This IPO has been a complete disaster: The initially lowered the price range, and then did the IPO at the low end of $10. Stock opened for trading at exactly that level, instead of higher, and has lost around 40% since then.
Normally this IPO would not have been that big of a deal. But since the tech IPO pipeline is largely frozen at the moment, APRN was widely seen as a canary in the coalmine for the sector. The fact that it was this poorly received, only underlines the fact that there is currently sector rotation out of tech going on.
The way that I think about a "tech" company is that it is able to scale its growth non-linearly with its staff (or human resources). This isn't a binary rule, and obviously many successful companies are in a gray area -- but I think that it serves as a good litmus test / starting point when thinking about companies.
For example, an app that is running on a few servers can gain users more quickly than it needs to hire additional workers. A company like Blue Apron has to grow its warehouse staff as it gains new subscribers, effectively meaning that its SG&A and overhead costs scale fairly evenly with growth.
Technology is strategy, techniques and general knowledge on applying science, engineering, and other disciplines to solve problems. It is not a thing in itself but a means to an end. That end describes the actual business.
Just because you use technology to improve productivity and output compared to a competitor does not mean you are a "tech" company - it means you're better at doing whatever your business is.
Agreed in general, but I am specifically not talking about technology used to improve processes or help a company move up the learning curve.
I was trying to offer an explanation of what separates out "tech" companies and not trying to get into the nitty gritty of the fact that many companies use technologies. I would argue that a manufacturing company whose innovation is a more streamlined assembly line to product some widget is not a "tech" company in the sense that many people on hacker news use the word.
*Do you have a platform that fundamentally solves what would otherwise be a technology problem for other people, ie expose your technology so others can leverage it(via API/SDK, SaaS or other such on-boarding method).
None of this is clear cut as there are many grey areas but in general if you are creating technology for others to use and that is your core operation then you're a technology company.
Selling packaged food while using an App or Website does not make you a technology company. Blue Apron could completely outsource their technology work and I doubt it would fundamentally change the makeup of the company, you couldn't do that with a technology company.
Some other ways I measure the "techiness" of a company; how much of the payroll is spent on engineers and if they're using software to replace value typically provided by people.
> if you are creating technology for others to use
If they're selling hardware then it's a hardware company. Likewise if it's software. There is no way to sell technology, you sell the end product or service.
> you couldn't do that with a technology company.
Yes you can, it's just building software or other work. Don't buy into this special Silicon Valley hipster thinking, getting things done and making (and selling) a product the market wants is all that matters. How you get there doesnt. And none of it makes you a tech company.
I would have to disagree with that definition. There are tons of companies that are scaling non-linearly without using any particularly new technologies.
I don't consider a frying pan manufacturer a tech company just because they have managed to grow by optimizing their supply chain and productivity.
Alternatively I also think a company that makes brand new technology year after year even if they scaling one for one with hiring is still a tech comapny
I think what you describe might just be a general guideline for identifying a financially successful company not necessarily a tech company. People hear VC funding or IPO and often automatically think it must be a tech company by conflating technology and financial success.
I think you are getting caught up in definitions for the concept in a vacuum. I was just trying to help explore "tech" when it comes to hacker news and the VC landscape, whether or not I agree with the definition.
I agree. While pinpointing the exact definition of a "tech company" is a game of semantics, I think it's pretty clear that they're simply a meal-prep delivery service.
Same goes for Casper, which dubs itself a "sleep startup" (whatever the hell that means). They sell and deliver mattresses.
having interviewed at Blue Apron, I can confirm that they very much view themselves as a tech company even though they are not really in the tech business space. The level of Google envy I saw at what is essentially an e-commerce grocery store was insane to me.
How is that more accurate? Every company uses technology, at which point saying anything like "tech company" is a useless modifier compared to just "company".
I think "every company is (nowadays) a tech company" is a relatively fair assessment, even if somewhat exaggerated.
