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Comment by paxys | Hacker News Reader

I like that WeWork is finally forcing us to have the conversation about WTF a "tech company" even is. A company that sells software? Or one that employs a lot of engineers? Or companies that use a lot of tech in their operations? Companies with a presence in San Francisco and Kombucha on tap? Are big banks tech companies? Insurance providers? Hospitals, auto manufacturers, oil and gas... What isn't a tech company?

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In an ideal world, we wouldn't care about which company is called a tech company and which isn't. This reminds me of that famous Bezos quote to the question of whether Amazon is an internet company or not.

He said "It doesn't matter whether we are a pure internet play or not. Internet, Schminternet, it doesn't matter. What matters is obsessing over providing customer value."

https://www.youtube.com/watch?v=RyrmPMJoG0Q

That said, it is altogether a different question whether WeWork provides value for customers in a fiscally responsible and sustainable manner, and whether Nuemann has the foresight and business acumen of Bezos.

It does matter because a company's valuation is driven by EBIDA and multiple, both of which depend on the type of business (e.g. SaaS, Cloud Services, Real Estate etc). In fact, Amazon's valuation jumped significantly starting 2015 primarily because of AWS, which is a pure tech play, not so much by its retail business. (In 2015 Amazon started reporting AWS revenue and margins)

Multiples and the like are more quick rule of thumb estimating techniques and I hope the valuation is driven more by deeper analysis.

I was sad when I realized that the companies I've worked for, who make things like avionics and fiber optics and sattelite communications equipment were no longer considered "tech".

Oh well, language changes.

I find it interesting how many people equate tech with software.

I would consider tech a lot broader than that; if your company is making any kind of new innovative approach to solving problems (and the future of the business depends on this), you're a tech company. So companies making lasers, robots, drones, sensors, 3D printers, DC-DC converters, batteries, and housing insulation could all be tech companies... As long as they're trying something new. So a battery company that is testing new formulations is a tech company, and one that just mass produces the same alkali cells they've been making for 50 years is not.

Software is just one sub-category.

So tech = innovation? I don't think that's a common definition.

A car company isn't a company that uses cars, it's a company that makes cars.

Technology is "the application of science to commercial or industrial objectives" according to the dictionary.

But a technology company is a company that makes technology. That inherently requires innovation.

Also the definition of technology is not "does something with or on computers", it's "the application of scientific knowledge for practical purposes, especially in industry".

A car is a piece of technology. An engine is a piece of technology. A computer is a piece of technology. A technology company is a company that produces products that are the application of scientific knowledge for practical purposes.

What we're really talking about is information technology, which is the study or use of systems (especially computers and telecommunications) for storing, retrieving, and sending information.

It seems to me that excludes all software from "tech". The computers are tech, but how they are configured isn't "making" anything.

It doesn't seem that way to me at all. You can create software that does things that were previously not possible or not practical. That is the creation of technology. Software and information are products just as valid as cars and robots.

I can't remember where I heard this or who said it, but I do like it and use it as my own definition.

A tech company is a company whose product is "easily" scalable with a few taps of the keyboard and clicks of the mouse. A game development company is a tech company. Selling one, two or a few thousand units is not that big of a deal. Now, we can argue that scalability in terms of cloud services is an issue. Think Steam for video games. But generally, there's little difference "work" wise between selling 10 copies and 10,000.

A not tech company that uses a lot of technology, but again, is not a tech firm, let's say Haas. They build high-end CNC machines. Manufacturing one or two machines is not negligible. Well, kind of. Compared to them. They build like a few hundred a month. But lets say they want to build a few thousand. That's a big deal. That's more manpower. More equipment. More materials. More warehouse space. More planning. More everything.

But Autodesk selling Fusion 360 (modeling program for CNC milling) is a tech company. Because it's generally meaningless if they have 1,000 licenses a month or 100,000 licenses a month. Production wise. All the upfront work was done for the product and now it's a matter of people giving up their credit card numbers.

What’s Uber?

A taxi company with an app that decided to just sub-contract its workforce.

Which was obviously brilliant and they don't need me to say that. But, I don't think it's a tech company. Adding drivers is not necessarily that easy. I know there's a metric-fuck-ton of them right now. But bandwidth to send a copy of software and hiring a new driver are two different things. Same with allocating cloud server space and doing a background check on someone. I think the definition needs somewhere in there, humans cannot be the bottleneck. Uber's bottleneck is in drivers (and municipal policies), not getting people to download and sign up for their app/service.

I mean seriously. What scales easier? Getting people to download an app or hiring drivers across the country that don't shank their passengers? Yes they did a good job at hiring a fuck ton of drivers quickly. But Carnegie did a great job at mass producing steel when others said it couldn't be done. Didn't make that a tech company either.

Acquiring drivers can be seen equal to customer acquisition within a software company. Yes the bottleneck of Uber is recruitment, but is it also not customer acquisition at any software/“tech” company?

By the definition above, clearly a “tech company”, no? Uber produces highly scalable tech, and can deploy it rapidly amongst a sea of contractors and riders- who are essentially consumers of the app.

There’s a helpful framework for this conversation created by Salim Ismail called exponential organizations. Instead of trying to bucket companies as tech or non tech, he recommends you look at their attributes to determine whether or not they are capable of exponential growth. For example, I think their case study of github indicated it was one of the few companies that had all of the possible attributes for exponential growth nailed. Anyway I don’t want to spend a bunch of time regurgitating the idea here but it might be helpful to take a look at it.

A fantastic vehicle for the rich to dismantle all protections organized labor made in the last century. Super cheap at a billion bucks a month if you consider the colossal amount of savings can be made on paying people if they are deemed contractors vs payroll.

