to software? Manufacturing technological hardware makes you a tech company for any meaningful definition of the word, no?

stumpedonalog 5y ago

Yeah my idea of what a tech company is: a company who is product first and that product is digital.

3np 5y ago

How about TSMC, Intel, Dell, or Microsoft? I don't see the usefulness in arguing that running a successful business means it can't be a tech company.

abeppu 5y ago

> Ultimately any company that makes money is not a tech company because pure technology on its own does not make a business. Making money is what the _company_ part of "tech company" is about ... right? It sounds like you want to imagine a world where making tech for non-business purposes is more normalized. I also want to live in that world. But I think perhaps we're so far into a world where tech to be used by an open audience (as vs e.g. secret defense tech) is entirely the province of for-profit enterprises that people have ceased to consider that the players in tech need not be companies.

xtracto 5y ago

For me a tech company is one that sales APIs, SDKs or similar products. I was in 3 "tech" startups before that were both b2c and b2b. Their product was perpendicular to their technology (one video-tech 2 Fintech) my current company's product is a set of APIs. It means that the features that we sell ARE the technology, instead of some footnote that buyers send to their nerd department to make sure it checks a box. Needless to say, the difference on how the tech team is valued is night and day between this last one and all the others.