this post was submitted on 16 Sep 2024
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TechTakes
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It's about hype and economics.
Tech companies can theoretically scale well and are valued on the expectation of growth while normal companies are manly valued based on what they currently do. An app can basically be copied for free to millions of users once it has been coded and servers don't cost that much. A traditional company, say a car company, that wants to increase profits has to build a new factory or something. The problems arise when a companies perception goes from startup/tech company to normal company.
Example: wework was a startup that rented office space long term and lets it customers rent short term from them. Once people realized, that it was a real estate company and not a tech company it's value plummeted, it couldn't raise more capital and went bankrupt.
Edit: spelling