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It’s time to ask, now that the IPO attempt failed and the CEO has been deposed: Does anyone still believe that WeWork is really a “tech company”? Please. Point to any technology that the company invented.
Of course WeWork used modern digital technology to operate its business. And it proudly marketed to and housed many companies that were in fact “tech.” Yes, the investors from SoftBank to Goldman put the company in their tech ‘bucket’. And WeWork’s (now former) flamboyant chief certainly epitomized the new cool of a t-shirt-wearing ‘tech’ CEO whose attire and style screams “I’m not a ‘suit’.”
But it stretches credulity to label a commercial real estate business as a tech company. There is in fact a conga line of similarly mislabeled ‘tech’ companies on the lists of “unicorns” (private companies worth over a billion dollars) awaiting an IPO.
If clever design, well-executed services and slick marketing gambits targeting Millennial office-space renters constitutes “tech,” then what’s next? Pig farming? Well….
It turns out the second biggest digital gaming company in China (think Nintendo) is building a huge pig farm, and they’re not alone. Given the demand for pork in China, a tech company can certainly bring to bear the power of analytics including artificial intelligence to make raising pigs “more efficient.” But it’s still a livestock farm that sends swine to the slaughterhouse. One could say the same about, say, office rentals, ride-hailing or food delivery, or banking.
Of course the idea that is inherent in the frenzied naming of anything and everything as either “tech” or “digital” or “e-something” is, at some level, a reasonable proposition: those companies that are skilled in using modern digital tools can have a real market advantage over the sloths who don’t. So the word “tech” is short form for signaling digital skills to customers and investors. But at some point the Internet and computing become so ubiquitous as to render that a distinction without a difference.
There was a time when a company using the magic of electricity to power its factories had enormous advantage over its belt-and-steam competitors. It’s electric! Before long, however, electricity (at least in our economy) became as ubiquitous as water. Or, similarly, in the early days of the automobile era more than four hundred companies appeared – and in due course, disappeared or were acquired – that built cars. They were the tech companies of that day. But the new business that the automobile enabled – from drive-in movies and restaurants, to the invention of the suburbs – didn’t inspire theater companies, paving contractors and homebuilders of that day to call themselves “car” companies.
Words matter because, until mind reading is practical, it’s one of just two ways we have for conveying ideas. (The other: pictures.) Radically new technologies appropriately inspire excitement precisely because of their power to change things. Intel is a tech company. They invented the microprocessor.
It was useful for the more innovative retail, real estate, farming and banking companies to use the “tech” label in the early days. Up to a point. But does the WeWork collapse signal we’ve finally “jumped the shark” with the tech label?
Digital tools are now ubiquitous, accessible nearly everywhere, at any time. Supercomputing is inexpensive and “elastic,” i.e., easy to purchase at any scale by-the-drink. The theory up until now is that some people – usually part of the Millennial generation – are just better at recognizing and using digital stuff because they grew up with it. That theory is a new version of the old adage that “you can’t teach an old dog new tricks.” Except you can. Especially as the tricks become ever easier to learn.
The real advantage for many Silicon Valley firms — “tech” companies — is their access to oodles of money, not so much technology. And that’s a huge advantage. But access to that capital depends on investors’ faith that tech firms’ familiarity with the magic of digital tools gives them enormous advantages in capturing market share in all the old stuff that comprises 90% of the economy, from selling pizzas to office space rentals. So far, that faith remains intact. But when investors conclude that engineers have finally made digital tools so easy to use that no special skills are required – say, like driving a car – then the game changes. We are almost there.
The advantage the “digital natives” (companies and people who have grown up with tech) have over “digital immigrants” (older firms and people who merely adopt it) is a familiar trope for tech cognoscenti: just Google it. But those advantages eventually evaporate with technology’s inevitable progression. Indeed, it is possible that the advantages reverse.
When access to intuitively easy-to-use digital tools becomes ubiquitous, the defining advantages of a business increasingly revert to understanding the immutable factors that constrain all things, from the laws of human behavior to those of physics.
The point? It’s not that the digital infrastructure isn’t a big deal. It is a huge deal precisely because the power that it unleashes to improve any all kinds of activities is becoming available to everyone. Such grand transformations of critical infrastructures have happened before, but not often: water, roads, fuel, electricity and telephony.
Why does it matter whether investors and policymakers fail to distinguish between quotidian business activities and genuinely revolutionary “tech” companies? Sloppy thinking not only devalues the concept of “revolutionary” but also makes it difficult to identify those inventions and companies that truly comprise the leading edge of the next disruption.
While there are still plenty of Silicon Valley firms that deserve the “tech” label, from Amazon (which almost single-handedly invented cloud computing) to chip-maker Nvidia, the hard truth for many Silicon Valley firms is that they are now no more “revolutionary” or “tech” than is any old-school technology-centric company like Baker Hughes, GM or Caterpillar.
Where might the next tech disruption lay? One example, despite early hype that has since abated, is the imminent maturation of truly useful robots.
With companies like the well-known Boston Dynamics (bots for construction sites) and the lesser known Houston Mechatronics (bots for the subsea), we are on cusp of having robots that will, just as mainframe computers did, find applications in business and industrial environments. If patterns hold, that too will be followed by the age of personal robots. It won’t matter if that revolution is pioneered by CEOs wearing suits or t-shirts, the impacts will be obvious and the “tech” label deserved. <>