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Is it really a tech bubble, or is it something else?

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Adam Lashinsky, in a piece for Fortune last week, wrote at length about the question that has crossed the minds of everyone north of San Jose: are we in a bubble? He takes a nostalgic trip down memory lane, talking about the dot-com bubble and how we are starting to see similar behaviors again.

Like Adam, I too was around in the Valley during the crazy days, so a lot he said resonated, but I still am not smart enough to say that we are in a bubble. These days it is hard to tell. In 2000 it was fairly easy to tell.

We live in crazy times — that is true — and things have gotten crazier, but it still doesn’t feel like the turn of the century. Last week, another former colleague from Red Herring brought up the topic and wondered how different things are now versus the 1999-2000 madness. And then he answered the question himself: 1999 had a gold rush mentality, a sense of broader mania. This time around you see more of a gross entitlement; and that’s what is different about the Bay Area.

Bay Area/San Francisco

The difference is the scale and scope of everything happening around here. Back then people would show up, hoping that they could merely participate in this tech-internet thing. Now, many (if not most) show up expecting millions even if their companies fail. Just sit in a cafe — any cafe in San Francisco — and you hear stuff that makes you want to poke your eyes out.

Founders, instead of trying to forge relationships, are getting into a pattern of expecting funding without much effort. After all, if it doesn’t work out, no harm done and there is an acqui-hire around the corner. There is an expectation that even if they don’t build an interesting product, they deserve a nice exit for trying anyway: which is troubling as far as I am concerned.

Today, the babble is sourced from blogs; news blogs, expert blogs, investor blogs and founder blogs. Yes, I have overheard a conversation that combined wisdom from Jesus and Ben Horowitz. Back then it was my then employer Red Herring and The Industry Standard that acted as source of buzzwords. Those magazines existed because the mainstream media at that time didn’t much care about the internet and the broader technology industry; for them it was a niche.

Today, the mainstream (which includes Fortune and its competitor, Forbes) is once again back chasing the story. The reason why there is a boom in technology media today is because it is THE story. Technology is now part of the social fabric; it is what is causing dislocation. It is the cause of fear amongst all of us. The digitization of our society is a challenge that is both legislative and philosophical. And that is why we are seeing a greater demand for those who cover this industry.

In 1990s, we had a generally upbeat economic environment around the country and there was a sense of naive optimism around the internet. Then came the gold rush and later the malfeasance. Right now we have a country that is facing an unending economic uncertainty, especially for a large swathe of people. As a result, the Bay Area stands out and finds itself living under a microscope. There is no naive optimism; just gross entitlement and that is what’s wrong.

Our industry has boom and bust cycles that are much faster that any other industry and at the same time have unsaid but distinct barriers to entry. The internet-speed cycles lead to many more startups and more people becoming millionaires faster and at a much younger age than any other industry — even the older version of the internet industry. We also forget that the same speed which thrills, also kills. The recent retrenchment of technology stocks is a good reminder that the craziness doesn’t get to mania levels anymore.

IPO stock performance 2014

Source: Deutsche Bank Research

The 1999 bubble was driven by stock markets where insane valuations for crap stocks led to insane decisions by equally insane (and clueless) venture investors. This time around, the stock markets, after overpaying for initial public offerings from much of 2013 and 2014, have come to their senses and decided that bad businesses aren’t to be rewarded. A Deutsche Bank report pointed out that 86 percent of IPOs have broken issue and 91 percent are trading below their first day close. Clearly, the market has skimmed out the froth and continues to re-price stocks including Twitter, which has trended down in recent days.

The bad behaviors, like everything, get magnified too much by social media. I mean, last week in Italy people were asking me about Google buses, protests and what is wrong with the tech industry. I don’t know what is wrong except that the social norms and behaviors of players are different. The world looks at the gratuitous amount of profits made by a company like Google, and juxtaposes it against the lack of hope for a majority of the planet.

