Here's the framework I use: "tech companies" are those where tech still plays a significant factor in the growth of the company such that it's important to an executive level.
Example: Google is still a tech company. As much as some might view search as "solved" (just like it was when Google was founded I might add), search continues to get better. Tech still plays a significant role in the actual core business (ie advertising) too.
I once again return to the Steve Jobs take on why Xerox failed [1]. An effective monopoly devalued the tech such that Xerox became a sales and finance company.
So, returning to Netflix. I agree Netflix isn't a tech company anymore because Netflix ultimately is about serving several thousand VODs and that problem is solved. Now Netflix's core business is about making content, licensing content and acquiring and retaining customers.
Obviously doing this (or anything) at scale is a lot harder than it sounds but at the end of the day Youtube is monumentally more technically challenging than Netflix due to the number of videos, the number of viewers, the advertising and live streaming.
They're still solving some interesting problems like how to watch the same content, in sync, with your friends. Interestingly my gf and I noticed that when we watched NFLX together using a video call to see eachother's faces/commentary our video would skew by noticeable amounts across the span of a movie. (eg even a 0.5% speed difference would give a 3 second skew in 10 minutes, which is enough for one to see someone's reaction to a surprising part of the video differ from your own.
So there are still technical fringes to solve that can value differentiate from late adopters like the channel specific providers like say the ABC app https://abc.com/apps
Co-watching is an interesting space. One I've worked in actually. And yes, I agree it's not "solved".
Amazon has taken a stab at this with a watch party on Twitch. I imagine you could have a private stream and do it that way maybe? Not ideal of course. It's intended for a different use case.
The best options I've seen involve using sites of questionable legality plus Discord.
Your observations of skew are kind of interesting and larger than I would've expected. But I guess this is the video players being built to show you the content not showing you the content at the same time as someone else. Specifically this means no effort is made to "catch up" in case of buffering. You or your GF must have a lot of buffering. This alone surprises me because Netflix's core delivery tech seems to be extremely good. But again, their delivery tech probably isn't built to solve this problem.
Anyway, while that's an unsolved problem it's not core to Netflix's business and that's the key criteria here.
On different hardware how do they synchronize the playback speed? Each device has very different processing environment, so I cant imagine it would be easy to ensure that exact of playback speed. eg maybe one is playing 30 frames per second, and the other is playing 29.85 ...
Audio is easier to stretch but audio should also never be stretched because we are extremely perceptive to it in a way that we aren’t with our visual processing abilities.
Video should always be kept in sync with audio and not the other way around. You can freely drop or repeat video frames (within the boundaries of reason) without anyone being able to detect it in a blind test, but audio should not be messed with. This is why when syncing audio and video from different sources during production, the master clock is always the audio.
Video conferencing already does massive audio compression (>2x speedup) to compensate for temporarily dropped connections. 30.5s of audio delivered over 30s isn't noticeable if you keep the frequencies the same, which is more than adequate for multiple people watching a movie together.
I see that is going on with "Metro cash & carry" - while they don't cater to simple consumers but small businesses they start to provide tech services to those small businesses not only supplies.
I can imagine part of Target/Walmart business to be like Amazon so they sell their tech to smaller or local players because they would have loads of knowledge in that specific area of ordering and fulfillment.
It is not counter argument as such - but idea that they could become Amazon competitors in some areas and be tech companies.
Plex has offered a watch together solution which seems to work really well for my users. I'm not sure if that is a unique bit of code Netflix put together or one of many decent solutions. I'd guess they need theirs to be the fastest and most efficient though.
I would hazard to say that a sufficient (not a necessary) condition for a company to be a "tech company" is its tech being hard to replicate, that is, far from a commodity.
Google is a tech company because both the search and the ads networks are hard at the planet scale; we can see how hard it is to compete.
Same applies to e.g. Twitter or Uber. It applies much less to, say, Reddit, or eBay, or Craiglist; their tech is secondary to their existing network effects.
A company like GrubHub definitely has a strong tech branch, but the tech is secondary to its delivery network and restaurant contracts.
A company like CNN, equally, must have a strong engineering / IT branch, but it's so secondary it feels totally invisible, and everyone sees them as a "media company", not a "tech company".
I distinguish between tech companies like Adobe, Microsoft and Intel, and tech-enabled companies like Netflix, Amazon (the store part, at least) Facebook. The former actually sells technology (hardware or software) whereas the latter uses technology as a strategic tool in selling something else.
Yes, I agree, though I think Google presents an interesting case study because technology develop preceded it's business model. It at least started out as a tech company.
But while it has also expanded its business model to include selling actual tech (Google Cloud, Chromebooks and Pixel phones, etc.) the lion's share of its revenue comes from advertising.
If it's solved, why is the UI for any other content streamer as seamless on my roku as the Netflix one. All the others, I might as well be using a 13 channel rotary dial still. Even Prime sucks, just try rewinding or fast forwarding a minute and see how frustrating that is.
The problem is, for consumers, these minor technical issues don't matter as much as the content on the platforms. Yes, Netflix works much more smoothly than HBO, but we don't choose Netflix over HBO because of the quality of the video streaming app, but for the shows we actually want to watch.
I understand this is an anecdote, but out of the apps I use, I probably go to Netflix or HBO first, then Hulu, and Amazon Video last. I honestly try to avoid Amazon's video app as much as possible because of how poor the navigation and discoverability is.
I try to avoid Amazon Prime Video because of the practices they use. It’s basically becoming a cable service now. Ads before the video plays, content locked up behind additional pay channels, which have the TV ads play during the content, and getting teasers of the first season of first few episodes only to find out the rest of the series is on a pay channel.
That is the reason I haven't prescribed for Amazon Prime Video. I really hate when I can't see the next episodes cause they are locked. I sometimes prefer visiting external sources to avoid this. One of the latest I used, for example, is https://lookmovie.io. I can watch here the latest movies and shows and I knew what I'm choosing and that I can end up watching the whole season.
I go to Netflix when I want to watch TV but don’t have anything in particular in mind partially because of the more pleasant UX. I only venture onto the other services when motivated to watch a particular show. I sometimes cancel these memberships after finishing a show because I’m not getting any value.
I find Netflix to be extraordinarily frustrating and annoying, because of their insistence on auto-playing video constantly based on whatever I momentarily hover over or pause on.
I have to dash through shit way too fast to try to get somewhere that they won’t auto-blast me with whatever high volume video shit they want to force down my ocular neural pathways.
That feature can be oppressive. You can disable it if you log in to the website (you may need to sign out and back in on your streaming device for the setting to take effect).
My guess is that it appeals to the average “turn on the TV and watch whatever is on” consumer, and Netflix probably prioritizes retaining them.
I discovered that setting by accident on the website - pretty annoying that you can't set it through the TV (but more views is better so make it hard to change).
I believe Netflix does care about total hours viewed, because it’s a strong predictor of churn as well as pricing power. The more time consumers spend on Netflix, the more they value it, and the less likely they are to cancel (even when the price goes up).
I don't think this is true; I definitely choose YouTube / Netflix over e.g. Amazon Prime just to browse for new shows as the UI/recommendations are way better. This affects my watch time significantly.
100% agree. I’m watching these over 99% of time on an Amazon FireTV device and YouTube and Netflix both have a better UI/UX than Prime video. It’s not even close.
FireTV device is an excellent value. Prime video? Well, it’s free with Prime at least…
I disagree. Netflix is a dramatically more polished experience. I'm not even going to touch channel specific libraries like peacock because hbomax/Hulu are already painful enough.
But we do. There are a lot of shows I didn't see last time I subscribed to hbo that I would love to but selecting the next episode involved going through the UI over and over again it becomes an active activity. There is nothing I want to see on netflix but I keep it and end up watching something because the ui is a lot easier to start and keep watching something.
As someone who seemingly in the past 6 months has subscribed to them all. The worst technically (Hulu on Android TV), has got the most interesting content, and has just passed Netflix as my go-to streaming channel. HBO, Prime, Disc+, Hulu, Vudu, Apple TV, they might as well use the same software.
This are highly subjective design choices. Hence why they are perpetually unsolved. For me, Netflix on fire Tv is by far the worst experience I encounter lately. I had to relocate the icon because if I accidentally click into it, it takes me 5 minutes to get back to Home Screen. Yes I timed it. Amazon has given apps ability to control the exit app UI and naturally apps do not want to let you exit. They hide and make it difficult to get to the exit app “button” and then still ask “are you sure?” But just getting into Netflix, there is a loading screen, a profile selection screen, a loading screen, then the last screen I was on (or home), then I have to scroll to the navigation bar, go all the way down to “exit netflix”, yes I’m sure, loading screen, then finally back home on fire tv. It takes 5 minutes and I never streamed any content. The Disney+ app is nearly as bad. It’s just faster so doesn’t take as long but requires a lot of remote control clicks. They actually make me choose a profile when we only have 1 profile.
I’d blame the device if other apps weren’t noticeably faster with similar UI/features. But it’s mostly that they’ve hijacked system level defaults, like what the intent of a remote control back button push is and obviously make it difficult to escape the app. Performance is salt in the wound.
Yeah, I think the device makes a huge difference. Amazon Prime on AppleTV is not horrible. It’s not the best UI out there, but it’s loads better than Hulu, and I like it much better than Netflix because it doesn’t try to constantly scream at me while I’m trying to find something to watch.
There are numerous "unsolved" problems in VoD - technical, economic, and creative. Netflix and YouTube barely scratch the surface, and traditional multimedia organizations give up and ship what they can on other companies' infrastructure without any technical innovation.
XR and interactive content are the obvious next generation of platform with many technical challenges to overcome. It's hardly solved.
It's solved to the level that additional changes and advancements won't make a major difference to the company as it is right now. Those advancements might end up being a major component later, but someone else could solve that problem and they could license it just about as easily. At this point Netflix is a multimedia company that runs their own infrastructure, not a tech company focused on delivering multimedia.
Netflix could swap out all the underlying tech for someone else's and update their players to use that and nobody would really notice, except possibly for the very few interactive experiences they run. That's why they're not a tech company anymore, they've matured the technology, and so have their competitors, to the point it's a commodity.
Many here would dispute this claim. However, it may be that SEO spam has caught up and we're merely at the old equilibrium rather than worse than before the peak of Google usefulness.