Various businesspeople tried propaganda , buying politicians and so forth, this "gig economy" is the newest effort, it is going well. For them. Recommended reading: https://www.wwnorton.co.uk/books/9780393337662-invisible-han...

Aren't any kind of financial products, insurance tech then? You can theoretically sell them with a couple of clicks.

What about Intel, AMD, and other chip makers? Under the definition of tech company that you mentioned, they wouldn’t be.

I think they would be, if you use the definition in the sense that the 'work' done is the Research & Development. The actual producing of the chips is easy. The R&D for new products and production methods are the real cost. So with in mind they are tech companies since it doesn't matter if they sell 10k chips or 10mil, the work is done. The rest is creating copies, which is 'cheap' in comparison.

>"What isn't a tech company?"

It would seem that these days, Wall Street and private equity can agree that a "company that isn't growing" definitely isn't a tech company, even if it uses technology :)

I work in publishing, and we don't use _any_ tech. My job just involves standing out in a field yelling at clouds.

Tech isn't an industry, it's an operating model. The misnomer here is that it's being peddled as an industry in order to drive up valuations.

Tech companies are defined by their VCs. The end.

More specifically by VCs which would invest in companies with horrible financials that can inflect at a quantifiable amount of capital and scale.

Is it really that important to define the term precisely? It doesn't seem like the term is used precisely, so what's the point in defining it precisely?

So what's the point in the term at all? What are you using it to do if you know the person you're speaking to cannot infer anything at all from the word?

My claim is that the overwhelming majority of people have no problem understanding the label. The term is not precisely defined, and can be debated in slim gray areas, but the term does not in practice cause miscommunication in the vast majority of cases.

Because tech makes VC and big money investors salivate and throw cash down, whereas real estate is ho-hum, risky, boring, etc. WeWork desperately wants that tech label to justify their terrible balance sheet.

It makes a big difference in the aggregated analysis of the IPO market. Tech is one of the few IPO areas that actually come close to matching the S&P500 returns (tech did better than any other IPO category). So, most companies going public want to be considered and valued as "tech".

Cool, so it doesn't really matter.

For them wouldn't a tech company and a software company be synonymous? It seems like software is by far the easiest way to create the growth they're after.

Not only is the term loosely defined, but it is not clear why it needs to be mutually exclusive with some other category. You can't be a tech company and some other thing at the same time, apparently.

Who uses the terms this way? I’ve never heard anyone imply that, for example, Apple is a tech company but not a smartphone company. Edit: see also "biotech," "fintech," "edtech," etc.

I've seen a lot of blurring the lines.

A company a while back was totally "blowing up the biotech space" (it was a random fairly empty article) ... I was curious and looked and they basically made a crud app... that could be used by a biotech company.

That's not to take away from whatever they were doing, but as far as I could tell they were as much in logistics as they were .. "a biotech start up".

What I got out of the article is that the cost to make one more widget for a software company is minimal, and thus is mostly profit. A non tech company has material costs (non-non consequential? :) that means their growth isn’t going to hockey stick. That seems to be the main differenator I see when Wall Street talks about tech companies.

I think that the main reason that WeWork has been referred to in the same breath as other tech companies is because the offices they build out resemble the nice, cushy offices that tech companies are famous for (and that lots of their tenants are software companies)

A lot of these companies are nothing more than traditional companies but with a tech interface.

Why? Who cares whether something is a tech company or not? How does that change the conversation? Is it no longer a startup?

There are enough things wrong with wework that this is just muddying the issue.

If you read the article, it should be pretty clear why it matters; "tech companies" are valued differently (because of their potential for giant profit margins and exponential growth), so a business can inflate its valuation/grab buckets of investor money by positioning itself as a tech company even though it doesn't meet any of the criteria that actually make tech companies good investments. Which is arguably somewhat unethical.

Probably by the kind of people that rise to leadership in the firm. Engineers would have more decision making power in a company that produces software. Not so much in a bank or hospital.

One that derives value from intangible assets. HW companies are on the boundary.

From a pure standpoint? Any company that makes tech - hardware or software - is a tech company.

From a usage perspective? Any company that heavily utilizes tech in their day to day operations is a tech company too.

From a software engineer's career perspective? "Tech company" has become a term often used here, and usually refers to a company whose core business involves software engineers, and treats them as respected first class citizens.

Companies that fall under the first two descriptions may or may not fall under the third.

A tech company is a company that sells technology, not a company that uses it. An insurance company sells the product of insurance, how they do it is irrelevant — they still sell insurance. Apple is a tech company — they develop and sell technology. Uber is a tech company: they sell yield management systems to independent car owners who want to sell space in their car. A bank isn’t a tech company; they don’t sell technology, they sell investments/banking services. A company that sells medical diagnostic tools is a tech company. A hospital isn’t. They sell the service of fixing your broken body, using tech from suppliers who are tech companies.

A company that uses tech isn’t a tech company. A tech company is one that sells tech. It’s pretty clear what the difference is. WeWork is a real estate company, that’s it.

By this argument, Google and Facebook aren't tech companies, since they make the vast majority of their revenues by selling advertising. Is that technology? The way in which they do their advertising perhaps is, but advertising itself is not really technology in the way a phone or copy of some software is.

I would argue that a tech company is a company which derives most of its real value through technology. And that it's a spectrum, not binary - companies that sell hardware and software licenses are more "tech" than companies that heavily leverage uniquely valuable technology to sell old-school goods and services. But those companies with uniquely valuable tech to sell old-school goods and services, like Google/FB (ads), Amazon (catalog retailer), Netflix (entertainment like cable) still derive most of their value from doing technological things, and I think that makes them tech companies, even though they don't directly sell tech

But still, WeWork is not really a tech company because their value isn't in their tech

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