Increasingly, successful companies require ownership of proprietary technology, rather than purchase of commodity technology from third parties, and in that way more and more companies - even those in "traditional" fields - have invested in in-house tech R&D.
More importantly, software engineering has become a critical part of companies' success, even if the company doesn't ship software to end users (see: UPS, FedEx, Visa, MasterCard).
It certainly seems like the old definitions of "tech company" is increasingly archaic - is Amazon a tech company? Or are they just a retailer that uses technology? Is Grubhub a tech company, or just a delivery service with a frontend?
> "Every company uses technology, at which point saying anything like "tech company" is a useless modifier compared to just "company"."
I think that's exactly the point. Software has become so critical to almost every field (and more importantly: in-house developed software) that many companies have become tech companies, and those that haven't are either getting on the bandwagon shortly, or will perish soon after.
There may come a point where "company" vs. "tech company" loses its distinction, but for now it seems like "companies" are becoming "tech companies" rather quickly.
A mistake on one end of the axis (BA is a tech company) doesn't need to be corrected by an outrageous statement on the other end of the axis (there is no such thing as a tech company).
There is no other end of the axis. You might as well say an electricity company because they use power to run.
Some are more cutting edge with newer tech, but that's making the process and operations better, with their end goal still being the same (whether it's selling software or groceries).
Google sells advertising software and people's attention. They also make search software and various other portals that they give away for free. SpaceX builds rockets and sells freight-to-space logistics. We have had rockets for decades, newer tech just make it possible to make better rockets.
Google and SpaceX (like every other person and company on the planet) uses technology to create these products and services, but that's it.
^ this. I think the bigger question becomes "why does it matter if something is a tech company?" Is it because that is what makes it easier to raise money today? If that's the case, then I wish more investors and analysts would go back to first principles and understand why slapping a "tech" label on a company does not necessarily mean it will scale well or succeed in the long run.
There's a Quora question[1] about this that has a different take than you:
> Uber is a tech company because that's what we do. We create a service that powers a marketplace through technology, and we provide apps that let people participate to this marketplace. Specifically, that marketplace lets individual users or businesses buy transportation services from partners.
> We are not a transportation company because we don't transport goods or people - our partners do. We just facilitate that. And we are not a cab company for the same reasons, and on top of this, we don't own a fleet of vehicles.
They're hitting the same problems that Groupon hit. Their margins are extremely low, the cost of acquiring and retaining customers is high, and there's no barrier to entry for competitors.
For example, during the last 12 months at Blue Apron they spent $178 million on marketing, and acquired 387,000 customers (these figures are from their IPO). That's $460 per customer. Getting hold of customers is not cheap, and many of these customers are not loyal or are stopping the service after only a few deliveries.
Well, a company can provide a good service but be a terrible business. See TWTR or SNAP as examples. Uber would be another. They're mostly burning cash without a clear path to profitability. Given their recent scandals, an IPO seems to be extremely far away.
They don't have a great moat (all recipes are available for free online for instance) and the meal kit market has gotten very, very crowded since they invented it 5 years ago.
Agreed. I also saw a talk by a PM from Blue Apron a while back, and it seems that another problem is that people subscribe with the hopes of cooking more but then discover that having the meal kit still involves enough time and friction to limit them from doing it. I think that many people love the idea of cooking more often but still wish it were more convenient. To Blue Apron's credit, they have made it fairly streamlined!
It takes me about half the time to make a Gobble meal as a Blue Apron meal. Blue Apron is streamlined relative to doing it completely from scratch, but it's still more work than I have time for.
I think that addresses it then lol. They aren't even delivering on their core promise, and competition has outperformed on a key product metric like effort and prep time!
Normally this IPO would not have been that big of a deal. But since the tech IPO pipeline is largely frozen at the moment, APRN was widely seen as a canary in the coalmine for the sector. The fact that it was this poorly received, only underlines the fact that there is currently sector rotation out of tech going on.