This might be very anecdotal, but in my case, outside of tech/programming topics, I feel like google results are getting more and more generic. For example, a while back I had some changes in my life and had to fill lots of paperwork. I had various administrative issues regarding 2/3 specific forms. When I searched for people that ran into these issues, I found many helpful link/forums etc... Fast forward these past few months, had to fill the same forms and ran into some of the same issues. But now and all I am finding is stuff like links to the forms, links to the administration websites, links to how to fill the form and so on. Maybe it is a SEO issue, but overall I feel like I am struggling more and more to get useful search results to very specific questions. But then again, sample size of 1.
Search is one of those areas where I find people have very strong but very subjective opinions for some reason.
It's like every DDG related HN thread always has these comments:
- I moved to DDG X years ago and it's [fine|better than Google]
- I can't find anything on Google anymore
- Here's a search where I didn't find what I want.
It's reached the point that I just immediately tune out whenever someone brings up anecdotes. There just seems to be so much confirmation bias.
I mean no disrespect here. This is generally true. Anecdotes just don't mean anything but for some people tech people love them when it comes to search.
I think this is one of those areas where aggregate statistics do not line up with the personal experiences of a majority of the population to such a degree that they are tossed out as unreliable. See also: the stunning ineffectiveness of saying "but the unemployment rate is only 3%".
For that matter, is there any more objective data about the quality of search results over time or are anecdotes all we currently have?
SEO has gotten so bad. One other factor was the majority of the old internet was hand made. Someone took the time to either build the page from scratch or to type it in to some blog software. While now when you search for something very particular, you get pages with identical keywords but you click on them and they are auto generated and show generic content not exactly what you wanted.
It would be an almost impossible task to filter these out because they are specifically generated to look exactly like the content you are looking for.
> serving several thousand VODs and that problem is solved
You're kidding right? You think this problem is solved? Try using HBO.
A tech company is any company that understands it can leverage technology effectively to run a more efficient organization. They treat tech as the way to solve problems rather than throwing people at the problem.
It's solved by Netflix. Doesn't mean it's solved by anyone else, though there are also quite a few other companies that have it "solved" for their level of usage, even if they couldn't flip the switch tomorrow to become Netflix.
"Solved" also doesn't mean there aren't people maintaining it or working on it or getting woken up at night by pages to keep it going. It just means, they've got a handle on it and when the Netflix executive team meets to discuss the business, they aren't spending much time discussing the question of whether or not they can stream video to their customers.
It doesn't mean there isn't room for improvement. Others have pointed to UI issues, for example. It just means the state of the tech probably isn't the top of mind for the C-team and the board.
Nope, there are 2 parts of this problem:
1. What do customers perceive.
2. What does it cost to run this software for Netflix - Companies are continuously trying to improve this while maintaining or improving 1.
Being done, is not what a tech company ever thinks of. Look at all the innovation coming out of Netflix as OSS products and blog posts.
I wonder if that commenter meant HBO Go? HBO tech has had an interesting history.
First came HBO Go. This was the online streaming for those with HBO as part of a standard cable package. Apparently it was built on a .Net stack and had huge problems.
HBO Now is the service created for standalone sales of streaming. Apparently it had a completely different tech stack because of issues with HBO Go. Apparently it came from the same people who did the streaming services for MLB (Major League Baseball)> In my experience it was very good.
HBO Max is the expanded and updated content ecosystem that came with the merger. I don't know what the tech stack here is. I suspect it's just incremental changes to HBO Now but that's just a guess.
Perhaps the commenter was referring to HBO Go's problems as evidence that serving VODs isn't "solved". To clarify, I mean "solved for Netflix".
The UI of HBO Max on an Apple TV is entirely befitting of AT&T - it makes me want to watch anything else because of how bad scrolling is because they insist on using their own crapware instead of the platform-native software.
Warner Bros and therefore HBO Max bought a company called You.i that built their own React Native Rendering engine for low end OTT devices I don't know if they use that engine for mobile or the native RN engines.
Last I heard their whole ecosystem is now based on this.
But if there's scrolling issues and some others, its likely because they're literally trying to run one codebase across everything including OTT devices.
Chalk up DirectTV NOW/ATT TV/DirectTV Stream (all the same product) as a victim of that too. Scroll interactions take multiple seconds to register, click activates elements other than the one indicated as selected by the UI, just an overall shitshow.
But they’re the only OTT streamer that carries the Lakers and Dodgers channels, so alas…
Oh, if only I could outright kill all sports channels and sports content.
Or at least permanently hide all sports-related content on all devices I own.
I pay for the Hulu+/Disney+ combo that does not include ESPN, because I don’t want to pay for ESPN. Even if that triple combo was cheaper, I’d still pay for the combo that doesn’t include ESPN.
HBO Max performance seems to be platform/tv dependent.
It works fine on my Ipad but is absolutely dreadful on my Samsung televisions. Super slow and crashes every single time when viewing content that is 30+ minutes.
>any company that understands it can leverage technology effectively to run a more efficient organization.
This feels like too broad of a generalization to be a useful definition. I could make the case any hospital or logistics or <insert business here> is a tech company by this. Tech seems too ubiquitous for this to be an effective definition.
I haven't given it much thought, but maybe "a company with a business moat hinging mostly on its unique technology or ability to use technology" would be a better definition. E.g., Walmart could still be a (less) successful business without an online presence but Amazon couldn't.
You're kidding right? Netflix, HBO Max, Amazon Prime Instant Video, CBS All-Access, whatever, they all do basically the same thing, and the only differentiator for my parents is the content.
but even if the center is profit, is the focus weighted on the technology it uses or just accomplishing the task (and time to market because any median engineer can accomplish this)?
One core problem Netflix is currently trying to solve with tech is "how do we produce hundreds of series/movies concurrently with predictable budgets and predictable performance."
They need predictable revenue GROWTH, not just predictable revenue.
Because if you’re not growing, then you’re dead. And no one wants to be dead.
This is the fallacy that all big companies seem to fall into, because they try to keep chasing the kind of growth numbers they had when they were small, but of course they can’t possibly sustain that level of growth.
There is probably still a lot more AI/ML work to do at Netflix. For example if you are browsing through standup comedy specials and you see the trailer joke, and you skip to the next one, they know exactly where in the joke that comedian bombed for you. So for other people like you, they can show a different joke from their special, and for you they can build a profile of the kind of humor you like. Then if you start a video and stop it, they can know that the joke they showed as a trailer was not representative of the first impression the comedian gives in the special. etc.
Honestly that's my experience with ML in general. And I know any organization that does a lot of ML has things like backtests and holdouts to supposedly measure impact on key metrics but I've seen too many cases where adding X has a +10% impact in some top line metric and then removing it later (and returning to the initial state) has another 5% increase in that same top line metric.
Maybe we need to revise the famous phrase to: Lies, damned lies, statistics and machine learning.
They must know whether people encouraged to watch more Netflix actually retain Netflix at higher rates. As their prices have gone up I assume this is becoming a bigger and bigger issue.
How does your ML model control for opportunity cost? How do you prove a causation between watch rate and retention?
Do algorithms that encourage viewership actually increase revenue, or retention? What happens when the algorithm is so good I under-sleep, miss work and get fired, eventually losing my ability to pay for Netflix? What if I see this in myself and cancel my subscription, instead of using Netflix sustainably? What happens if I genuinely watch all programming I find interesting and move on to reading books on the same topics?
In other words, if the Netflix catalog is perfectly sorted by relevance to my personal interests, how much of it will I engage with? How far can Netflix content creators and licensors follow me down the rabbit hole?
I don't see how this example would necessarily benefit me as the content consumer/customer nor Netflix. What if the clips that Netflix learns to show me aren't representative of the entire special, and I'm disappointed? And while Netflix to some extent wants to have me spend time using their service (to ensure I feel like I'm getting value and don't cancel my subscription), watching more things I don't enjoy may not help.
> I once again return to the Steve Jobs take on why Xerox failed [1]
Thanks, I had not seen that before.
I worked for a telco that has the largest operating area of any telco in the world, and was also a monopoly with the highest internet prices in the world.
Steve saying that product people (& Tech people) were not seen to improve the company, and that only sales and marketing did is absolutely spot on. I didn't see that at the time, and now in hindsight it's obvious. It also makes perfect sense why the former VP of Marketing is now the CEO (of a telco!), and not the VP of IT or Network.
Is Telsa then a "tech company" by your definition?
What about Jet.com (pre-Walmart acquisition) that pioneered cheaper shipping / savings by informing users to by substitute products from the data distribution center.
Tesla is interesting because even they've described themselves as an energy company masquerading as a car company. Put another way: battery tech is Tesla's core business. They just happen to make cars as a way to sell batteries.
It's a bit like how SpaceX is set to become a major player in regional Internet delivery but you wouldn't call SpaceX an Internet or a networking company. It's just a synergy between Internet as a business and reducing launch costs while proving reliability of first-stage reuse.
I'm tempted to describe both companies as "engineering companies" more than "tech companies". I just looked at Tesla spends a relatively modest (for its size) ~$1.1B on R&D.
So what's the difference? I'd say "tech" is largely about software and "engineering" is largely about hardware. Specifically, both Tesla and SpaceX are capital-intensive businesses where that capital is being used to produce physical products.
To be clear, none of this is official in any way. This is just the framework for how I think about things.
> Put another way: battery tech is Tesla's core business. They just happen to make cars as a way to sell batteries.
No it's not. That's a fake narrative that was invented by Tesla bulls to try to label Tesla as anything but an automaker.
It doesn't make sense to categorize Tesla primarily as a battery company or energy company. Batteries and energy (including solar) are a fraction of their business in terms of dollar value and that will continue to be the case. That has been true for nearly two decades now. And it's not a close comparison, the battery is less than a quarter of the cost of the car. For the Model S and X it's far less than that.
Tesla is an automobile company. GM and Ford are also not transitioning into being primarily battery companies. They're automakers.
Want to test this out? Kindly ask Tesla to immediately end their automobile business and start only selling batteries, see what happens to the stock and their P&L statement.
If in 20 years Tesla's battery business is finally larger than their automobile business, then sure, recategorize them.