People dislike Uber, not because some founder is going to become a billionaire; the discontent comes from the visible disparity between those who have it and those who don’t. Google buses get rocks and eggs thrown at them mostly because they are a reminder of digital feudalism. As an industry, we are very fortunate; and that is why it is important to remember why we need to have compassion and understanding about the fears of the rest of the world. We need to remember that our actions now intersect and influence those who are not of our industry. Trying to be in their shoes isn’t a bad place to start.

I have been around in San Francisco for over 12 years and I have come to reluctantly call it home. The garishness of modern times is unsettling but it doesn’t mean we are fully in the grip of mania/madness just yet. And if being the old-ish guy in the valley has taught me anything, it is that booms turn into busts, cycles end and greed gets it comeuppance. And we start all over again.

The way I deal with it? Avoid the spectacle of technology and instead focus on technology and science solving real problems. For me, it is always about the possibilities.

Featured image courtesy Aksenova Natalya via Shutterstock

58 Responses to “Is it really a tech bubble, or is it something else?”

  1. Daniel

    To me the keep words for the article is “gross entitlement” or more a gross sense of entitlement from all side and all walks of life in the Bay Area. Companies, that in a way I understand, that hold out for the multi-million dollar pay day if they are acquired because of the sense of hard work and accomplishment they have done to turn their particular service or technology into a valuable and recognized brand/product on the market. Founders demanding multi-millions in seed money because they feel the potential that their idea has on ROI and the cost it usually takes to start a company. The tech protesters that feel entitled to participate and work in tech companies even though the engineers, they basically yell death threats to on a daily basis with no repercussions, sacrificed and dedicated a large part of their lives to obtaining the knowledge and skills it takes to accomplish the job while the protester have not.

    The you have article that claim the X or Y location will be the next Silicon Valley. In short at the moment it looks more like a cycle jealously than a bubble to me.

  2. Glenn Franco Simmons

    “And that is why we are seeing a greater demand for those who cover this industry.”

    Yet, many of those covering tech are filled to the brim with conflicts of interest that would not have been allowed at any self-respecting newspaper or magazine in the pre-Internet era because worthwhile journalists followed a code of ethics, such as the Society of Professional Journalists’ Code of Ethics.

    Some media outlets had their own codes and media ombudspersons (some still do).

    What it lacking in tech media is the quest for objectivity. No media ever really reaches it, but most of the tech media doesn’t even try. In fact, it is often the opposite.

    Enterprise, in-depth and investigative reporting in the tech media are not lacking, but they are, as a group, an endangered species.

  3. Marivi Lerdo De Tejada

    I hope more people take your remarks about compassion as a call to action. Do you think our having grown up in countries with heartbreaking poverty and income inequality makes us even less tolerant of the entitlement culture around us?

  4. Marc Canter

    Come to Cleveland!

    No wait – I left Cleveland. Come to Charlotte, NC! That’s where we moved after Cleveland.

    Its really nice here……..

  5. Rodney Mason

    OM, your central belief that focusing on technology and science to solve real problems is what is needed most in Silicon Valley.

    Without a focus on truly solving real problems, innovation from Silicon Valley is nothing more than an expensive shell game.

    Rodney Mason, CMO

  6. dan turner

    Nice article, Om, and thanks!

    Though one niggle. I worry that the “And we start all over again” near the end could be read as an acceptance that this is the normal cycle of things, when of course it’s the result of a lot of intentional engineering (some would say rigging of the system). We shouldn’t just accept these as “well, whaddya gonna do?”

    Also, I hope someone can follow up with an article that makes it clear that these booms and busts are not harmless to the long-term health of cities and surrounding areas. It’s not just, “Oh, that happened, back to normal.” In addition to the pricing out of the middle class in SF, the first dot-com boom gutted SF’s industrial capacity (and now many of these repurposed industrial spaces sit empty, costing the city revenue and inviting blight), forced a large part of the artist community to flee, and so on.

