[andersen1488]

These journalists, along with most people outside the tech industry, fail to see the overall picture. 4 out of 5 of the largest companies on earth are tech firms, and none of them were even close to that position 10 years ago. Software runs the world and tech companies are the single largest driver of the modern American economy, making the overall pool of companies that may go belly up at any given time larger. Public consciousness just hasn't caught up to that fact yet since it happened so fast.

[refurb]

I'd have to disagree. It may seem like tech is driving the US economy when you're standing in Silicon Valley, but it's not even in the top 5.[1]

Energy, manufacturing, transportation, healthcare and agriculture have seen the most growth lately.

Of course tech can play a role in all of those industries, but overall tech is not that big a part of the US economy.

[1]http://www.investopedia.com/articles/investing/042915/5-indu...

[rm999]

Technology isn't just an industry - it's a way of doing things and is becoming ubiquitous. When people think "tech" they may think of sharing status updates or searching for a restaurant. What about driverless trucks (transportation), gene sequencing (healthcare), industrial robotics (manufacturing), automated warehouses (retail), solar research (energy), farm-specific yield optimization (agriculture)?

This stuff is all being driven from within the tech industry, even when it will benefit "other" industries.

[lambda]

I think one problem with this discussion is what is encompassed by "tech". If you just use "tech" as an abbreviation for "technology", then sure, tech has been driving human civilization for millennia. Agriculture? Buildings? Roads? Language? Writing? Man, those are some technologies that have paid off big time.

If by "tech", you mean "high tech", well, that encompasses an awful lot of different things, and of course the goalposts are constantly moving as today's high-tech becomes tomorrow's tech becomes the next day's obsolete.

If by "tech" you mean computer hardware, software, networking, and networked services, then sure, that's a pretty important driver of some other advances, but likewise advances in other fields help to drive this as well. Globalization, shipping, mining, energy, RF engineering, photonics, aerospace, and so on all play into this, and all both benefit from and contribute to the success of computer hardware, software, networking, and networked services. But just because this form of high tech can help with other fields, doesn't mean it's driving the economy. It may be increasing productivity to a certain degree, but there is an awful lot of the economy which is only minimally influenced by these kinds of things.

[zadig]

I think the point the previous commentator was trying to make is the distinction between the 'tech industry' a la Silicon Valley versus other industries - and it would be unfair to credit the former with any innovation in the latter. Pretty much every industry since we have invented fire has grown through advances in 'tech'. So what makes a firm a 'tech' firm - in this day and age it's hard to say, and I'm not sure if it's a useful exercise.

[ChuckMcM]

A "tech" company is a company that provides a good or service that is either completely new and only possible because of a technological innovation, or is a new company providing an existing service using a different vertical stack based on technology which came available after the incumbents were started.

Uber is a "tech company" because as they are providing a new business model for a livery service based on using an application to make a market that is distinct from the previous market.

Facebook is a "tech company" because they are providing a business model around sharing information between acquaintances (a social network) using an application and a web site.

Fedex is not a tech company as they are augmenting but not replacing their model or their processes. Foster Farms is not a tech company as they have not fundamentally changed the way in which they raise chicken.

I go back and forth on Tesla or SpaceX. Consider Tesla, they are a car company but electric cars have been around forever, their most successful incarnation, the Golf Cart, has dominated golf courses for decades. It wasn't the "idea" or the "product" that made the Roadster and then the Model S successful, it was the execution on the vision. Similarly SpaceX rockets are just rockets with better execution and better alignment with available technology.

[kelseyfrancis]

It is a strange, strange world in which Uber is considered "tech" but turning around a rocket after it's boosted a payload toward orbit and then landing it back on earth exactly where intended isn't technologically innovative enough to qualify.

[mbesto]

> A "tech" company is a company that provides a good or service that is either completely new and only possible because of a technological innovation, or is a new company providing an existing service using a different vertical stack based on technology which came available after the incumbents were started.

That's such a vague definition and one could seemingly fit every company into being a "tech" company if they wanted to. How do you unilaterally define something that is "completely new"? What precisely is a technological innovation? Isn't the iPhone not "completely new", since we had palm pilot and blackberry before it? Is a personal computer considered "completely new" even when mainframes existed before? How do you draw the line between a laptop that has a touch screen (but still has a keyboard) and one that is just a touch screen (iPad Pro for example)?