> Put another way: battery tech is Tesla's core business
It absolutely is not. Almost all Tesla's battery IP rests on Panasonic IP. Panasonic has been a leader in this space for 40+ years.
That's why when Tesla "open-sourced" all their battery patents in 2014 it was seen as mostly a PR move. It didn't really affect the industry because Tesla's IP in this area just isn't that valuable.
> tech companies" are those where tech still plays a significant factor in the growth of the company such that it's important to an executive level.
By similar definitions, aren’t almost all companies also money companies, employee companies, legal compliance companies, strategy companies, marketing companies, mission statement companies, fundraising companies, etc?
That sort of definition works for giving job applicants a hint about whether the company might need them I guess.
By definition, "almost all" companies are not whatever departmental adjective comes next. In business, you're defined by your differentiators, the things that make you different from all other companies. Finance, HR, legal compliance, etc. are commodities: pretty much everyone knows how to do them. The companies that are defined by those labels (Goldman Sachs for finance, for example, or Gusto & ADP for payroll) are those that know how to do them so much better that other companies would rather pay them than do it themselves.
So it is with tech. On some level all companies are tech companies in that you need a website, Intranet, database, etc. These are all commodities though. A "tech company" is one where your tech is so good that either you can offer differentiated consumer experiences that nobody else can offer (eg. YouTube, Apple, FB's various products, consumer parts of Google) or people pay you to handle the tech things for them (eg. AWS, Microsoft, Google Cloud).
> A "tech company" is one where your tech is so good that either you can offer differentiated consumer experiences that nobody else can offer(…) or people pay you to handle the tech things for them
It’s a decent definition. It has some implications though
Almost no companies really differentiate via tech that nobody else can offer
Almost no game or app companies meet that bar. Most game companies have tech that another company can reproduce for example. Almost all apps use fairly commonplace tech.
Within gaming, there's Unity, Unreal, Crytek, and the like which I would classify as tech, but otherwise, most gaming companies are far more creative-focused much like film.
Depends on the company. Roblox, Epic, and Wube (Factorio) I'd also classify as tech. Most of the other ones are either driven by gameplay or art, though.
There's a pattern there: Unity, Roblox, Unreal, Crytek, and Epic all build platforms and game engines used by other game developers, so again, you are what you do well enough to sell to people who don't want to deal with it.
You lost me there. Even before Google started putting their thumb on the scale for its Machiavellian goals, search had gone way down hill. It is now at the point that I've got a better chance of finding something by randomly browsing the internet than through a dozen targeted searches. Unless what I'm looking for is associated with a multi billion dollar media company's content farm.
We should stop thinking in terms of "tech companies" and think of them in terms of "companies that use tech with a high degree of success". Ultimately any company that makes money is not a tech company because pure technology on its own does not make a business. Also, with the right incentives and management it is possible, although hard, for legacy companies to start using tech better to compete.
> Ultimately any company that makes money is not a tech company because pure technology on its own does not make a business.
"X makes money, therefore they are not a tech company" seems rather oversimplified in the same way "X is a tech company" is oversimplified. Actually, it seems oversimplified to the point of maybe not being so useful.
I think the way most people would define "tech company," if they were pressed to offer a definition, is that a tech company is one that derives the bulk of their revenue from selling technological goods and services, rather than using technology as the means to sell other goods and services. There's no way to keep that definition from being somewhat fuzzy, but if I say "Dell is a technology company and Cadbury is not," I don't think people will really object to that unless they're trying to be pedantically clever about it: Cadbury may use technology in all sorts of clever ways to manufacture chocolates and get them to retail shelves, but they're selling you chocolates.
There are obviously companies that complicate this by having multiple divisions with different kinds of revenue streams -- Amazon and Apple both come to mind immediately -- but Netflix really isn't one of them. What they do requires a lot of focus on their technology, and from the perspective of someone perusing their job listings it's very easy to think of them as "a tech company." But what they're ultimately selling is access to their content.
Most people wouldn't consider car companies tech companies, but they definitely do R&D and directly sell the technology that results from that inside their cars.
Probably because people don't even have a good definition of "tech". Everything we use is tech. Even books. Some of it is old, some of it is new. But people's definition of tech mostly centers around when they were born.
As a software developer, I mostly care if a company considers their software a competitive advantage. Because they're more likely to treat me well. This is also similar to how I tend to define tech companies: companies that view tech as a competitive advantage. So they aren't just buying stuff off the shelf - they're figuring things out in house, regardless of what they sell.
Everybody I know considers a car company a tech company. I think there exists a strange Silicon Valley definition of tech out there. But maybe my German bias shows. I mean, most of the stuff in SV barely qualifies as tech.
The SV definition of tech leans towards "a user-centric service delivered over the web, with some clever software solutions behind it to handle a lot of data and users".
I thought the definition was more about scaling because of the near zero incremental cost of servicing another customer. But using some sort of tech as the product.
Other industries also exhibit this, like media.
And that is what differs an auto company from a Google. The next car sold still has significant capital investment.
> Everybody I know considers a car company a tech company
I have never heard that. Car companies are mostly manufacturing, that is the major part of their organizations and what drives their decisions. They have big engineering teams, but they have way bigger teams working at factories. If you had a company just creating car designs and selling those to manufacturing companies it would be a tech company, but the current ones aren't.
I suppose it depends on the car company, but a lot of them are logistics companies coupled with assembly plants.
When I visited our customer auto assembly plants the only actual manufacturing going on at was the frame and paint. The rest of the parts were shipped in from other manufacturing facilities.
The auto company did design the parts and send them to contract manufacturers, which is what I worked at. Again, I’m sure this depends on the vertical integration and supply chain relationship of each company, but I think there is less manufacturing than assembly going on.
I don't doubt they were tech companies 80 years ago when things were new and creating new tech was more important. However I don't think that Google or Facebook or Microsoft will be tech companies in 50 years either, its just the nature of having a field being mostly explored and companies being in maintenance mode since there isn't much else they can do.
Cars have been in the small incremental improvement camp for decades which is why they’re not considered tech. Tesla is the outlier because they are pushing a revolutionary change not just incremental ICE improvements and are valued as such on the stock market.
Auto makers could turn into tech companies again but their risk tolerance has to be turned way up.
The history of the word "tech" as an industry sector is that it has been used to refer to computing technology, but cars are certainly a technology more broadly understood.
But we probably should just stick to industry standard jargon. Lockheed and Boeing are definitely technology companies, but not "tech" companies, although that is even further complicated in that they do sell computing hardware and software products, not just airplanes and missiles.
Netflix unambiguously only sells entertainment, though. They use an app and a website as a delivery mechanism, but the app isn't the product.
Also, as much as the emphasis on hacker news is think of employment by Netflix as being an engineer for Netflix, engineers are very far from the highest paid contracts. No engineer is getting the $500 million deals Netflix hands out to Shonda Rhimes and Benioff and Weiss. Netflix itself recognizes content is king here.
There's a third category that you're missing, and it's where the definition gets real blurry.
There are companies that effectively use technology to outcompete (or "disrupt") incumbent companies in a market. Amazon in retail, Netflix in media, Craigslist for classifieds, Uber for taxis, etc.
It seems as if many existing companies, like Cadbury's perhaps, aren't able to effectively re-work their business models with the new possibilities available via tech. Thus they're "non-tech" companies even if they do make some modest use of technology, but ultimately their business model predates tech.
"Tech" companies in this space are the ones creating or adopting brand new business models in an existing space enabled by technology. This is the "software eating the world" part of the tech market.
I like this definition, but I think it should be associated with a strategy rather than a company.
So Netflix is using a tech strategy, but it won't forever be a tech company.
As the particular technology a company deploys becomes widespread, then everyone will deploy it and it will no longer be a tech company.
To put it another way: Netflix was not a tech company when it launched and was mailing DVDs, it became a tech company when it started its streaming service, and as other companies also launch streaming services, it won't be a technology company in the future.
I really like the focus on strategy (or tools) rather than trying to label the company itself.
Across many industries, especially in the past several decades, companies have used (modern) technology to compete, and the successful ones grew and gained recognition for good application of technology.
Google, at the core, doesn't sell technology to consumers. They help people find and share information. (Yes, they sell consumer products that have evolved in the technology age, and we often call a phone or a modern speaker "technology.")
Apple is a consumer products company. Microsoft is (by revenue share) an enterprise solutions company. (This includes software, hosting, APIs, etc - all technology.)
As sibling comments have pointed out, from the beginning of their existence, automotive companies took the newest technology (initially motorized transport!) and used it to sell personal transport to consumers. Technology is in almost everything sold (except when it clearly isn't... food, most clothing, some services) or it's used behind the scenes.
Overall, what value do we get from trying to draw a line between technology company, and "not" a technology company? Netflix by itself doesn't really try to sell you technology, and yet they were instrumental in selling smart TVs and streaming boxes.
Do we want to know as prospective employees? Knowing if we are cost centers or profit centers?
We used to have a better word for companies doing things like the Amazon Marketplace: eCommerce. But now that AWS is most of their business, they're "tech" because cloud infrastructure is a computing technology they directly sell.
I like this definition, but I think it breaks down even if you're not trying to be clever. AWS is a tech company. Amazon is not a tech company, it's a retail store. But AWS isn't actually an independent company, it's just a division of Amazon. So we've got a retail store hiding a massive tech company because the retail store is even more massive.
I think this is less a flaw of the definition and more a sign that Amazon should be broken apart and AWS spun off as an independent company.
I generally agree with you here, since it seems like "tech" or "not tech" should be based on services actually provided (ie selling physical books online isn't really tech).
Except, many of these companies have a second, b2b service that they're cultivating as a goal unto itself: customer attribution, identification, aggregation, etc. Companies like goPuff (or Amazon, but Amazon has a hand in everything so is more complicated for this example) have a core "not really tech" service of online ordering of human-delivered goods, but they are actively working to turn all of those engagement/sales/preferences info into a packaged product they can sell to brands and marketing companies, which is at its core, data aggregation and analytics as a service...so "kinda tech"?
Is Dell really a tech company though? Does selling computing hardware really count as tech these days since Apple would definitely end up being a tech company under that definition - even with all the other revenue streams it has I think being one of the largest manufacturers of computing hardware would automatically qualify them.
