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Companies are calling themselves “tech” less often, Recode

Companies are calling themselves “tech” less often, Recode


  

After years of slipping the word “tech” into business decks for companies that lease office space, prepare food, or drive people from place to place, public companies are using that word less often to describe themselves. That’s surprising given the recent spate of high-profile IPO filings, includingWeWork,Peloton,Uber,Lyft,andSlack, were especially adamant about their “tech company” Designations.

Overall, company documents referencing “tech” and “technology” peaked around August 2018, according to Sentieo data pulled from US and international public companies’ earnings calls, financial transcripts, and press releases.

Since then, the number of documents with those terms declined about 12 percent, indicating a change in the ways businesses market themselves to investors and customers – and perhaps how they perceive themselves. The trend for “tech company” and “technology company” was similar.

A lot of that decline reflect shifts in the financial industry, which has also seen a big dip in financial tech buzzwords like “payment,” “chip,” “mobile,” and “ app, ”as well as broad tech terms like“ startup ”and“ disrupt. ”

Of course, none of this is to say technological advancements are stalling, but rather that language and marketing tactics are changing.

And there are a few potential reasons for the decline.

For one, it could indicate that the idea of ​​integrating technology into non-tech businesses has gone from novel and noteworthy to commonplace and unremarkable.

It could also mean that people are avoiding the term as it becomes less useful, since its overuse has rendered it basically meaningless. When companies that hawk everything from shoes to salad call themselves “tech,”what does it even mean?

“It does feel like we’re kind of past this, ‘Any internet company is a tech company,’” Paul Condra, lead emerging technology analyst at PitchBook, told Recode.

It’s also possible that the term “tech” has gone from being lucrative to being a liability.

Calling a business a “tech company” has always been about more than just semantics. It helped founders draw attention to their companies in the first place. It also supported higher valuations and higher payouts for people bold enough to claim the designation.

“There are really huge incentives for companies to present themselves as being on the bleeding edge, even when they’re not,” Nick Mazing, director of Research at Sentieo, told Recode.

“The tech sector has been extremely successful, not just in terms of changing behaviors and lives. It’s been successful financially, ”he said. “There’s a tendency to imitate what has worked recently.”

That imitation also works in reverse, when companies are trying to disassociate themselves from less successful ones.

Currently, a number of the most-anticipated tech IPOs of the year aretrading below their offer prices.

Uber, which some argued wasjust a taxi company with an app, saw its desired private market valuation of $ 120 billion more than halved on the public stock market since it debuted in May, with a current market cap of $ 58 billion. It continues to burn cash and is far from turning a profit; it also will soonhave to deal with real employees, rather than contract workers. Workplace communication software companySlackis trading at 34 percent below its opening day price, thanks in part to pressure fromcopycats like its much bigger rival, Microsoft, which is offering its communications software basically for free as part of its ubiquitous Office Suite. WeWork, which was valued at many multiples higher than its non-tech-claiming competition but which faces many of the same real-works liabilities – such as being stuck with long-term leases but short-term customers when the economy crashes – is currentlyworth 70 percent belowits last funding round.

High-profile struggles could be discouraging, even though the information technology sector as a whole istrading ahead of the S&P 500so far this year.

Tech companies are also facing headwinds in the form of government regulation, which could dent their profits in the future.Statesandfederaloffices have launched antitrust probes into the biggest tech companies, including Google, Facebook, Apple, and Amazon.

That doesn’t necessarily mean new companies are at risk of antitrust scrutiny , but rather that there has been a shift in public and politicians’ perception of tech. Privacy andpoliticalmissteps at Facebook have proved the adage, “People are the product.”Facial recognition technologyat Amazon and Palantir is conjuring images of asurveillance state. There’s also the specter that the robots aregoing to steal our jobs.

Changing what companies call themselves might “deter attention away from some of the more vulnerable aspects of tech, like antitrust and data collection, ”Condra said.

All this is to say that it might not be the best time to try to call yourself a tech company.

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