[jasonjei]

I would argue FedEx is a tech company. Creating and shipping labels can be done via the FedEx API, and pickups can be arranged too, like Uber. The supply chain solution is so good that companies can keep very low inventory of high value goods. Drivers use software to optimize routes (eg no left turns in US). I believe software is a very important part to keeping FedEx efficient.

But your other examples made a lot of sense to me.

[ChuckMcM]

Great discussion. What I was trying to capture was the difference between businesses that wouldn't be possible without the tech they are using and businesses which could operate but would perhaps be less efficient or perhaps less profitable. I certainly agree it is an arbitrary distinction and one which has been debated literally for decades in the SF Bay Area at least.

But I don't think that being arbitrary makes it invalid, the goal is simply to put a stake in the ground so that the conversation can move forward. One of the challenges of having discussions about tech bubbles or tech economies is agreeing on what companies are considered (by the speaker) to be tech companies, and which are not. Then the listener can translate that into their own set of companies and look past the definitional challenge and then on to the meatier question of the role of technology in the economy and the businesses that are currently considered valuable by that economy (or not).

[eldavido]

A better definition might be, how much revenue (measured % of sales) does this firm reinvest back into R&D?

Let's try a few examples: P&G: Not a tech company. They spend tons of money on advertising to get products on shelves and on TV that tons of Americans buy. They can innovate in packaging and distribution, but honestly not that much.

Tesla: tech company. Spending tons of R&D. I don't know how much, but it's a lot.

Pepsi: Not a tech company.

Your local grocery store: tight margins, probably not a tech company.

AmaGooFaceSoftPle: Billions/yr on new product development. Tech companies for sure.

[greglindahl]

This search gives a nice summary of P&G's supercomputing-driven research:

https://www.google.com/search?q=procter+and+gamble+high+perf...

It's not just packaging and distribution. Now it's fair to point out that P&G spends less on R&D than tech companies, but it's not zero.

[CyanLite2]

In all deference to what you're trying to say... I'd submit that most companies are tech companies.

Biggest example is Goldman Sachs. Their CEO came out and said "We're not an investment bank anymore, we're a tech company." Their rationale is that they have to use technology to defeat their competitors--before their competitors can use technology to defeat them.

[pj_mukh]

All the tech he mentioned in the conventional industries are being driven by fundamental changes in the "conventional" tech space. Smartphone market dropping price of mobile computing, cloud-connected robotics deployed across manufacturing floors, all ideas that became mainstream in SV. So, where do you draw the line?

[coliveira]

Following this reasoning you could say that accounting is ruling the world, because accountants are needed in any company, no matter their size or industry. The reality is that in many industries technology is an important and even essential tool, but it is does not replace that industry. This is true is energy, banking, general services industry, manufacturing, etc.

[barkingcat]

I actually do agree with your idea that accounting is ruling the world, especially when it comes to creative accounting, mergers and acquisitions, IPO's.

Any Tech company, facebook and apple included, has a ton of accounting DNA when it comes down to the nuts and bolts - how to pay their employees, how their stock compensation is structured, and even how the founder keeps control of the company.

Accounting really is taking over the world - in every single industry, tech / high - tech included.

[qq66]

It's not all being "driven" per se from within the tech industry. For example, John Deere is making huge advances in agricultural equipment that's going somewhat unnoticed in Silicon Valley -- but these are combines that can leave a 3-inch overlap between passes rather than a 18-inch overlap, because they are GPS-guided, for example... this is adoption of technology, but it's being driven by John Deere, and will show up as growth in the industrial equipment sector, not the high-tech sector.

[pjmlp]

These industries see software as a means for their products, not something that they excel at.

Anyone that has worked in these industries knows how they usually don't care about whatever best practices are touted in tech conferences.

They only want something that delivers business value, regardless how the code looks like.

[amsheehan]

That may be true for products from the industrial era where the end user isn't directly affected by software.

Companies that want to keep customers (in some cases keep customers alive [cars 'n shit]) are going to have to start caring about software as it becomes the conduit for every interaction their customers have with their products. It's not just social networks that are getting funded now—it's companies that build the previous poster's top five drivers of the US economy. I believe you have to call pretty much any company in those verticals tech companies to some degree.

[coliveira]

Not at all. Companies have a need for all kinds of services unrelated to their main purpose. Technology is just another service. In many cases it is important for them to have software departments, but that has been true for a long time. For example, banks have for more than 30 years relied on technology departments to do business. For all this, banking hasn't become part of the tech industry, and never will because this is not their purpose.

