What is tech anyway?
TECH, these four letters have become more abused a term than digital, marketing, or design — which is by any means not a small feat. The best way to define « tech » is probably through the eye of investors and how the notion has tacitly evolved during the last 30 years.
In the 90s, « tech » would mean just that: technology. It implied that you would do R&D and patent something. In a nutshell, tech meant IP. And IP was good. It delivered (a) a solid defensive moat against the competition, (b) powerful marketing, and (c) if your company was acquired (or went under), a resalable asset. And it’s still the case today. Companies like Nokia still live on their vast IP portfolio, while they admittedly lost their huge market footprint.
Around 2007-2008, when Google started to be an economic powerhouse and buried Yahoo in the ground, something different happened. The rise of network effects and 3 magic letters for investors: « MRR » (monthly recurring revenues). This was a silent tectonic shift that we still try to cope with: the most powerful companies on the planet could address worldwide markets and create self-sustaining moats by virtue of their networked activities. Who would want to fund companies just inventing technology now you could invest in de facto monopolies? Get rid of your army of researchers and IP attorneys, and let the massive gravitational pull of your interconnected customers suck the oxygen out of the market.
To get there meant accepting the rule of winners take all (companies working at a loss for years and massive investments to fuel nascent network effects). This leads to the likes of WeWork and the abuses of trying to jump on the tech bandwagon. Whereas, if you managed to sell your business as « tech,» you instantly got 10 or 15 times the valuation you would have deserved as a normal (real-estate) business.
But we also currently witness a lack of understanding of all this when we see most European innovations pulled back to « deep tech » by public funding.
After years of funding tech startups in Europe, trying to find the next Uber or Airbnb (tech as network effects), we go back to tech as science (tech as IP). And let me be clear, tech, as in « science,» is not bad. It’s just that we can’t go back in time. Network effects are not going away anytime soon. If we haven’t managed to create AirBnB or Uber-like unicorns in Europe, it’s because we’ve tried to apply the US playbook too literally.
The challenge of building a « tech » industry in Europe is still ahead of us.
EDIT (Feb. 14) – The EU has started to flex its muscles beyond the GRPD initiative and aims to build a single data market. The term data is probably confusing and means digital privacy. It’s a bold start in the right direction. (Prepare for US outcries.)