I personally consider "tech companies" to be companies with tech I find interesting to think about - Netflix definitely qualifies under that header, Apple does too owing to producing a huge operating system, Amazon not only has AWS services on offer but they also run a storefront of a staggering scale and were pioneers in how storefronts like that were discovered... Dell - Dell might get grandfathered in as a tech company based on how they were earlyish into the market of web-based computer sales (ala "Dude you're getting a Dell" days) but now a days I assume their tech stack is a pretty ornery customized CMS like thing with a relatively simple order processing system behind it.
Dell takes in a $94 billion dollars in annual revenue across several lines of business and is the 4th biggest “tech” company by revenue after Apple, Microsoft, and Alphabet. Facebook is 5th (“tech”?), then Intel, IBM, HP, Cisco.
Only half of that revenue is from “Dude you’re getting a Dell” - PC (and network / peripheral) sales. DellEMC (mostly enterprise storage or hyperconverged hardware and software) top line is $35 billion or so of that number. The rest is VMware and other software / services.
Simple order processing it is not, it’s like saying a Google is “just search and ads”. Somewhat true, but misses a lot.
Suggesting Dell is just a customized CMS thing is like saying Netflix is just an account registration tool. They're not just reselling equipment designed and made by other companies, they actually make a ton of things as in making actually new technologies. Maybe not things you touch on a day to day basis, but they make tons of things nonetheless.
I’m confused by how at the very end of your comment you seemingly switch to only considering the tech stack of a company’s online ordering system, which seems to me to be always completely irrelevant to whether a company would be considered a “tech company.”
It's in the context of the first half of the sentence: If "online ordering being interesting" was what made Dell relevant, then the fact that it isn't interesting today is relevant.
To me “tech company” also usually implies that the company has replaced some older thing with a newer technological solution. I think that’s why Netflix intuitively feels like a tech company, even though all the other TV/movie home distribution companies (cable TV, satellite TV, pay per view, even physical media sales/rental, etc.) have always used advanced technology. Netflix is just the company that’s most famously associated with the introduction of the newest mainstream technology for distributing TV and movies: Internet VOD.
> but if I say "Dell is a technology company and Cadbury is not," I don't think people will really object to that unless they're trying to be pedantically clever about it
Such as if you were to ask people, "which is the tech company, Apple or Ford?", most would choose Apple, choosing to call Ford, instead, a "car company".
I'll just copy and paste my response from before because this comes up often:
there is no real definition of a "tech company" or "tech industry", the word "tech" defines the operating model. This is the dirty little secret VCs don't like to tell you because it means they can call Tesla a tech company (its a car and battery manufacturer) to fetch tech-like valuations or Facebook a tech company (its a media company). Tech operating models typically net high gross margins (i.e. Facebook) which is one of its major defining characteristics.
I therefore posit there is no such thing as a "tech industry", but rather businesses that sit on a spectrum of operating models from:
I think it's still a useful category, but we need to be careful with it, because "tech" is a moving target that only includes what's novel.
As an example, pencils are an excellent technology for writing. (Petroski's "The Pencil" and "The Evolution of Useful Things" are great reads on how much innovation it takes to make something mundane.) But Faber-Castell is definitely not a tech company. Similarly, ~100 years ago, electricity was novel. Fortunes were made starting and investing in electricity and electrical-adjacent companies. Now it's mundane.
Dealing with novel technology requires different skills. Both for the specific technology involved and for wrangling things that are less well understood and keep changing. A good example is the IT department and what they are and aren't responsible for. The breakroom toaster? Nope. The breakroom wifi? Yup. The breakroom TV? Well, that depends.
For me the useful dividing line for "tech company" is where novel, volatile technology is at the heart of their business and vital to their success. That doesn't last. And indeed, the markets have been too generous about pretending certain things are tech companies. Most notably, WeWork, but I'm sure here folks here can name plenty more.
How many "non-tech companies" are non-tech companies simply because they're too disfunctional to use technology effectively? Think of your bank with its shitty password rules, only offering 2FA using SMS, and no useful APIs; that's a non-tech company. They either aren't aware of their lackluster technology, or are unable to organize themselves well enough to improve it.
Large banks have an entire universe of challenges that don't impact firms like Netflix or Google. I've worked with enough of them and seen many high speed engineering folks from FAANG companies flounder for months as they try to recalibrate for the highly regulated environments.
I'm not saying banks are great at tech, because on any individual metric it would be really hard to find an example of where they lead, but they (and other highly regulated industries) have a lot more to solve for along the way.
Or just have customers who mostly can't grasp authenticators. A friend worked for a company that implemented 2FA with the authenticator app. They removed it in a day as it ground the company to a halt.
Better term would probably be revenue driver, which is typically what is meant by "profit center." In other words, IT brings sales contracts through the door.
For banks, online banking is a huge driver of business. Some banks have even started claiming (I suspect mostly for recruiting purposes) that they are "in tech sector".
Similar Point: "Hedge" and "Edge" share a lot of letters and semantics. If you are really good at dealing with tail risk (Pandemics, perhaps...) this not only allows you to rugged-ize and preserve your internals structures and practices in extreme circumstances but also potentially massively outcompete your competitors.
For a modern information-centric company, what does that mean? Get the technology right. Pay some smart people to get your internals ship-shape and reproducible, for example.
I also tend to think the distinction is related to compartmentalizing all technical activities into an IT suborganization. A tech company performs all these activities as a matter of the regular course of business, within the lines of business organizations. A bank would have a dedicated IT organization, a few layers of 'governance' and human orchestrators to slow down your builders, and you get all the dysfunction you describe.
What about companies that use tech to make tech and that people buy to incorporate into their tech? GitLab, Atlassian, 1Password and others. No physical products, just tech for your tech so you can make more tech.
I agree. What most HN commenters seem to really mean when they say "technology" is "consumer software", or more cynically, "company is made of mostly software engineers".
There is an incredible amount of advanced technology being created and used by more "traditional" industries like manufacturing, aerospace, or animation.
Why should Facebook be considered a technology company but not Pixar, Ratheon, General Dynamics, Corning or TSMC? It makes zero sense and relies on a very self-serving definition of "technology".
How would you compare GM and Tesla using this framework? They're both very tech dependent given the impact of the chip shortage and electric car manufacture, but one is certainly more "novel." I'm honestly not sure where I would come out, but I think it's a good point of comparison for the framework as a result.
Tesla is an engineering based company. GM is a MBA based company.
It isn't that Tesla has no MBAs on staff or the GM has no engineers on staff. But a culture that leverages engineering culture can iterate and reinvent itself and include new technologies faster than one who is focused on management metrics.
I'm not saying that MBAs are bad, there are plenty of companies that went way to heavy on hiring engineers and went bankrupt before their business plan was viable.
This whole argument seems a silly bit of semantics. Is a company's product is not "technology" a tech company?
For the vast majority of companies technology is tool, not the product, but whether you call them a "tech company" seems a silly game. I'd think pretty much all companies are "tech companies" and the better you are at using those tools can provide a competitive advantage.
A 'tech company' is that is internally built of software, so it is (theoretically) as easy to evolve as software - which is not that easy, except compared with anything else. So, amazon, stripe, airbnb, uber, reddit, github etc.
Perhaps a bit like when companies started to be built around the new-fangled telephone instead of telegrams and dictated letters. More responsive and free-form.
This does not guarantee a strong competitive opportunity, nor strong execution - but it makes it possible for the benefits of IT to be realized.
Actually, there are several legitimate definitions of 'tech company', this is just a relevant one today that is significant long-term.
> Ultimately any company that makes money is not a tech company because pure technology on its own does not make a business.
Making money is what the _company_ part of "tech company" is about ... right?
It sounds like you want to imagine a world where making tech for non-business purposes is more normalized. I also want to live in that world. But I think perhaps we're so far into a world where tech to be used by an open audience (as vs e.g. secret defense tech) is entirely the province of for-profit enterprises that people have ceased to consider that the players in tech need not be companies.
For me a tech company is one that sales APIs, SDKs or similar products. I was in 3 "tech" startups before that were both b2c and b2b. Their product was perpendicular to their technology (one video-tech 2 Fintech) my current company's product is a set of APIs. It means that the features that we sell ARE the technology, instead of some footnote that buyers send to their nerd department to make sure it checks a box.
Needless to say, the difference on how the tech team is valued is night and day between this last one and all the others.
While you can make that argument today, Netflix as a company is 24 years old. It got to its current position not by spending $15B/yr on original content (which it can afford to do now) but purely based on a superior and novel tech experience for its users.
Of course eventually all discussions of this nature devolve into the intricate definition of "tech company", and in the absence of one that is agreed upon, bringing this whole thing up is pointless.
Eh, as a user Netflix original content is a large part of why I still have a subscription.
I used Netflix back when it was mailing me DVDs, and loved the online streaming back in the halcyon days when it seemed like they had everything.
Then came the dark days when content owners began pulling their IP from Netflix and scattering it all over the internet behind a dozen different options that offered them more money or control, and Netflix was a barren wasteland without anything that caught my eye; my queue was a variety of B-tier series that I tried a few episodes of and gave up on.
So I canceled my subscription, for several years. It didn't matter what their UX or uptime was or how smooth their video codecs, they didn't have enough content I wanted to watch.
Then I came back for the original content -- I forget which series first made me sign back up; House of Cards? -- and while I watch licensed content on Netflix from time to time, at least half of what I watch is produced by Netflix.
> It didn't matter what their UX or uptime was or how smooth their video codecs, they didn't have enough content I wanted to watch.
Netflix has developed a novel data system (as evidenced by papermill) that is likely responsible for countless decisions that manifested the content which brought you back. I don't know first hand but I suspect data is integrated into their everyday processes in ways most companies can't even dream of. Does that make them a technology company again?
This is a little bit hyperbole don't you think? I think companies with means these days just invest in this sort of technology because that's what you do in business now. Target is a department store but I wouldn't be surprised to learn they are hiring pure machine learning researchers too and doing remarkable things with data as well, same goes for any large company. 60 years ago you had large companies operating complex switchboards in their offices but you would never call these businesses telephone companies even though they operated their own internal telephone network. That sort of technology was just a tool of the trade, just like data science is now for large companies. I wouldn't call netflix a technology company when literally every large video production company is investing in the same things and trying to hire the same sort of talent, and you wouldn't call MGM or warner brothers a technology company either.