[oldmanjay]

Technology is "just another service" in the modern economy like oxygen is just another element found in our atmosphere.

[vox_mollis]

Additionally, much of what most consider "tech" is actually media and entertainment. c.f. facebook, twitter, etc. - which just happen to utilize technology in their products.

There is surprisingly little tech going on in "tech" today.

[wlesieutre]

You could say that Ford is in the automobile industry and they happen to utilize manufacturing in their products, but I don't think it's a useful distinction to make.

Just like Ford's cars are made by factories, Facebook's products are made by programmers.

Even if you want to look at the "tech industry" as meaning "creates tech for use by other people" instead of just "develops tech-based products for consumers," Facebook still has some solid output (React Native, Nuclide, etc).

[gaius]

Apple and Microsoft make technology as their primary purpose. But if Facebook and Twitter could sell as many ads without technology, then that's what they'd do, because that's what business they're really in.

[wlesieutre]

I'm sure Facebook has people who work there because social networking and a solid cross-platform messaging system are both useful services to a huge number of people.

Warner Bros. makes plenty of money off of product placement, but it doesn't make them not a movie studio.

And what about Oculus? Are we writing off VR as a technology because Facebook might put advertising in it?

[odonnellryan]

I don't agree with you.

Energy, Manufacturing, Transportation, and Healthcare are all very heavily entrenched in technology.

I would Agriculture may be "not so tech" still, but look at the amazing advancements in GMOs and equipment that are helping us feed our growing population.

Plus, who runs the infrastructure? Tech companies. What do they use when they need stuff? Other tech companies, like Google (apps), Amazon (AWS). They build their solutions using products like Facebook's React...

[dosgonlogs]

https://www.youtube.com/watch?v=w7ugXLd78JU how cows are milked now

https://www.youtube.com/watch?v=WBmFH7fNxnA grape harvesting

https://www.youtube.com/watch?v=UlaNDm88yZo Autonomous harvesting robot for Sweet-pepper.

Highly recommend watching the cow milking one.

[fapjacks]

Agriculture may be "not so tech"? My friend, let's go back to my hometown some weekend. I'll introduce you to the most technological people I know (they're farmers).

[npalli]

Your article is from Q1/2015. Since then the energy sector has imploded in a catastrophic manner. Pretty amusing to think it is driving the US economy (directly) right now. It is by far causing the biggest loss in jobs and profits. Look at the market cap by sectors right now.

https://eresearch.fidelity.com/eresearch/markets_sectors/sec...

Tech. is second only to finance. Given finance is going through it's own troubles, fully expect tech to take over the top sector of the economy in the next five years.

[novocaine]

Market cap != economic driver.

[amsheehan]

Market cap !!= economic drive either.

[jeanduluoz]

How do you think that normalized interest rates will affect your prediction?

[StanislavPetrov]

That depends on what you consider "normalized rates". There's a very good argument to be made that ~0% (if not less) is the new "normalized rate", given the massive debt bubbles that saturate every segment of the economy, both public and private.

[valarauca1]

>Manufacturing

The data you cite is from 2009->2015 so it's just showing the recovery from the great recession. In reality Manufacturing hasn't created jobs since the 1970's.

>Healthcare

Their lobby wrote a bill and gave it to the GOP which ran it as Romney Care. Obama couldn't get anything passed so now we call it Obama Care. So yes legally requiring all people to have something does ensure more people buy that thing.

>Energy

Is having a turbulent time now that you can export US Oil/Gas. Renewables continue to grow at a steady pace tho.

[enjo]

>In reality Manufacturing hasn't created jobs since the 1970's.

That's true, but output has steadily grown over those years.

[valarauca1]

Which once again confirms the importance of the Technology Sector.

None of that would be possible without Micro-controllers, programmers, or PC's to run their compilers/ladder logic programs on.

[edejong]

And the micro-controllers operating sensors, using chemistry. The chemistry being better controlled by using new materials. The materials being better researched, using high-precision optics. The optics being more precise, using modern physics. Just a random walk around technologies.

Yes, computing technology has played a major role in helping us communicate our advances and better model the next iteration. However, it's myopic to regard it as the sole driver.