  7. As someone who was around the first bubble and spent time in San Francisco, I agree with the author on how things have shifted, and how most tech entrepreneurs these days have a sense of entitlement. It feels very different now, there’s more competition and that sense of community is gone. Everyone is out for their own good and a lot of these companies are frantically trying to build a model they can sell for X multiple to the highest bidder.

    I miss the old days.

  8. Jason Jepson

    Om, great article as always. Question, have you thought of doing a follow up article and taking the pulse on Austin, Denver, Venice Beach, Seattle, etc. on this topic? Also wonder if these cities are more insulated or if they are at more risk from either a bubble or just fundamental change in the direction that funding is going… Best – J

    • Jason Jepson

      It would take a lot of effort and time to get a better understanding of those markets for me. I am sure there are others who are more equipped to talk about the local conditions. I am sure we will those soon.

  9. platformulagroup

    OM is absolutely right (and moral) to call out the Bay Area’s ‘digital feudalism’.

    The Bay Area digital culture—mainly as it is reflected in consumer focused startups—-often appears to me to be straight out of the Hunger Games. You have a banker-driven digital aristocracy in SF that often looks, dresses and behaves like those overfed, over-luxuried citizens of ‘the Capitol’ on the one hand (while of course wrapping itself in the cloak of ‘social responsibility’)—and on the other hand you have the unemployed, under-employed and ignored inhabitants of the ‘Districts’.

    And it’s magnified a hundred times over when you factor in the smarmy ‘youth culture’ spin of it all—especially all that elitist self-congratulatory posing relative to ‘disruption’ and ‘changing the world’.

    I also think the situation “is something else” and is much much darker than just a ‘bubble’.

    Everyday I see evidence of a massive loss of cross-generational core institutional memory in how self-sustaining tech companies are built in the Bay Area—Side by side with the justification for this loss of core institutional memory by some mutated form of Orwellian startup Newspeak.

    When your ‘minimum viable product’ is an excuse to serve unbaked crap to users and customers (rationalized of course by the ‘iterative’ process)….when your ‘growth’ strategy is to engage in non-permissioned marketing and data privacy over-reach justified by a ‘freemium’ kick the monetization can down the road ‘business model’….when your development strategy is to say none of that really matters because ‘developers are the new kingmakers’ and ‘we’ll get acqui-hired’ based on developer scarcity even if our business is totally unviable—Then you have all the prerequisites not just of a bubble, but ultimately of a net decline in real innovation.

  10. Daniel Tunkelang

    Om, this is a nicely written piece, but I’m curious how grounded it is in reality.

    “Founders, instead of trying to forge relationships, are getting into a pattern of expecting funding without much effort.”

    Do you have data to back this up? And are the founders getting this funding, or are they whining when they don’t get it? This feels suspiciously like nostalgia for the good old days when people worked hard in ways that today’s youth just don’t understand, yada yada.

    “People dislike Uber, not because some founder is going to become a billionaire; the discontent comes from the visible disparity between those who have it and those who don’t.”

    Again, I’m curious about the data. I know that taxi companies and the government agencies they lobby have issues with Uber and other ride-sharing services. But I haven’t seen evidence that regular people care. And it’s hard to imagine they’d be opposed to discount taxi services that democratize transportation, e.g., for a family than can’t afford to own 2 cars.

    • Daniel

      So multiple threads here. There aren’t quantifiable data sets on founders but if you spend even a week trying to do business as an early stage investor (my new post gigaom profession), you can experience this on a daily basis. I talk to many investors in the Valley and the shotgun approach to relationships is a topic that is often shared.

      On the nostalgia side of things, I am not sure what you are talking about.It is a very simple comparison and no, I don’t wish the 2000-madness to come back.

