TECH, these four letters have become more abused a term than digital, marketing or design — which is by any mean not a small feat. The best way to define « tech » is probably through the eye of investors, and how the notion has tacitly evolved during the last 30 years.

In the 90s « tech » would mean just that: technology. It implied that you would do R&D and patent something. In a nutshell, tech meant IP. And IP was good. It delivered (a) a solid defensive moat against competition, (b) powerful marketing, and (c) if your company was acquired (or went under) a resalable asset. And it’s still the case today. Companies like Nokia still live on their vast IP portfolio, while they admittedly lost their huge market footprint.

Around 2007-2008, when Google started to be an economic powerhouse and buried Yahoo in the ground, something different happened. The rise of network effects and 3 magic letters for investors: « MRR » (monthly recurring revenues). This was a silent tectonic shift that we still try to cope with: the most powerful companies on the planet were capable of addressing worldwide markets and create self-sustaining moats by the virtue of their networked activities. Who would want to fund companies just inventing technology now you could invest in de facto monopolies? Get rid of your army of researchers and IP attorneys, and let the massive gravity pull of your interconnected customers suck the oxygen out of the market.

Which to get there, meant accepting the rule of winners take all (companies working at loss for years, and massive investments to fuel nascent network effects). Which then lead to the likes of WeWork and the abuses of trying to jump in the tech bandwagon. Where if you managed to sell your business as « tech » you instantly got 10 or 15 times the valuation you would have deserved as a normal (real-estate) business.

But we also currently witness the lack of understanding of all this when we see most of European innovation pulled back to « deep tech » by public funding.

After years of funding tech startups in Europe, trying to find the next Uber or AirBnB (tech as network effects) we go back to tech as science (tech as IP). And let me be clear, tech as in « science » is not bad. It’s just that we can’t go back in time. Network effects are not going away anytime soon. If we haven’t manage to create AirBnB or Uber-like unicorns in Europe, it’s because we’ve tried to apply the US playbook too literally.

The challenge of building a « tech » industry in Europe is still ahead of us.

EDIT (Feb. 14) – The EU starts to flex its muscles way beyond the GRPD initiative and aims at building a single data market. The term ‘data’ is probably confusing and means ‘digital privacy’. It’s a bold start in the right direction. (Prepare for US outcries.)