[bogomipz]

I think that every company is a tech company now in the sense that tech has fundamentally changed the way people do business. I think the old guard media is quick to cheer on a sense of impending doom for tech industry. This is worth a read even if it is from a SV insider:

http://www.wsj.com/articles/SB100014240531119034809045765122...

[lottin]

It's very misleading indeed. And regardless of what has grown the most lately, the top industry in the US by far is Finance (19% of GDP) followed by Government and Manufacturing (12% each). 'Tech' is scattered across various industries, I think for the most part is included in Business Services and in Information. It's simply not nearly as important as some seem to think it is. The data is available here http://www.bea.gov/regional/index.htm

[PopsiclePete]

Healthcare and Banking usually have huge IT departments. They don't just use typewriters and store customer data on paper just because they're not the software industry. Is there any company anymore that doesn't have at least an IT department?

Heck, most of them have their own software divisions. Let's not even get started on companies like Lockheed Martin/Honeywell - how many programmers do you think they employ?

[btreecat]

>Energy

Requires technology

>manufacturing

Increasingly dependent on technology for the most basic of operations, such as managing inventory or customer orders.

>transportation

Automated driving, mandated auto breaking, hired drivers, bus schedules...

>healthcare

DHR, wireless pace makers, direct to pharmacy prescriptions

>agriculture

Indoor farms, pink LED's, automated nutrient systems

So I think it's quite the understatement

>Of course tech can play a role

Tech already plays a vital role and with out it we would not have the global economy and productivity levels that we currently enjoy.

[bhauer]

I'm in the tech industry, so I am sympathetic to your view, but you must realize this argument is silly. Energy requires technology? Yes. Technology also requires energy to power... well, everything. Manufacturing requires technology? Yes. Technology also requires manufacturing to build our phones, tablets, computers, Teslas, etc.

You can see where I'm going here. The economy is a network. No single node is the focal point around which everything else orbits.

[sillypog]

"People" might be the central node.

[smpetrey]

Yep.

This right here. So what happens when AI becomes is in the focal length of simple adoption? AI isn't even affecting .0000000005% of the economy yet. But when it comes, it going to unleash of fury of change never before seen.

To go full circle, there's a reason that the "tech industry" carries a big weight. It's because the Information Age is coming to a close, and who knows what's next.

[bhauer]

Good point.

"The economy is us. We don't need a mechanic. Put away the wrenches—the economy's organic."

https://youtu.be/GTQnarzmTOc?t=5m4s

[madengr]

The original poster implies software, and software (the main product of SV) is in a bubble which will burst.

[talmand]

Well, I would say all those things have required technology of some sort or another since they all started. So saying they require technology is nothing new. Now saying they all require software technology of a specific sort from silicon valley is completely different. For example, if a bubble did exist and it burst so that all those software technologies from silicon valley disappeared, would those sectors of the economy suddenly disappear as well? I think not. You are elevating software technology to all technology.

[roofer]

This is exactly how people were thinking about housing market back in 2005. It's a bedrock on which US economy is built and blah, blah, blah...

Yes tech is the future - AI, VR, and etc. But most of us are writing web and mobile apps, and lots of those apps are not that useful.

[300bps]

Do some side work for a local business and you'll see how powerful code can be. I did 20 hours side work per week for four years and small projects were able to replace teams of employees that used to hand calculate and process work items. Those teams were able to be moved to other tasks saving companies millions of dollars per year while still growing rapidly.

[cachemiss]

While it certainly is more efficient to automate those employees away, in my experience they are rarely assigned to new work, they are simply let go. Whether or not that's good or bad morally or for the economy I won't speculate on.

Most companies are actually quite overstaffed for various reasons, freeing up X employees in department Y doesn't mean they slide over to department Z, Z already has more than enough employees usually.

[cjarrett]

my first paid coding work was at a wind energy company as an intern. I did a lot of manual input into a piece of software for 9/10s of my internship. The other 1/10th of my internship was writing a web-app that acted as a counter for each type of legal document category. They had created their own documentation system with project-Category-count schema. Each of the employee within the compliance group had to figure out the current doc-count for any new document's category, and there was no real gating mechanism before the document entered the hard-copy vault. This led to numerous duplicate items (ala, two documents labelled HR-1042-4).

My simple web app, which took virtually no mental effort to create other than learning the source code system and some vanilla Web App / SQL, was treated as a god-send to those employees. It was still being used 6 years later, though I've lost track relatively recently. Always interesting to hear interesting stories like that out there.