      The people who hate Uber and such services are the ones who take buses and public transportation. The hatred is not for Uber, but for what it represents. Unlike cabs, it is something that is more in-your-face. Just ask regular folks and there is a distaste-to-hate feeling for such services.

      • Daniel Tunkelang

        I meant nostalgia more generally — not just reaching back to the dot-com bubble. Every generation believes the next generation is lazy and feels a sense of entitlement. As someone else put it, every generation is accused of being the “me” generation:

        I don’t doubt that your personal experiences inform your perspective, but I think you should be careful not to make broad assertions that generalize from your personal experience. I’ve certainly talked to founders and would-be founders who can’t get the time of day from investors. But I don’t have any reason to believe my personal experience is any more generalizable than yours.

        I suspect it’s just the nature of marketplaces: if it doesn’t work in your favor, it’s easy to feel it’s unfair. While if it does work in your favor you take it for granted.

        And as for “regular folks” hating Uber et al, you’ll have to forgive me for wondering whether your circle of friends introduces some sample bias. As someone who takes buses and public transportation myself, I’ve found these services to be life-changing. I’d be curious to see if anyone has tried to meaningfully assess public sentiment about them.

  11. Phil Wainewright

    I saw lots of entitlement in the 1999-2000 bubble too. Ever go to a First Tuesday event? What seems to be different this time round is that the participation in wealth creation is narrower, as you highlight. But don’t forget that the VC bubble is being fuelled by pension funds and other investors of the general public’s money – which is why I hope we can avoid a bust.

  12. It’s not a tech-bubble, it’s a broader asset bubble. And the reason why there’s no gold-rush mania this time around is that the middle class has been punched in the face twice since the Dotcom bubble.

    Just as with the dotcom bubble and the housing bubble, this bubble is fueled by low interest rates. The new variable this time around is quantitative easing– glorified money printing– that goes directly to banks. What happens to that money? Banks use it to buy riskier assets (like tech startups) seeking high returns in the face of low interest rates. In other words, all that printed money goes into risky assets in the form of venture capital, and into stocks in general. It is also why there is no “gold rush” feeling– the middle class do not get their hands on this money for the most part, until they’ve already been priced out of the market. The entitlement mentality is directly attributable to easy money policies.

    And yes, this is definitely a bubble. But it is definitely not limited to tech.

  13. Hamranhansenhansen

    The difference this time seems to be that today’s startups are making products for the rich, because that is who has all the money now that the middle class has been effectively destroyed. So in the 90’s, we were making virtual Fords and Chevys, but now we are making virtual Bentleys.

    Another component is the lack of responsibility today. Notice that a cab company has to hire reliable drivers because if that driver hits someone, the cab company gets sued. But with Uber, no driver screening happens, and when an Uber car hits someone, only the driver is responsible, only he or she gets sued, which means the person who was hit may not get any compensation at all. So imagine somebody who is working at a coffee shop, serving startup entrepreneurs all day, and on their walk home (if they can even afford to live within walking distance of work anymore) they get hit by an Uber car carrying a startup entrepreneur and then there is no compensation at all, the driver has no money, and Ãœber takes no responsibility. It’s Dickensian.

  14. Keith Hawn

    Two other differences between then and now. (1) The insane business philosophy that has taken root in every bit of soil that “Failure is not only GOOD, it is a REQUIREMENT !!!!” So, a sh&tty business plan or half-cocked IPO is simply built in, nowadays. (2) The Millenial (and younger) hero worship for “entrepreneurs” who are nothing but coders hoping to be the next Snapchat or WhatsApp without having been around the block even once – maybe without even having left Mom’s basement.

  15. Part of the difference between 1999 and now is that making a fortune from tech IPOs was relatively new. Now Silicon Valley is populated by ordinary individuals who struck it rich either through talent (a few) or lucky accident (many). The fast track to wealth has become an assumption. In my perspective it appears to have attracted larger numbers of companies with a theory that they may not have to prove if they can exit in time. As you say, it definitely drives different behaviors. Thanks for the great article.