Is Coca-Cola a sugary drinks company, a logistics company, or a technology company producing hardware, software, chemical engineering processes and countless other disciplines to enable international scale methods and logistics employed in delivering various liquids and other goods all over the globe?
It's still a sugary drinks company in my eyes, because all the things you listed are necessary parts to become a sugary drinks company as large as coca cola or pepsi in this day and age.
> purely based on a superior and novel tech experience for its users.
I don't think this is accurate - the main value proposition of Netflix seems to have always been "streaming site with lots of mainstream content, that is also legal". I.e. it's the streaming deals they've made that mattered, not delivery tech or their web player.
No. For the first decade plus of its existence, Netflix was a DVD by mail rental service and there, its technology was a key differentiator. You paid a subscription depending on how many DVDs you wanted to have out at a time, Netflix mailed them to you in red envelopes, and you mailed them back in the same envelope. The ingenious part was that there was a website where you entered in all of the DVDs you wanted and Netflix would mail them to you as they either became available or in order of priority (the original Netflix queue).
Yes, you could be pedantic and call a lot of that logistics, but the lack of physical stores, the website, the queue and rating and recommendation system (the Netflix recommendation algorithm was a huge part of its appeal, even after the streaming stuff, until Netflix got sued for accidentally outing someone with the algo), were all tech.
Netflix has ALWAYS been a hybrid tech and content company. Always. But it started out very much more on disrupting the video store model the same way Amazon disrupted brick and mortar bookstores.
Then all companies are tech companies. They all aim to come up with a product that's better than the last, and they almost never use old tech to do it.
Well, yes. In a certain way, everything is tech. Tech != computers/engineers/algorithms/robots/HAl/whatever.
But even in the popular understanding of what a tech company is, Netflix more than many others DOES have historical and current tech bonafides. 25 years ago during dot com mania, there wasn’t a lot of hand-wringing about whether WebVan or Pets.com or Amazon or whatever were tech companies. It was accepted that e-commerce WAS tech, even if it was different than DEC/Compaq/HP or Sun or Microsoft or Apple or whatever.
And Netflix operated from a website, used technology for its logistic and delivery system (much like other e-commerce systems)and had a recommendation algorithm (that they had a contest to improve, because they saw that good recommendations reduced churn) and a focus on UX to keep the product good.
It took them more than a decade, but the goal of delivering video via the Internet was always there. Roku, which in its original incarnation was simply a Netflix streaming box, was originally ideated and developed at Netflix before the company decided it didn’t want to be in the hardware business and so the head of the project and the engineers left to make Roku. Netflix has done as much work as any single company except perhaps YouTube to optimize and pioneer how to effectively serve large swaths of video to users across the globe.
The problem with Ben Evans’ piece is that he misunderstands that Netflix has always been a tech and a content company. Even when it was a rental company with more tech and no original content, the recommendation algorithm and the dedication to buyers and curators who would make the decisions about what DVDs were purchased (eventually customer signals played into this too) always had a very strong content focus in the product.
That’s the reason Netflix works. It was the first media company to really innately understand both tech and content. Disney and HBO (WarnerMedia, whatever) have great tech stacks too (especially Disney), but Netflix was the first and is still the most successful.
My local library has had the same service for about equally long. The only difference is that instead of ordering them to my house, I order them to the nearest branch and then I walk in and pick it up whenever I feel like it. Then I drop them off a couple weeks later. No need to mess with envelopes and shipping. And it's free!
While I don't disagree that this experience exists in many places, the reality is nowhere near as convenient as you describe it. The waitlist for any movie I want to see is astronomical unless it's a decade old so by the time I get it, I might not be interested anymore. Netflix somehow had the logistics worked out that everyone could get most new movies pretty close to release which I think is why they took off in popularity.
Also, the Netflix shipping/return mechanism is arguably more convenient than even driving to the library. The envelopes were prepaid and were built in such a way that opening it uses one part of the packaging, which exposed a tape seam to seal it for return. Chuck that in any mailbox and you're good to go. Better than driving 15 minutes across town to the library to return a movie in the drop-off bin and hope it doesn't get lost and I get charged for it, forcing me to go inside so I know it was returned properly...
I want the local library version to get better, but right now it still has a ways to go in my city.
I was going to say something similar. It's inarguable that they were a tech company, when they pioneered streaming delivery for existing video content. Their tech platform was their primary differentiator to competitors for a number of years.
Whether they are currently a tech company is a bit fuzzier. Certainly they new have content as an additional differentiator, and the margin of their tech advantage has narrowed.
I think we have a large advantage in the CDN space, both in integration and efficiency.
In terms of efficiency, we've been serving at 100Gb/s (mostly TLS encrypted) from single socket servers since 2017, and are moving towards 400Gb/s today. How many other companies can say that?
I'm talking about the push to 400Gb/s at EuroBSDCon online, a week from Sunday..
But that mostly doesn't matter. The consumer doesn't care if their movies are coming from a server handling 10Gb/s or 100 Gb/s or 400 Gb/s. There's cost savings there, but I imagine that content costs dwarf delivery costs at this point.
There is some technology component where the UI, resposiveness, reliability, and so on impact the user experience. But still content is king there. The HBO apps suck and their streaming is less reliable than others but they've got the content I wanna watch so I put up with it.
Perhaps Netflix has shifted. In the beginning, I think you could have made a good argument that technology was their moat, but I don't think you can say so today.
Today, their best attempt at a moat is content, and it's a poor one at best since they can only make so much original content and it's not as if they can do so in a way that is inaccessible to other services.
> but purely based on a superior and novel tech experience for its users.
I mean they were the pioneers in offering tv and movies via streaming. The tech is really not that dramatic.
You can think of streaming tech in three parts: video quality, recommendations and UI.
Arguably video quality is the most important, but other platforms have already offer similar/better quality (albeit a lil more data).
Their recommendations and UI are better than others but I honestly don't care about these two as they are still not good enough for me to discover content I would want to watch, for that I still have to go to reddit/curated articles.
So I would say Netflix's contribution was more in pioneering tv streaming as opposed to tech. They are now competing mostly in terms of their originals, so I would label them more like Disney/HBO rather than tech.
This whole thing is pointless. It is basically about clarifying the definition of a financial/MBA term. Where do you draw the line at "tech company" vs some other classification? It only matters if you need to check a box on a portfolio investment diversification.
If a company came out with a fully automated oil drilling solution they are a tech company. Tech defined the company even if the majority of their business 20 years later comes from the fruit of their technical development labor. Netflix is tech company that now mostly makes money from content.
I think the broader point is that this term is getting less and less relevant in general. It would be like if you defined any company that transported goods by rail a “train company”. It would have seemed relevant as a classification when trains were novel, but once it becomes the norm that ceases to be the most relevant characteristic.
My biggest gripes with headline and article that they used the term with extreme ambiguity. I'm sure 50% of the world companies are classified as "tech company". Every time I see those term popping up, all the question I have is tech in what? and What is their specialty? Espically with many new entities name and it is harder to track of what they do.
This is attributing much more coherence to Netflix's strategy than could be reasonably assumed.
Netflix is still trying to figure out what it is. I think their growth post-DVD was based on the assumption that they would be the clearinghouse for all video content; with Hulu and the further balkanization of the video space, it was clear that this was not going to happen; that Netflix was destined to be one provider among many, and that their sources of content would start to dry up as other companies decided that the streaming and application and appliances were commodity technology that they could just brand in-house.
The quality of the UI of Netflix is terrible, but everyone else is so much worse that for the moment they stand out. And they never managed to get on the bandwagon of selling add-on packages like Hulu and Amazon did (although both of those products have such abysmal UX that you gain very little over using the respective native apps).
So now they're continuing to play up the original content game, which appears to be where the industry in general is headed, because the Paramount Consent Decree is so dead that it can't even hear our prayers.
They are a tech company insofar as they have invested heavily in the tech and as a result have the most reliable and usable platform (and the most research into recommendations), but the gap between Netflix and commodity streaming is narrow enough now that their edge in the technology space is gone. So they're basically a studio/theater at this point, like everyone else in the space. The only difference between Disney and Netflix is that Netflix doesn't have a theme park (yet!).
> based on the assumption that they would be the clearinghouse for all video content
Unless they pivoted at lightning speed, I don't think this is true. When I saw the online subscriptions start for Netflix, I, some random person on the street, observed that the moment a white-box streaming service is created, all of the content-owners will have zero incentive to put their content on Netflix.
If I could think of this, then so could Netflix, and sure enough we started seeing netflix buying and producing content of their own pretty quickly.
This was only part of your comment, but I’m very happy with my Apple TV purchase (especially now with the “fixed” remote). The hardware has always been sufficiently fast which enables app devs to present the best version of their UIs. Though this isn’t a silver bullet (see the Prime Video app), the same APIs many devs are used to on iOS do enable a delightful experience (insofar as delightful = objectively better than the experiences on alternative hardware).
I think it's generally understood that, in the 21st century, a "tech company" is a company that uses tech as the principal competitive advantage to replace traditional "non-21st-century-tech" incumbents.
Obviously, Netflix used streaming, collaborative filtering recommendations, and a massive CDN to replace cable TV subscriptions.
If that's not a perfect example of a tech company, I don't know what is.
Yes Netflix needed a good content library too, but that's never been its primary differentiator. NBC and HBO have been producing good content for many decades now. That's table stakes.
There's another "level" of tech companies, you could argue -- companies that supply tech rather than just use it as a competitive advantage -- e.g. Microsoft, Apple, MongoDB, Dropbox.
But today we tend to label those "software" or "hardware" companies specifically (or a combination). Perhaps in the 1980's those were the only "tech" companies. But at least ever since the dot-com era, "tech company" has meant companies that use tech as the principal competitive advantage (as opposed to merely increasing internal efficiency).
So you and the author have exactly opposite perceptions of what is “table stakes” (tech or content) and where the strategic advantage in the streaming business lies…
Perhaps one missing piece is that there is a first-mover advantage to being the tech disruptor, but in many cases the tech quickly becomes “table stakes” and the strategy goes back to where it was.
