The coworking company WeWork’s newly unveiled public filings raise a question: What does it even mean to be a tech company these days?
WeWork, which leases office space to people and businesses, is valued at a whopping $47 billion — more than 10 times its bigger rival IWG, which is considered a real estate company but does the same thing. A “tech company” like WeWork, the rationale goes, is more valuable because it is bigger, faster, stronger, and will bring in more future profits for shareholders.
“If you’re going to raise capital, it’s an easier way to get your foot in the door by saying you’re some new kind of disruptive tech company,” Paul Condra, lead emerging technology analyst at research firm PitchBook, told Recode.
That’s why WeWork went to great lengths in its filings to point out all the things that make it a tech company and, by extension, validate its price tag. It has purchased lots of other tech companies and brings that technology to bear on its regular operations by “scanning technologies and software to automate the design and construction layout of any given space,” applying “data science to compare new buildings with similar proven locations,” and using machine learning to “forecast demand for each building to set the opening day price and optimize on a real-time basis.”
It also boasts 1,000 tech employees out of 12,500 total employees.
But does that make it a tech company?
Ultimately, WeWork’s main business involves leasing buildings on a long-term basis, remodeling and styling them so they feel like trendy places to be, and then subleasing space in those buildings to people and companies on a short-term basis. It looks a lot like a real estate company.
But it’s certainly not alone in having tech aspirations. Startups of every stripe are touting their tech bona fides.
Are direct-to-consumer brands like Glossier (makeup) and Away (luggage), where you purchase goods online but otherwise don’t interact with technology, tech companies? Amazon and Etsy, which primarily function as online marketplaces — are they tech? What is it that makes Tesla a tech company but not General Motors? GM uses plenty of technology and is even making competing, autonomous electric cars.
Airbnb? DoorDash? Blue Apron? Uber? Lyft? Sweetgreen? The list goes on, as does the justification. As many have noted before me, every company is a tech company — or at least thinks it is. Katrina Lake, the CEO of clothing recommendation company StitchFix told Recode’s Kara Swisher, “if you want to be relevant 10 years from now, every company is going to be a tech company.”
“The first question is, ‘Does the company sell tech?’ That’s easy. If yes, that’s a tech company,” Condra said. “If they don’t, then you have to ask yourself, ‘Is there some kind of modern technology core to its customer acquisition or customer retention?’”
But as technology becomes increasingly central to companies’ businesses, that line becomes harder to draw.
“Twenty years ago, if the internet was an important part of a business — I’d say, ‘yes, that’s a tech company,’” Jay Ritter, a finance professor at the University of Florida who tracks IPOs, told Recode. “But today, what company has a business where the internet isn’t an important part of it?”
He added, referring to other IPO researchers he’s talked with over the years, “We all agree that companies like WeWork or Etsy, whether you classify them as a technology company or not is definitely a judgment issue.”
For plucky entrepreneurs aspiring to found tech companies, that leaves many ways in. You don’t necessarily need to sell or develop technology as your main line of business. Simply using technology does the trick, and the more buzzwords you can fit in a pitch deck — AI, machine learning, data mining, blockchain — the better. Hiring engineers and software developers helps, too.
Or perhaps being a tech company is more of a mindset: We are new and we use the internet, therefore we are tech. It’s certainly a branding tool. But the distinction can feel mind-numbing.
In 2011, prominent tech venture capitalist Marc Andreessen penned a widely read Wall Street Journal article, “Software Is Eating the World” that made the prescient point that software companies would take over a large portion of the economy. These days, it feels like it’s eating our brains.
by Rani Molla, Recode | Read more:
Image: Jonathan Brady/PA Images via Getty Images
[ed. See also: WeWork: Is There Any There There? (NY Times)]
WeWork, which leases office space to people and businesses, is valued at a whopping $47 billion — more than 10 times its bigger rival IWG, which is considered a real estate company but does the same thing. A “tech company” like WeWork, the rationale goes, is more valuable because it is bigger, faster, stronger, and will bring in more future profits for shareholders.“If you’re going to raise capital, it’s an easier way to get your foot in the door by saying you’re some new kind of disruptive tech company,” Paul Condra, lead emerging technology analyst at research firm PitchBook, told Recode.
That’s why WeWork went to great lengths in its filings to point out all the things that make it a tech company and, by extension, validate its price tag. It has purchased lots of other tech companies and brings that technology to bear on its regular operations by “scanning technologies and software to automate the design and construction layout of any given space,” applying “data science to compare new buildings with similar proven locations,” and using machine learning to “forecast demand for each building to set the opening day price and optimize on a real-time basis.”
It also boasts 1,000 tech employees out of 12,500 total employees.
But does that make it a tech company?
Ultimately, WeWork’s main business involves leasing buildings on a long-term basis, remodeling and styling them so they feel like trendy places to be, and then subleasing space in those buildings to people and companies on a short-term basis. It looks a lot like a real estate company.
But it’s certainly not alone in having tech aspirations. Startups of every stripe are touting their tech bona fides.
Are direct-to-consumer brands like Glossier (makeup) and Away (luggage), where you purchase goods online but otherwise don’t interact with technology, tech companies? Amazon and Etsy, which primarily function as online marketplaces — are they tech? What is it that makes Tesla a tech company but not General Motors? GM uses plenty of technology and is even making competing, autonomous electric cars.
Airbnb? DoorDash? Blue Apron? Uber? Lyft? Sweetgreen? The list goes on, as does the justification. As many have noted before me, every company is a tech company — or at least thinks it is. Katrina Lake, the CEO of clothing recommendation company StitchFix told Recode’s Kara Swisher, “if you want to be relevant 10 years from now, every company is going to be a tech company.”
“The first question is, ‘Does the company sell tech?’ That’s easy. If yes, that’s a tech company,” Condra said. “If they don’t, then you have to ask yourself, ‘Is there some kind of modern technology core to its customer acquisition or customer retention?’”
But as technology becomes increasingly central to companies’ businesses, that line becomes harder to draw.
“Twenty years ago, if the internet was an important part of a business — I’d say, ‘yes, that’s a tech company,’” Jay Ritter, a finance professor at the University of Florida who tracks IPOs, told Recode. “But today, what company has a business where the internet isn’t an important part of it?”
He added, referring to other IPO researchers he’s talked with over the years, “We all agree that companies like WeWork or Etsy, whether you classify them as a technology company or not is definitely a judgment issue.”
For plucky entrepreneurs aspiring to found tech companies, that leaves many ways in. You don’t necessarily need to sell or develop technology as your main line of business. Simply using technology does the trick, and the more buzzwords you can fit in a pitch deck — AI, machine learning, data mining, blockchain — the better. Hiring engineers and software developers helps, too.
Or perhaps being a tech company is more of a mindset: We are new and we use the internet, therefore we are tech. It’s certainly a branding tool. But the distinction can feel mind-numbing.
In 2011, prominent tech venture capitalist Marc Andreessen penned a widely read Wall Street Journal article, “Software Is Eating the World” that made the prescient point that software companies would take over a large portion of the economy. These days, it feels like it’s eating our brains.
by Rani Molla, Recode | Read more:
Image: Jonathan Brady/PA Images via Getty Images
[ed. See also: WeWork: Is There Any There There? (NY Times)]
