Renowned analysts: Airbnb, Uber, WeWork, etc. Are technology companies?


The Translation Bureau is a compilation team of 36氪, focusing on science and technology, business, workplace, life and other fields, focusing on foreign new technologies, new ideas and new trends.Editor’s Note: Nowadays, technology has become one of the foundations of the social and economic system, and it is rarely insulated from new technologies.However, with the popularization of technology, it is difficult to produce too many changes in terms of the form of technology itself and the business model.So, is a technology company based on technology but entering other fields?Recently, the famous analyst Ben Thompson wrote an answer to this question. He proposed an analysis framework to analyze Airbnb, Uber, and WeWork.The original was published in the Stratechery blog entitled “What Is a Tech Company?”.The article is compiled by the 36氪 Translation Bureau and I hope to bring you inspiration.Related reading: The roadmap for the evolution of the company: From IBM and Microsoft, to Salesforce and Atlassian, WeWork and Peloton (Netflix in the fitness field) have released prospectuses. At first glance, they don’t have much in common:One rents vacant buildings and transforms them into office space, while the other sells home fitness equipment and video fitness classes.However, their prospectus raises the same question: Are they a technology company?Of course, we can ask: “What kind of company is not a technology company?” Based on previous discussions (famous analysts: from IBM and Microsoft to Salesforce and Atlassian, the roadmap for the evolution of the technology company), you need to pay attention to the followingThe role of core features in software: software creates the marginal cost of ecosystem software. Zero software will improve the software over time. The software provides unlimited leverage. Software makes transaction costs zero. So, whether a company is a technology.Companies, the problem depends on how much of their business is determined by the unique characteristics of the software, and how much is limited by real-world factors.Take Netflix as an example, it is a competitor of traditional TV and film companies, and is also considered a technology company with the following characteristics: no real software creation ecosystem.The marginal cost of the program offered by Netflix is ​​zero, and there is no need to pay the distributor (although the bandwidth cost is high).Netflix’s products have improved over time.Netflix is ​​able to serve the world because of software, which gives them more advantages than other competitors. Netflix can trade with any user in self-service mode.Meets four of the above five conditions.The upcoming Airbnb is also often considered a technology company, although they operate a residential business: Airbnb has a software-based landlord and tenant ecosystem.Although Airbnb’s accounting data shows that the marginal cost of its revenue is very low, the overall observation of Airbnb’s market shows that the company actually pays the landlord 86% of total revenue: in terms of the overall transaction, the real worldThe cost is dominant.Airbnb’s platform will improve over time.Airbnb is able to serve the world and get the most out of it.Airbnb can trade with anyone in a self-service mode.At the same time, Uber is similar to Airbnb, and for good reason, it also has most of the conditions: Uber has a software-based driver and passenger ecosystem.Like Airbnb, when Uber reports its income, it also means that the marginal cost is very low, but from a holistic point of view, the company pays drivers about 80% of the total revenue; this is not a company with zero marginal cost.Uber’s platform will continue to improve over time.Uber can serve the world and give it the most impact.Uber can trade with anyone through a self-service model.One of Uber’s main problems is transaction costs: it takes a lot of money to attract drivers to the platform and stay behind.But that doesn’t mean Uber is not a technology company, but it does emphasize that Uber relies heavily on those elements where marginal cost is not zero.Now let’s take a look at the two companies I mentioned at the beginning of this article.First, it is WeWork: Wework claims that it has a software-created ecosystem that connects companies and employees in different locations, but it’s hard to find evidence that this is the driving force behind WeWork’s business.A large portion of WeWork’s income is used to pay rent.Of course, the services provided by WeWork have the potential to improve over time.The WeWork service supply is limited by the amount of office space.WeWork stipulates that even if only one person rents an office, consultation is required.When it comes to providing services to larger companies, it relies heavily on brokers.Frankly, it’s hard to say that WeWork is a technology company.Finally, Peloton: Peloton does have the qualities of a social networking platform and a strong gamification property.Although Peloton is just an application, if you want a complete experience, you need to buy a four-digit bicycle or treadmill. In this respect, the marginal cost is certainly not zero, but the marginal cost of the service itself is zero.Peloton’s products will improve over time.The size, weight and installation requirements of Peloton hardware mean that the company’s services are limited to the United States and the UK and Germany that have just entered.Peloton’s installation process requires deep user involvement.From these perspectives, it is difficult to determine whether Peloton is a technology company.But then, Apple is also the same: it has a lot of software to form differentiated hardware.Moreover, there is another definition worth emphasizing.Peloton and the term “technique” are very old and “older” than Silicon Valley.It means anything that can help us produce things more efficiently, and it is also the driving force behind human progress.In this regard, all successful companies—at least in the free market—are technology companies: no matter how important the product is to customers, they do more efficiently than any other company.The best way to better understand the technology is to use some definitions, the most useful one from Clayton Christensen’s book The Innovator’s Dilemma: Most new technologies willTo promote product performance improvements, I refer to these technologies as “continuous technologies.”Some continuation techniques may not be continuous, or they may be groundbreaking in nature, while others are essentially progressive techniques.What all of the continuation technologies have in common is that they all improve the performance of mature products based on the performance level that mainstream consumers in the major markets have always valued.Most technological advances in a particular industry are inherently continuable.Breakthrough technology gives the market a value proposition that is completely different from the past.In general, in the mainstream market, breakthrough technology products are not as good as mature products, but they have other characteristics that are valued by marginal customers (usually new customers).Products based on breakthrough technologies are generally cheaper, simpler, smaller, and more convenient to use.Continuing technology will make existing companies better, but it will not change the competitive landscape.By extension, if technology is simply to strengthen your current business, rather than making it the only possibility, you are not a technology company.That’s why there aren’t many tech companies in IBM’s customers compared to companies that use SaaS applications today.However, breakthrough technology has made it possible to do things that were previously impossible, or to make prices impossible.That’s why I think Peloton is a “technology company”: Peloton is cheaper and more scalable than a spinning class in a traditional gym.Of course, watching the screen is not as good as working with the coach and others in the same room.But it’s more convenient, and it opens up the market for a new customer base.In addition, it’s an extension that the gym can never do: the course only needs to be recorded once and always available on demand.This definition also applies to Netflix, Airbnb, and Uber.All of these companies digitize things that are critical to their competitors, such as time and trust.However, I am not sure if it applies to WeWork: in terms of the uniqueness of the company, it seems to rely mainly on unprecedented financing channels.This may be enough, but that doesn’t mean WeWork is a technology company.On the other hand, being a technology company does not guarantee success: the “curse” of technology companies is that although they create great value, it is extremely difficult to obtain this value.In this respect, Peloton’s hardware is as significant as Apple’s.On the other hand, a light asset model like the Net Car is very attractive, but can Uber get enough value to make a profit?When Airbnb conducts an IPO, what will it behave like?In fact, Peloton’s development looks good, mainly because they are selling hardware products and distinguishing them through software to get huge profits!Still, the definition is helpful even if you can’t provide a forecast.All companies are using software, and software has revolutionized technology companies, and we should re-use them in a longer time dimension, considering their pros and cons.Related reading: The evolution of the technology company: from IBM and Microsoft, to Salesforce and Atlassian translator: scale..