Netflix figured out data-driven streaming better than anyone. That's its competitive advantage, full stop. It purchases content based on unparalleled data analysis, i.e. big-data tech. They often don't even order pilots (previously unheard of), they're so confident in their statistics.
A useful contrast is with HBO. Yes HBO has a streaming service and app... but its competitive advantage is in prestige content people will pay $$$ for. Somehow HBO's management team is incredibly good at nurturing content in an artistic critically-acclaimed way, rather than tech-data-driven way.
For Netflix, tech is the primary differentiator and the content is table stakes. While for HBO it's reversed. It all depends on how a given company is choosing to compete in the same market.
>They often don't even order pilots (previously unheard of), they're so confident in their statistics.
And a lot of their Netflix-branded shows are quite mediocre. I'd say they're not so much confident of their statistics about each individual show as they are about being able to promote their shows and get them viewed anyhow.
And on the average, it works out for them without the messy bits in the middle with ordering a pilot and having to somehow assess the quality of that pilot in regards to a full show.
>Somehow HBO's management team is incredibly good at nurturing content in an artistic critically-acclaimed way, rather than tech-data-driven way.
It was good. As far as I understand, ATT got rid of most of the bosses responsible for nurturing that quality over quantity atmosphere and they are also now pumping out garbage.
A few months ago, I opened up the HBO Max app (which I only have access to due to it being bundled into my mobile phone plan), and this is the show that was being advertised:
...you mean shows like the critically-acclaimed Mare of Easttown and Hacks and The White Lotus, all this year?
Nobody ever said HBO was exclusively prestige content. There isn't enough to fill multiple channels 24/7. But it's still the main factor that drives subscriptions.
It was exclusively quality content (or a higher probability of it). That is why people used to pay $15 per month just for HBO. HBO's curation was its value. If I have to research whether or not an HBO show is good or not, then the HBO branding is worthless.
Thanks for the recommendations though! They look interesting.
Exactly right. And I, as a consumer, would consider content as the primary driver. An efficient delivery mechanism is already (or soon will be) commoditized. Bad content delivered efficiently won't drive profits.
> Obviously, Netflix used streaming, collaborative filtering recommendations, and a massive CDN to replace cable TV subscriptions.
Then Disney, HBO, and CBS are now tech companies.
To stretch your analogy, you might even argue that Target and Walmart are tech companies too. Or UPS, DHL, and FedEx. They do massive scale logistics using computers.
I would go by a different definition for tech. Are engineers the principal innovators and expense driving the company forward? Are automation, growth, measurement, iteration, and hard problems a chief mindset? That's what tech is to me. You could even meet those definitions without being an internet company. SpaceX, Tesla...
The trouble with this definition is that as it defines tech as an advantage, it intrinsically depends on what your competitors are doing.
Is Netflix still a tech company when Disney (incumbent) now offers similar tech? Does Netflix still have tech as its principal competitive advantage, or are subscribers now choosing who they subscribe to based on content?
If the latter, then Netflix is now a media company, and whatever tech superiority they still have is about as relevant as Betamax's tech superiority over VHS.
> Yes Netflix needed a good content library too, but that's never been its primary differentiator. NBC and HBO have been producing good content for many decades now. That's table stakes.
It's pretty much the only differentiator, and what people mean when they say "content is king." Very few companies can compete with Netflix on fidelity and technical performance. Yet Netflix is second fiddle to industry giants that contracted out their streaming platform development, because ultimately consumers care more about what they're watching than how they watch it.
apple may not be a pure tech company, they re a gadget company, but they have developed a lot of technologies that they can patent, a lot of UX things, and it seems they have evolved many of the preexisting ones. I don't really know what netflix does, do they develop things like video codecs, load balancing tech or recommendation algorithms?
> The tech has to be good - but, it’s still all about the TV. If Netflix was only showing reruns of Frasier and Ally McBeal no-one would have signed up
I think this is always a bit of a silly argument. If Netflix was showing everything, but the tech was terrible, no one would've signed up. You need both.
I disagree. The HBOGO app used to have pretty poor tech. It would logout with no reason, forget where I was in the show, sometimes freeze requiring to close and open the app multiple times, have problems with Chromecast. Still, I wanted to see GoT
I mean, I have Paramount, Hulu, and HBO subscriptions, but I'm far more likely to fly the black flag and watch it from my Plex server instead of their apps due to how painful those apps are to use.
If I was a little less honest, it would be easy to skip paying the subscription entirely. I generally use their apps now to find and try new shows, then download them to Plex once I know I like a show (so I'm not burning bandwidth fetching shows I'm not gonna watch).
Yeah I kind of agree, Netflix still seems to be the only streaming service that actually offers a better service than just pirating the content and watching it through Kodi or Plex. There is always some minor or major technical issue or missing feature with every other streaming service I've tried except Netflix.
No, but my tech-illiterate father is now setting up fire TV sticks with Kodi and plugins using Youtube guides for him and my step-siblings.
The whole "are the normies capable of this" argument has turned into an arms-race against Youtube/FB for easy setup guides.
That said, yes, the number of people they'd loose over shitty interfaces is probably kinda small, but I'd argue that as guides, youtube vids, and even all-in-one seedboxes become more available, that population is gonna grow. All it takes is some streamer to lay out the current process.
I'd disagree considering there's more than a few streaming platforms with sub-par tech. Hulu is quite buggy, as is HBO Max. Criterion Channel is literally just Vimeo and didn't even have working closed captioning until recently.
Hulu is technically quite good and Criterion is a failing service (< 100k subs)--but regardless, technical evaluations need to be made relative to missing would-be subscribers and expectations relative to library size, market size, brand value and marketing budget.
The tech isn’t just content delivery. It’s also extracting useful information out of their customers’ habits so they know what to license, what to renew, how much to pay for it, etc.
They're not optimizing for fewer flops, they're optimizing to attain and retain subscribers for the least amount of money. If that means 20 flops for every success, who cares?
Netflix wasn't the first service to show TV online. Others didn't catch on because the tech WAS terrible. That's why we all would stream torrents before. Netflix's promise was convenience at a good price and it definitely came down to the tech.
Especially when you consider before netflix made content and first got its subscribers, it was just showing reruns of shows like Frasier. Cheaper to get through a box set on a netflix subscription than at the video store.
Maybe I am just getting older, but I would pay for a service that simply showed reruns of my favorite shows (including Frasier). That is 99% of what I watch anyway nowadays, just from my NAS.
Once the tech gets good enough to show tiles on all platforms and distribute the content to edges efficiently what "new tech" does Netflix need quarter over quarter?
I used to read a lot of writing like this and still do (tech strategy newsletters--Stratechery, Benedict Evans, etc)
The hazard of reading stuff like this is that it makes the world seem much more orderly and predictable than it is. Case in point: Zoom. "Videoconferencing is a commodity". "Distribution is all that matters". And all of a sudden, someone does this "commodity" a lot better, without the pre-existing network/distribution/brand of someone like Skype, Google, etc. How do they explain this? How does it make sense that a team can work heads-down without any clear distribution advantage and just grind, and build a large, meaningful company by making a better product?
It's the same deal with Yamaha Motorcycles. Read their story. Bootstrapped from a "nobody" brand in the US, stiff competition against Harley-Davidson and their ilk. They just got better and better, gradually improving year after year, until they're taken seriously by hardcore enthusiasts and are one of the leading motorcycle companies in the US. How do you explain this success in terms of moats, 2x2 matrices, SWOT analysis, competitive positioning, etc? Sometimes a company wins because they just want it more badly and are willing to push their people harder, and outwork/out-deliver the competition.
Calling the tech "still fundamentally a commodity" bothers me not because I'm a technologist, but because it's horribly hand-wavey and imprecise. It sounds precise, but what...exactly...does this mean? As other commenters have pointed out, sure, a commodity that cost oh, 100 billion dollars and a decade to build, isn't easily duplicated, and meaningfully contributes to the user experience? I heard someone describe gold as a "6000-year bubble" last week in the context of the "crypto bubble". Same idea--"a commodity that nobody else has, took a decade to build, and over 100 billion dollars". Some "commodity".
As a CEO, I increasingly find all this strategy stuff noise. All that matters is delighting your customers. You do that and charge a reasonable price, you're going to succeed. It might take a while, and of course you need decent sales/marketing execution, but overall, just focus on keeping customers happy, and you'll get there.
I would say strategy evaluation is more valuable on the investing side than real-world.
Investing in companies with strategic advantages is much more profitable that trying to find the one commodity company out of thousands that are able to escape from the fires of intense competition.
Strategy is also how you avoid having to delight your customers to be profitable. Just get a new law passed that is inconvenient for your competitors to follow.
Delighting customers is also hard because people are unreasonable and unpredictable. Try selling an app. Even if your app adds lots of value over your competitor, people aren't used to spending money on apps. I would guess the vast majority of apps that make money play into people's addictions and get 1% of their users to buy pay-to-win items or custom skins for their players/items. Only the unreasonable people actually make these companies any money.
I use Apple TV. Netflix does have better user experience (in terms of playing videos) than Prime Video, HBO Max, Hulu for me.
It plays faster, seeks faster, properly does Dolby Vision / HDR when the content has it and has different language subtitles. It animates properly from one screen to another (in stark contrast to Prime Video).
The content exploration and navigation is something to be desired, but comparing to other apps, it is on par (similarly bad).
100% agree. Prime video is garbage through and through. I much, much prefer Netflix.
I think Benedict's larger point is correct that I might put up with shitty Prime streaming because I want to watch what's on it. But it's not a delight. No way. And in the long term, that shit matters. The joylessness creeps up on you over time, until eventually you're left with Eclipse, Windows 10, or Android scrolling. Your NPS scores fall off a cliff, you get zero word of mouth, no lines outside of stores, nobody talking about it on social media/news/etc. and then everyone acts like it's some big shock.
It's not fun!!
I think Tesla, Apple, and Netflix all really get this.
> Calling the tech "still fundamentally a commodity" bothers me not because I'm a technologist, but because it's horribly hand-wavey and imprecise. It sounds precise, but what...exactly...does this mean?
Quite a lot of analysis seems to be making people feel better about not being technical, when technical jobs are exploding in prominence, and you can sell your analysis better if you make customers feel better.