  16. Parkway

    An insightful article but “gross entitlement” has always permeated Silicon Valley. It is not the provence of founders and startups and is considerably worse at the tech giants where C- and VP-levels practice sophisticatated “gross entitlement” on an industrial-scale that result in tens of millions of dollars in salary plus bonus plus stock options annually.

    The post by Wonkster has it about right. Since the realization of the mobile device as a new platform in 2007 which set the trajectory of a computer in a pocket for billions of people, investors have and will continue to pour money into the market looking for the really big new new thing. At the same time, it has become much easier and cheaper for software engineers to build stuff irrespective of whether there is a market or not. As Felix Salmon put it eloquently recently – it is a lottery. It would be foolish to discount the mixing of the Darwinian pot by investors who rely on this ferment to place their bets.

  17. DB Cooper

    Om, I was very much part of the boom/bust (Netscape, Looksmart, etc.). I vividly recall conversations overheard in cafes all over SF back in ’99 — Entrepreneurs boasting about pitching Hummer Winblad; how much money they planned to raise at what valuation. The sense of entitlement was EVERYWHERE. I suspect the days of wild valuations for pre-revenue businesses are gone, the crazy real estate valuations are back with a vengeance.

  18. Brian Burt

    It’s Something Else…
    To me the “something else” is that we globally have more winner-take-all networks, businesses, leaders, and even sports stars. There is something about the global connectedness that is creating more wealth at the top, flatness everywhere else and much of the resentment stems from people being concerned that people that aren’t in software/startups are going to be priced out of a city they love.

    … But Not an Actual Bubble (?)
    As for the *economic* side though, I’m surprised you don’t address the economic difference: real profitability. Having lived through both, I claim there are many more companies today that are actually profitable (and where the source of money are end consumers, not just venture-backed companies). Google, Apple and Facebook are obvious examples, but there are a lot of small companies with real products, raking in a *ton* of cash. From the profitable companies in the 90s, subtract out the ones making profit off of IPOs or off of other companies fueled by investment, and also subtract out those fueled by telecom (which was a *much* bigger bubble in dollar terms than the rest of tech combined), and it’s night and day.

    Today: it’s looking today much more like a “bubble that won’t end” aka “not a bubble” -although when hiring engineers or looking for an apartment it sure feels like it.

  19. Albert Hartman

    The late 90’s dot-com craze was everyone with stars in their eyes from the shiny new amazing technology: the internet. The current mania is the shiny new amazing technology: cloud+mobile. They’re both right. And there will be others: info-biotech, IoT, carbon-goes-to-electric. It’s all real and it’s all good. But humans are wired to move in fads & manias. Sense of entitlement shrivels as soon as any contraction happens, people then grow up. But we do live in improving times that will soon extend to others, we’ve just seen it in SF/SV first.

  20. Alan Graham

    I’ve worked in tech and new media for over 20 years. Over 10 disruptive technologies and platforms. I was in the Valley before the previous bubble burst and it was a pretty wild time. I was lucky enough to get out the last time with the shirt on my back.

    A year and a half ago, disillusioned with where things were headed, my wife and I pulled up and moved to London and I’m doing a startup here. That meritocracy crap that seeped into the Valley doesn’t exist in that same insidious way over here in Europe. Theres a sense of cooperation/collaboration and excitement that I’ve missed from the SF tech community for quite some time. People love good ideas, they recognize them, and want to help make them a reality.

    I think there is a bubble in the Valley and it is a creation of the great migration of people to the area who are then living within a bubble and have no sense of what is going on in the world outside of Silicon Valley. The Kool Aid has been replaced by Soylent and they are all high on their own sense of self importance. They all talk about changing the world, but with what? Dick pic apps?

    I think there is a bubble burst coming, but that’s not the same one we saw before. This one is a disconnect from reality and a self feeding idea loop of an economy built upon freemium models and advertising that is unsustainable. One dip in the economy and that all comes crashing down. I’ll be glad to be outside when that implosion occurs.

