Is it a tech company? Is it, really?

We appear to be in the midst of a trend where companies are claiming to be “tech companies” when they’re anything but.  One might wonder why it matters?  So the guy selling peaches on the side of the road is claiming to be a tech company because he uses his phone to accept credit cards.  Who cares, right?  Actually, it matters a lot, and in this article, we’ll explore why.

“Unicorn” has ceased to mean anything

We’re all familiar with the trouble WeWork experienced during their IPO. Prior to going IPO, they were touted as the next “tech unicorn”, but looking back we should all wonder why they were ever called a “tech” anything. Looking at their business model, they rented out space to companies.  Sure, they offered their locations to technology companies all the time, but that doesn’t make them a technology company.  They used technology to manage scheduling, network access (insecurely, I might add), and other areas of their business, but does that make them a tech company? No more than the guy selling peaches.  Their core business is real estate, plain and simple.  One of their differentiators, however, is that they have positioned themselves as this sexy technology company solving world problems and moving humanity forward.  In reality, they’re a room with a desk where you can do business for a monthly fee.  Also known as an office.  I don’t know enough about pricing public companies to say for certain but it seems to me their IPO troubles stemmed from the fact that they were a real estate company selling their stock as if it was a technology offering and the investors weren’t buying it.

So, again, no big deal right?  The only people who are apt to be harmed are their investors.  But let’s take a look at how insidious this trend is becoming.

Not everyone IS (or can be or SHOULD be) a tech company

Take a minute to ask a medical provider about Juul. We have a lot of medical professionals in our circle, and the stories they tell are astounding. One of them regularly sees teenage patients with the lungs of a 55 year old who has smoked most of their life.  All because of a company that is touting themselves as a “tech company”.  Such a claim is specious at best.  They took what someone else invented, modified the formula to contain more nicotine than two packs of cigarettes, slapped stylish marketing on it, and started targeting kids.  If that’s what it means to be a tech company now, we want no part of it.

Using tech IN your business is different than being a tech company

Part of the problem here comes from a saying going around the past few years that asserts, “Every company is a tech company.” To the degree that it may be true, what it really means is that you have to use technology to do business.  That part is unavoidable.

Using technology doesn’t make you a technology company any more than driving a fast car makes you a race car driver.   Farmers use computers and technology on an ever increasing basis.  Even the workers in the world’s oldest profession make use of technology to find “clients”.  But none of them, from Farmer Joe to “Candy”, are hiring a team of software developers to help them manage their products or services, or providing those products and services as revenue-generating offerings within their companies.

If at any point after asking yourself the question, “Is it a tech company?  Is it, really?” you have to contort your face while you ponder the answer then, no, it probably isn’t.  To paraphrase Supreme Court Justice Potter Stewart; you know a tech company when you see it.

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Cynthia Del'Aria

Cynthia Del'Aria is a serial entrepreneur and tech startup ninja, specializing in product-market fit and idea validation and helping new entrepreneurs reserve their time and money for the idea with the best shot at success. With two successful exits before 30, an active high-profit-margin SaaS in the commercial airline space, and two additional startups in the works, she knows what it takes to traverse the entrepreneur journey, the highs, and the challenges of turning a vision into a successful, viable business.
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  • Denver, Colorado

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Copyright © 2021 Precursa  |  All Rights Reserved  |  Site Created by Natalie Jark

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