A fundamentally semantic argument like this seems mostly irrelevant to me. It's like calling Google or Facebook advertising services, which might technically be true but isn't usefully descriptive. Using the author's logic you could call high frequency trading firms tech companies instead of financial services. If his semantics here were correct one might wonder why nobody calls HFTs tech companies. The author ignores the more complicated side of the questions about what makes a company a "tech company" — mushy concepts like internal corporate culture, sources of talent, and participation in the broader tech "ecosystem".
Also the idea that Netflix's content strategy is cleanly separable from its tech is totally bogus. Netflix uses some sophisticated tech to decide what content to produce and also has a huge amount of in-house technology involved in the actual production of content.
I think it makes sense to an analyst. Is the company's success determined more by {TV,advertising,healthcare,...} concerns or by tech concerns?
Which is a very different question from "if I like to do X, where should I try to work?" It's closer to "what is the company's largest expense" but that's still different.
Different categorization schemes for different purposes.
Ah, nothing like a clickbaity title to nerd-snipe us the morning after a holiday!
> Like Sky, Netflix has used technology as a crowbar to build a new TV business. Everything about how it executed that technology has to be good. The apps are good, the streaming and compression are good, the UI is good, the recommendation engine is good, and the customer service and experience are good. Unlike American cable subscribers, Netflix subscribers are generally pretty happy with the tech. The tech has to be good - but, it’s still all about the TV... It used tech as a crowbar, and the crowbar had to be good, but it’s actually a TV company.
By this logic, Google is less a tech company than an advertising firm that used tech as a crowbar! Microsoft is an office supplies manufacturer! Which seems absurdly reductive.
In my mind, if you're scaling customized services for individual users far beyond what a team of top-tier customer service professionals could do (or you're cyborg-izing those service professionals!), you're a tech company. Plain and simple. And Netflix fits this bill because part of its approach to content creation is that programming choices should be driven by quantitative insights about individual users - it's just a very, very long iteration cycle on the optimization algorithm.
"Tech company" used to be vendors/providers of technology components (IBM, Oracle, Microsoft, etc) but today it is a label you slap on a stock, startup or IPO to mean "monopoly potential with very profitable operations / scalable revenue streams", so demand (and price) for said stock grow up.
This is all BS of course - Netflix is a media/content company, Stripe is a financial services company and Tesla is an automotive and clean energy company. The fact they leverage technology much better than their peers (little offshoring, lots of R&D, "built here" mentality) is more relevant to the how they do it than to what they do.
If no one is a tech company, what IS a tech company? We have the habit of getting into pedantic esoteric arguments that are meaningless. I can't accept that Netflix is a "Television company" because they don't sell TVs. They are a content provider and license holder. However there are billions of content providers and license holders.
Also let's say that a mega rich person starts investing in 15Billion / year on content like Netflix, but at the same time does it by creating Blockbuster like stores where people can walk in and rent said content. That's not a Tech company is it?
There IS a reason these companies born out of the SV are tech companies. Flagging as this is just a click bait puff.
Netflix used to be head-and-shoulders above other streaming services, now it seems that streaming (which was unbelievably revolutionary 10 years ago) is trivial now. Look how Peacock and Disney+ just popped up overnight, streaming video is just commoditized now.
I think what makes a company a "tech company" is doing actual R&D. Netflix pioneered a lot of technology around streaming. Google invented the modern search engine. Microsoft builds operating systems. Apple designs hardware and operating systems.
NBC with Peacock? No, they just bought something off-the-shelf.
Is Netflix still doing real cutting-edge R&D? Maybe? Maybe not.
I think "tech company" is a near-useless label, anyway. I struggle to think of any company that isn't, or at least shouldn't be, a tech company. Everyone uses technology to provide their product or service, even if they are rudimentary ones. There are those companies that are pushing the boundaries of what was previously possible, sure, and if that's what people agree is the definition of "tech company" (high innovation), then surely Netflix counts. No one watched much TV on computers or phones before them.
I've been in video tech for a long time, and you glossed over the part where Netflix does tech company things. They invented VMAF and per-title encoding. I've seen countless video tech talks and Netflix consistently brings innovation to the table.
This gets complicated though. Is AirBnB a tech company? A simple analogy to the article would suggest no, AirBnB is a hotel company.
However, the actual "hotels" are owned and operated by AirBnB hosts, and AirBnB does not derive significant competitive advantage from the quality of their administration, beyond the value of having a large number of hosts on the platform. AirBnB is fundamentally an information company. Its real competitive advantage is that it owns the channel to the customer, it has a really good search function, and it also owns all the data that makes up reputation-management system that's critical to good hotel reservations. These are all tech areas; AirBnB can afford to lose a bunch of venues, even really good venues, but if it loses the review database a good portion of its competitive advantage goes away.
There was a time when lots of people believed Netflix's key competitive advantage was the recommendation algorithm and viewing history. I'm not certain we're in that world anymore - Netflix seems to care a lot more about content than recommendations these days - but I can see why Netflix would've been considered a tech company back then.
Netflix is absolutely a tech company. Everyone wants to be "tech" because the valuation multiples are higher due to non-linear revenue potential per unit invested. That's pretty much what a "tech" company means today - the cost of acquiring user 1 might be millions, but user 2 is pennies. The only way to push those user n+1 costs so low is with heavy tech automation, which Netflix et al. has in spades.
The "tech company" monicker is increasingly nondescript, but any kind of classification needs context to be useful. These big guys, at present, aren't doing obvious head-2-head competition in well defined market categories. Ford, GM and Toyota are similar to each other that Amazon & Google are not.
To think in classifications, you pick your classification based on the aspect of company you care about.
Netflix's culturalness, financing, hiring/labour practices are more like "tech companies." Their competition, is home entertainment for consumers, and media companies for content. Their business model is basically cable. etc.
In any case, it seems the author goes through all these semantics to notice tha:
"you can access the same service on any device (Netflix, Spotify, Kindle), or the same content on any service (music, books), or both. Content doesn’t stop you switching - unless it’s exclusive, and that’s a totally different budget."
So yep, key point. Media economics is understudied.
The more important distinction it seems is how much of your sales is marginal profit, how your revenue scales, and the growth potential.
If you have very high fixed costs, but the profit from each additional subscription is ~90%, and you have a clear path to growth - your future profits could be ridiculous.
Netflix is selling non-durable goods with insane marginal profits. In this way, it isn't much different than a software company - like Microsoft in the 90s.
The distinction between whether you are selling software or NFTs, streaming videos, or ads seems less relevant.
> Coming back to TV, there’s an irony here in the fact that the tech industry has spent decades wanting to get into the living room, get into TV, break up the cable bundle and move TV from scheduled linear to on-demand, and yet now that it’s happening, it’s happening in the TV industry, not the tech industry.
I don’t see the irony. This seems to be a circular definition of “TV industry”. The technological breakthroughs (cable, satellite, streaming, mobile) that completely change TV don’t count as “tech industry”. Silicon Valley startups Netflix and Apple somehow don’t count, neither does Amazon, and YouTube doesn’t even get mentioned.
I also have an issue with the implied definition of “commodity”. I think a commodity needs fungibility and availability. So storage is now a commodity, but large scale streaming is not. You can’t order a Netflix scale infrastructure on the market.
The author says Netflix is not a tech company, but then does not give a definition of what is a tech company. At one point he seems to say anything that sells something online is not a tech company. I disagree, using SaaS companies as one set of counter-examples.
For me a tech company is any company that offers product that is computerized hardware, software, digital asset, or digital service that they have created (so not just a case of repackaging). Netflix meets that definition because it offers a viewing experience with recommendations, watch lists, etc. By my definition many of the companies online would be considered tech companies though.
I do think Areading314 is partially correct too. Most companies today are going to be using technology. Though not most will be creating it as a product.
In 1997, Hastings and Randolph mailed a DVD to see if it would be delivered without damage. Netflix was created because a new market (home delivery of movies) was created by an emerging technology.
10 years later, Netflix kick started the streaming revolution. In 2008, Netflix licensed the Starz catalogue of 2,500 titles.
In a podcast episode, Ben Thompson said Netflix was his favorite company to write about because they have successfully transitioned their business model multiple times to take advantage of technological shifts.
The always had streaming in mind though but the infrastructure for it did not exist for mass adoption. They used DVD and USPS to gain footprint get off the ground. This enabled Netflix to wait it until the market was ready for their big tech-play. c.f. SV failures like WebTV and General Magic who were ahead of their time but the market/infrastructure didn't exist.
As I understand it, the category "tech" was invented by stock traders. The applicable definition of "tech" company is a company whose share price movements correlate with the share price movements of other "tech" companies, which in turn tends to depend on how stock traders view the company, so the definition is circular in at least two ways. But it's probably still a useful concept. For stock traders.
This is a flawed argument; Netflix is a tech company that dabbles in TV shows (and films). It has the best recommendation engine (and not a commodity) and nothing else comes closer. There is a possibility that it may merely switch to "cloud-generated" characters with multiple plotlines in the same series and its gaming ambitions must be understood in this light.
If you use traditional metrics to understand the company, it wouldn't make sense. Why is the company losing more money than it earns from subscriptions? The amount of granular data it has on films (and increasingly on the people's choices) will make it easier to predict the choices users will make.
Hollywood's movies rely on "gut-feeling and formulaic approach" to film making. Netflix will replace it with data.
Or is it that Ben-Evans missed the initial hype around Netflix and couldn't invest? Its easier to take pot-shots on the blog and call it a commodity.
Bandersnatch was an initial experiment. There's more to come with "immersive filmmaking" and "story-telling".
Netflix said that their strategy was to become HBO faster than HBO could become Netflix.
Which to put it in the words of the author: get as good at “TV decisions” as HBO before HBO got as good at tech (making apps, good UI, good recommendations and streaming back-ends) as Netflix.
I think it makes sense. Wish the article was better at explaining how the tech-crowbar worked for sky and Netflix.
Facebook is not a tech company it's a (social) media company, Google is not a tech company, it's an information search company, Apple is not a tech company it's a consumer electronics company, Amazon is not a tech company, it's a retail company.
You can say this about any tech company, it's just where you draw the line of what "tech" is.