    • Agree with Bryan and those recognizing that this is an asset bubble. As such, many of the same traits apparent in the last cycle appear again in Silicon Valley (& San Francisco).

      On another note, Silicon Valley increasingly appears to be an ‘isolated system’, or a bubble community, producing a consistent and similar view (arguably limited) of the broader market. Probably not necessary to note that expansive thinking begets innovation.

      Regardless, whether the buzz cycle propagates a bust (behavioral finance), the rapidly increasing (reckless?) risk tolerance from the venture community propagates one, or otherwise…we will have to wait and see.

  21. Bryan Goldberg

    I think we should be careful painting in broad brush strokes either way. The entrepreneurs I know are amongst the most hard working people I have ever encountered, and most of them sprint to the finish line… working six or seven days per week (and skipping vacations) for many years at a time. The ones who have been fortunate to achieve an acquisition continue to work hard even when they have no skin in the game, because they believe in their products, employees, and in delivering value to their acquirer. I know many tech millionaires who still wear Casio watches and continue to live in small neighborhood homes.

    I have no statistics to point to, nor can I say if my sample size is representative of the whole… but I lived my entire life in Silicon Valley (even before Web 1.0) and can say, with confidence, that the humble, hard-working, inconspicuous, grateful, caring, millionaire is the far more common occurrence… if their worldview is tainted, then it is from an over-exposure to crazy technological theories, not from an over-exposure to First Growth wines, yachts, and Swiss watches.

    Many of the people who are millionaires today sewed their businesses during the cold years of 2003 – 2009, and have their favorite memories from the quiet and productive years when Silicon Valley was bemoaning a “farewell to good times”. They will do just fine if the markets take a turn for the worse.

    • Bryan

      Thanks for the comment. I definitely agree on all fronts and yes, painting by the broad strokes isn’t the intention — what I wanted to point to is that there is a slight difference in everything from expectations and the self correcting market behaviors. I have been around long enough to know that rough times bring out the best ideas and they work well as a result. I wrote about the downturn-born companies a few years ago. Today we are on the fringes of irrational behavior but like I said, the markets self correct much faster now.

      • Ammiel Kamon

        I think both Om’s and Bryan’s above comments are spot on.

        Speaking of broad strokes, the actors in the current boom are a different generation than the last… So it is interesting to see the generational characterizations come into play — The negative aspects of the gen-x led late 90’s boom are painted as “greed”, while the negatives of the current, Millennial led boom are painted broadly as “entitlement” . Not saying either one is worst than the other, true or not, etc. just that the actors, as a cohort, are noticeably different.

        Same can be said about the positives of each generational cohort — e.g. Gen-x label of “self made”, and Millenial label of “collaborative”.

  22. Wonkster

    It seems to me that this bubble/boom whatever definitely involves larger sums of money. The funding rounds for companies that barely exist are much larger than in the previous bubble/boom. I live in SF and I too have heard conversations in cafes that make me want to poke my eyes out. The most obvious issue is that so many “social” apps seem to have no revenue model other than to get really big really fast and then figure the money part out later, yet they are being “valued” at astronomical numbers (and often double in “value” for no apparent reason). There is only so much money to be made selling advertising aimed at chatting teenagers. As much as Webvan and became symbols of the first “dotcom bubble” the basic business models might have made sense, and might still make sense (and in fact the grocery delivery “space” seems to be coming to life). Maybe I’m missing what the really smart people see, but I can’t see how things like Snapchat and Whatsapp (let alone Whisper and Secret) could ever justify their implied valuations.

    • Alan Graham

      I’m such an old dumbass that my startup over here in the UK actually has a revenue source and will make money on day one and not from advertising. It’s crazy, I know, but I’m old school that way.