My brother's workplace (from my distant vantage point, keep in mind) could have saved millions upon millions of dollars had it had a dedicated technical engineer working on crafting automated reports that connected their massive databases of data to its operational scientists instead of spending 2-4 hours on building the report themselves during the worst time-crunches.

[st3v3r]

"Those teams were able to be moved to other tasks saving companies millions of dollars per year while still growing rapidly."

Although in all likelihood, they were fired.

[jmagoon]

Same--when you work for a large company you see that a ton of development is about large companies cutting cost through automation. Its unfortunate to be a hatchet man, but that work always exists in economical downtime.

[addicted]

So you're arguing for consulting companies?

[joshvm]

It's a lucrative business to be in. If you have niche technical competency there's a lot of funding to be had from companies that have problems to solve.

You're unlikely to hit millions like you would from a VC, but you can be solving very tangible problems rather than the stereotypical "Uber for X". And you would be amazed at how much companies are happy to spend on products that work.

[petra]

I know regular custom software usually comes through the consulting channel, but i'm curious if machine learning and deep learning have gotten to the stage of maturity/simplicity that consulting companies offer them to their medium/small clients ?

[joshvm]

I work in computer vision, so ML is kinda ubiquitous in the field and there are definitely startups that are selling deep learning as-a-service (canonical example is Clarifai).

The main issue with deep learning is that for a small/medium client, there isn't enough data to train on. Lot of clients want classification software of some kind, but often it's binary and you don't need anything as complex as a CNN.

There are a few big frameworks for vision, like Halcon, which include SVM and neural net implementations (and loads of other stuff). You can provide training examples and it'll do the rest for you. It's not cheap and you have to charge for licenses, but they even have their own little scripting language as well as hooks for C++. The idea is you can use any camera, drag and drop functions and get your solution out. I've never used it, but I've seen their sales demos and they're quite slick.

[roofer]

Good point

[jonnathanson]

The success of technology companies isn't an all-or-nothing proposition. Google is about as different from any given startup as it is from John Deere. Even within the realm of "unicorns," there are those with actual business models (profitable or otherwise), and those without.

What we're really talking about here is the end of a half-decade of basically free capital, which has been funneled into startups willy nilly. As a result, a lot of startups that never should have been funded will fail. Other startups that probably deserved funding, but were massively overfunded and overvalued will also face difficulties. Some startups will survive.

Similarly, some big tech companies are struggling to right-size the investments they made when their effective cost of capital was radically different from where it is today. Some will be fine. Etc.

[mbesto]

> 4 out of 5 of the largest companies on earth are tech firms

Tech isn't really an industry...

Amazon = Retail (and probably another 10-20% software and software services)

Google = Advertising (and probably another 10-20% non advertising)

Facebook = Advertising

Microsoft = Software / Services (but very diversified)

Also, companies like Bechtel and Saudi Aramco are not publicly traded but could be considered in the "largest" category. We just don't know what their market cap is because they're private.

[adrr]

These firms probably have software engineering as a core competency. I think any firm going forward that doesn't have software engineering as a core competency will get eaten by a "tech" company who does.

[grillvogel]

>and none of them were even close to that position 10 years ago

I think you are failing to see the overall picture. 10 years is not a long time, those companies could fall out of favor at any time. yes software runs the world, but is it facebook and twitter software or software that runs industrial services and backend systems? do you really think Uber is more important than something like general electric or dow chemical?

[odonnellryan]

It's true. And others on the top ten are almost-tech companies:

Exxon Johnson & Johnson General Electric AT&T

Exxon has a really large research arm, so do Johnson and Johnson. Maybe not tech as this forum traditionally thinks about it, but I'd consider it tech.

GE and AT&T have great research arms, as well, and they are much more tech: focused a lot on communications, storage, and hardware.

[petra]

Also the tech industry is deeply behind the IOT(platforms), and IOT is dispersed through the economy.

[cylinder]

Software runs the world does not mean software is not in a bubble.

Housing / real estate are the backbone of the economy. Everyone needs buildings. Does that mean it could never be in a bubble?

[adventured]

> 4 out of 5 of the largest companies on earth are tech firms, and none of them were even close to that position 10 years ago

There's an exception to that group. Microsoft was one of the largest companies by market cap ten years ago. They've been very consistently in that spot since 1998.