Wouldn't a tech company simply be a company who values technology as a differentiatior and therefore invests in building tech in-house?
If so, I feel like Netflix qualifies. For them not to be a tech company anymore, they'd need to pivot to only producing TV and Films, with outsourcing or licensing their work to a company that builds the technology to host and deliver the content to users on their behalf.
I'm not sure Netflix would be doing as well if they pivoted to that.
By having in-house technology teams that you invest in, it also means that the company is acquiring engineering and scientist talent, potentially acquiring tech patents, as well as building technological means that in-theory they could pivot to resell the tech or license it to others if they wanted, making tech not just something they invest in and use as a differentiatior, but making it an actual product or service they sell, this is what Amazon did for example.
> The box was good, the UI was good, the truck-rolls were good, and the customer service and experience were good.
What UI? Back when Sky launched the box would show you the channel number you where tuned to via LEDS over the channel selection buttons and/or via a simple OSD like you would get on any other TV with a OSD displaying channel numbers.
The best UI you got was went something wasn't "working" (be it because you didn't have the auth or because something went wrong) and the OSD told you it couldn't decrypt a channel / to insert your viewing card.
It wasn't until the launch of digital I would say it gained an UI.
Granted the truck rolls and the customer service was decent from what I recall. I don't recall any major issues. (and the UI on the digital boxes wasn't bad when it came out and have been added to since, no idea what the Q boxes are like as I cord cut a fair few years ago.).
Besides all the great comments here about Netflix being not a tech company. I will add that most of Netflix tech blogs lately are just describing integrating a bunch of Open source Apache/Spring Framework software.
The "technical challenges" they are facing are similar to those Enterprisey IT developers face when they could not wrap their head around Kludgy Java framework APIs.
Also If I look at Netflix OSS at github it gives that feeling of below average enterprise Java software with deeply nested packages with probably 5 percent of meat and 95 percent scaffolding / config around it.
I wouldn't be surprised to learn if Netflix's famed extensive systems monitoring is not because they are on cutting edge but
that million instances of half-assed Java microservices do need endless monitoring just for standard http/database request processing.
So yeah, Netflix is not tech company in many meanings of tech.
Yup. Netflix doesn’t sell tech, it sells subscriptions to scripted drama. It uses tech to expedite its business, like everyone else.
Yes, they invent a little more technology than your typical small business spreadsheet. But tech is a commodity for them because the only strategy for tech is that “it has to be good”.
Every problem that business solve, even if it is "technical", is still a business problem.
Nobody cares about docker, until businesses (that might be in retail/healthcare/cruise/whatever) realize they can use docker for their needs.
Nobody cares about stripe. Until businesses realize they just pay for a well documented, easy to use SDK.
I work for a company in a sector that is not that familiar with technology. We're bridging that gap, and the software we sell is a technical product, but engineering is only part of the equation. Again, nobody cares about what we make until those business realize that software loaded on those phones everyone carries can help them improve/increase their business.
Just solve problems. Labelling problems is for business analysts/consultants/hamster wheel professionals.
When I worked at Yahoo back in the mid-2000s one of the most depressing internal messages was the idea that "we're not a tech company, we're a media company" - while Google were running circles around us on basically every front.
It just depends on the dimension you are talking about.
If you describe a company based on the product/service it provides, there is no such thing as a tech company. There are car companies, project management software companies, web search companies, entertainment companies, oil companies, etc.
If you describe a company based on their core competency, there are tech companies, product companies, brand companies etc.
You can choose any dimension you want. It's usually just helpful to then be consistent, ie Tesla is a car company and Netflix an entertainment company. Or both are technology companies.
"Tech company" is arguably a term whose meaning has shifted into the domain of common popular agreement, away from any rigorous first-principles definition.
It would be equally futile to say "Betsy's Diner may serve coffee, but it isn't a cafe; it's mainly just a sandwich and pastry shop." Or, "Fritz's Foods may sell a few items in bulk, but it isn't a grocer; they mainly sell individually-packaged items."
>all of the questions that matter are TV questions.
I wish ben would do a little more research. Netflix imo very much is a tech company. they released an entire x.509 certificate orchestration framework. HBO and Disney to my knowledge havent released any devops tooling.
If you can provide a service to an additional subscriber at near zero overhead costs, near zero dollar sales and onboarding process, then you’re a tech company
the only reason additional industry specific questions exist is because they have so many simultaneous users that theyve reached theoretical maximums on their near-free resources
when other industries reach the same place, if at all ever possible, then we can split hairs over this distinction
First focus on Netflix started out as emailing dvds. So it was a supply chain company. Then it started going into recommendations. So it was data mining. Now it is streaming. So it is streaming company. Like Real (remember them?) was a streaming company.
Large companies with established proven processes can migrate towards the tech ladder. But small companies cannot become a tech company aka shark tank funded red dress.
"Tech company" is a label that is rapidly outliving its utility. We probably need another name for the small segment of the industry that is producing technology as its product.
Looking forward, I'm guessing "tech job" is another label whose days are numbered. Already, "I work in tech" is a fairly nondescriptive phrase. It's the new "I work with a pencil."
I really don't understand how Netflix is not 100% a SaaS tech company. To say they aren't in the way the article describes is to say that no SaaS companies are tech companies which is an obvious fallacy. They have dabbled in making original content but it's far from their core business.
I’ve always thought of Netflix as a media company.
I believe a simple approach to find out what type of a company - a particular entity is - is to seek what comes to your mind when you think about that co.
Toyota - Cars: so, they are a car company.
Microsoft - Windows. So, they are a software/tech co.
Google - Search. But, they are part of a conglomerate.
Good question. I said ‘Google is part of a Conglomerate’ - Alphabet. I also consider them a software co. But, some of you might disagree by bringing - Google ads and YouTube into discussion. This is where things get complicated. Microsoft also had MSN and serve ads in Skype and Windows. Does that make them a media co? I don’t think so. Similarly, FB also does not consider themselves a media company. They say they are a tech co.
Having used Paramount+ recently, it has really made me appreciate Netflix as a tech company, in addition to their FOSS contributions and other innovations. I think it's silly to say that only a company that directly sells tech (whether that be software or hardware) is a tech company.
In a way Netflix is a productivity company. They relentlessly improve productivity in decision making, in building device ecosystems, in lowering streaming cost, in managing streaming assets... Cool technologies emerge from such endeavor.
I think almost every company is a tech company in some ways. Tech enables them and has moved on from a concept of being a cost center to revenue enabler. Also tech resources are likely the most expensive resources as well.
Neither is Facebook or Amazon. In fact, all three have already been moved from tech sector and into communications / consumer discretionary by economists. Google, Microsoft and Apple still qualify as tech for now.
There are multiple OTT content providers in India, many with "popular" content, but their tech is bad ( to be accurate), so is the experience of watching shows on them.
Look at it from that lens, and Netflix is a tech company.
Anyone who has used Netflix and HBO MAX (the best and worse streaming site, respectively, in terms of streaming tech) will beg to differ that Netflix is not a tech company...
The confusion here is expecting the tech to be visible in the user experience. Netflix tech is continuing to invest in targeting and data-driven content content production.
The salaries for engineers says otherwise. Honestly that's a better metric than anything else as it directly correlates with how valuable they see engineering talent.
Tech company is a company that can sucessfully and repeatedly build product (product in IT sense). Which most companies can't even if it's a cold day in hell.
Eh. Netflix gambled hard. Real hard. They thought streaming would destroy all dvd and physical mediums. That was a real gamble in 2005. That was a huge payout. Now we all have "genius" insights how it worked out - but honestly they deserve every penny. And no, they are not a tech company anymore they just produce content. Anyone can upload a video and hide it behind a paywall. Rock on netflix.
Why does industrial help language at all? The idea that Netflix is regulated differently than Time Warner is a scam. It's bad for users. Everything was an insurance company for a while. Then everything was a finance company. Now it's tech. Why not break the cycle instead of just pushing it into the next field?
Basically every company just shifts their marketing language to whatever industry has most aggree-able regulations.
I kinda think a more important conversation is about what Netflix actually is. Subscribers are the livestock, not the customer. The customer are propagandists who wanna promote something with a documentary. So many of their docs have a clear influence peddling motive.
My favorite is Fear vs New York City...a mafia doc? Well it turned into a commercial for Giuliani that was hyper-targeted at New Yorkers when it looked like he was going to get charged by SDNY. You can argue that the content is compelling but the idea is that they interviewed Rudy and Michael Chertoff and a whole bunch of real corrupt villains and...i bet netflix paid them. That's where our subscription money actually goes.
We all agree they're not a tech company but what do ya'll think Netflix actually is?
Sure and McDonald's is a property company. But that's not particularly helpful well doing things like competitor analysis. You could say that Google sells advertising space on the Google home page, but that is a market with zero competition at that level. The competition is at the search level (e.g. Bing) or at the engagement level (e.g. Facebook drawing eyeballs away).
I'm probably wrong here, but it seems to me that storage is practically cheap enough (not quite) that Netflix could simply send out a drive with their whole library and then a membership gives you access codes.
Imagine how small the drive would be if it just had 'things I might ever watch'.
The size for 100% isn't even that big given a few iterations of storage tech.
I'm just blown away by how little Netflix really gives you. Given the push to internally-financed programming they've basically become a production company with streaming bolted onto the back end. Their market cap is kind of a joke.
Example: Google is still a tech company. As much as some might view search as "solved" (just like it was when Google was founded I might add), search continues to get better. Tech still plays a significant role in the actual core business (ie advertising) too.
I once again return to the Steve Jobs take on why Xerox failed [1]. An effective monopoly devalued the tech such that Xerox became a sales and finance company.
So, returning to Netflix. I agree Netflix isn't a tech company anymore because Netflix ultimately is about serving several thousand VODs and that problem is solved. Now Netflix's core business is about making content, licensing content and acquiring and retaining customers.
Obviously doing this (or anything) at scale is a lot harder than it sounds but at the end of the day Youtube is monumentally more technically challenging than Netflix due to the number of videos, the number of viewers, the advertising and live streaming.
"Tech company" is still a useful classifier IMHO.
[1]: https://www.youtube.com/watch?v=NlBjNmXvqIM