    • dan turner

      That’s a decent point, Wonkster, but there’s a bit more too it (and YES to the eye-poking conversations here! Though I admit sometimes it’s not my eyes that are tempting targets).

      A big difference between the booms is the scale of general-public money invested in all this flummery. That’s not at all to justify any of the tulipmania or any business plans or MBA entitlement, but this is a bit hopeful in that the bust won’t take down so many private individual investors, as it did with et al. As for institutional investors, I don’t really know; CalPERS may still be vulnerable, which would be awful.

      As for the “get big fast”, I’m still pondering how that is like or unlike the “first mover” fetish in the first dot-com boom. Steve Blank chronicles that fallacy and its discontents well in his “Four Steps” book (I think the first few chapters are available online for free).

  23. Isn’t at least part of the issue around the buses that they use public infrastructure without paying adequate fees? That would seem to reinforce your point about wealthy tech companies being tone-deaf to the communities around them.

    • realist50

      A lot of the issue is that established San Francisco renters feel that they should have the benefits of owning real estate – meaning being shielded from cost increases – even if all they commit to is year-to-year leases. They also oppose building new housing units, and then they rail against the logical consequence of restricted supply, namely higher housing prices and higher rents.

      So I’d say that much of the problem is a group of San Francisco residents who feel entitled and are quick to protest, and support counterproductive or unrealistic policies because they are economically illiterate.

  24. Very insightful piece, Om. At a recent social media conference, I met a young tech founder who had dropped out of college in Boston and moved west with an app idea that he found funding for. What was shocking to me was how cavalier he was about returning emails to the very people who had funded his company to the tune of $750K. I found myself lecturing him the way I might one of my own teenagers, but he just laughed it off. I happen to work for a tech start up in Reno, Nev. (I left San Francisco for Reno during the first tech wave) and have to say the attitude here, even in technology, is much different. There are things I dearly miss about my native Bay Area, but the entitlement vibe you write about is definitely not one of them.

  25. Haley Jindal

    On possible tech bubble, in today’s NEW YORK POST lead Business section story:

    “When it comes to buying that hot startup, price is no object.
    Along with surging shares of newly public tech outfits, Silicon Valley CEOs in search of the “next big thing” are driving up prices for private tech companies, giving rise to talk of another bubble. Companies spent way more to acquire private US tech companies last year even though the number of acquisitions was down compared to the previous year’s peak, a new report from private-companies Internet data company PrivCo shows.”

  26. Bill Plein

    The San Francisco bubble most cited here and elsewhere is a Social and/or Media bubble. These are companies that use technology (hardware and software) to deliver services. They aren’t tech companies even though their services are highly dependent on “tech”. They are as much “tech” companies as Ford Motors is a “tech company”.

    This conflation of “online” (now Social or Media or related) with “tech” is a bad trend. Suppliers like networking companies, server companies, and storage companies, are all “tech”. Snapchat and Twitter and Facebook and Instagram and all these other companies are simply Social Networks (i.e. services).

    Is Amazon (the retailer, not the AWS side) a tech company? NO. They use technology to deliver sales over the web. Is a tech company? NO. Is Twitter a tech company? Of course not.

    • Derrick Harris

      I disagree that web companies can’t be tech companies. On the web, at least, Facebook is responsible for a large number of technological innovations, from programming to hardware design. Same goes for Google and, to a lesser degree, Amazon (especially w/ AWS), Twitter et al.

    • Thanks for your astute comment. I think if you look at the investment patterns, the “attention” grabbers pass for tech. We have an excess in tech enabled services.

  27. the blind following the blind, there seems to many advances by too many companies trying to solve the same issue, almost repeating the same song but using a different instrument, it is only a matter of time before common sense re engages, and it’s getting close. the advancement of the web is the story of over trading, going too far without proper backup, i see this in the energy tech industry, the ipad too, basically said, why would you dump good technology for a car that did an extra 5 miles per gallon, good article