What Exactly Is A Technology Company?
A digital tech business is defined as one that delivers or substantially relies on a digital technical service/product/platform/hardware as its principal income source. However, if you ask around, you'll discover folks who believe in a variety of different definitions of what a "tech firm" is.
It's trendy for businesses to portray themselves as "tech." Beer pong, bean bags, and millennials come to mind when you hear the phrase. It's a method of hinting that your firm is at the cutting edge of innovation without having to really innovate.
Raising money like a tech firm
WeWork, a coworking firm, raises money in the same way that a digital startup does. It is now a unicorn, meaning it is a'startup' valued at more than $1 billion, thanks to a $4.4 billion investment from SoftBank.
Unicorns, unlike WeWork, are usually found in the fields of "technology, mobile technology, and information technology." WeWork is an excellent illustration of how designating a company as a technology company opens up new investment opportunities not generally available to office management firms.
"Is a firm that has staff members with 'programming' or'engineer' in their names a technology company?" wondered investor and former Twitter engineer Alex Payne in 2012.
What's the difference between tech and non-tech?
Sainsbury's has around 600 digital and technology jobs, including one of its main headquarters in Manchester. Sainsbury's, on the other hand, is universally acknowledged as a retailer.
Yet why are there so many organizations that wish to call themselves tech companies but fall outside of this definition?
Businesses that utilize technology extensively are frequently confused with technology companies. This is largely due to the enormous benefit of defining your firm in this manner.
During the dotcom boom of 1997–2001, firms adopting the dotcom suffix to the end of their name enjoyed a short rise in their stock price, according to a 1999 research titled 'A Rose.com by any other name.' The company didn't have to be very connected to the internet, demonstrating that there was a real financial benefit to connecting your business with technology.
Although the landscape has altered since the dotcom boom, many businesses continue to engage in similar activities. We asked a number of tech firms in the North of England how they would describe a tech firm.
Any huge corporation
"Today's corporate world relies on technology – so much so that I would argue every significant organization could now be classified as a tech company," says Sarat Pediredla, CEO of the Newcastle-based Hedgehog Lab technology consultancy.
"The basis for our designation as a technology business is straightforward in our instance. We develop technology as a product/service and a focus of our knowledge.
"However, the definition may be used in a considerably broader sense." WeWork, for example, exists to make productive tech work possible. It will not rent premises to a retail or manufacturing company. It can be seen as an important aspect of the industry."
It may be claimed that WeWork is a tech company because it primarily serves IT clients. They rely greatly on technology as well. Is being linked with the tech industry, however, the same as being a tech company? Is WeWork a part of the greater ecosystem, or should it be regarded as such?
When the product is technology
Some businesses believe that a definition should be founded on the fact that technology is the product. Hardware, such as the Apple iPhone or the IBM computer, might be the product. Software, such as Spotify's music-streaming platform or Oracle's business database software, can also be used.
Technology as a service is being sold
Technology might potentially be a service, similar to how Uber's software platform and infrastructure have revolutionized the taxi business.
"A genuine tech firm generates new technology," says David Coveney, Director of Liverpool digital agency Interconnect IT. It does not imply that it will be sold to others. It may include technology into a product, such as Uber, which both utilizes and develops technology to help users book minicabs. It might also be like Google, which is always developing new search algorithms.
"However, technology isn't simply software; it may also be machine-based, or even something as simple as a new type of kitchen equipment." Paper is a form of technology. Glass is a type of technology. Corning creates glass and is unmistakably a technological firm. My local glass company, on the other hand, is not a technology firm. They just provide glass."
Uber is a good example since there has been debate over whether it is a tech firm or a taxi company in the past. Airbnb is also facing similar questions about whether it is a hospitality or software firm (it would like to say the latter).
The answer has far-reaching implications for how a firm runs and is governed.
Technology's reliance
Simply possessing a software platform does not automatically qualify a firm as "tech."
"We feel the answer is very straightforward," says Jamie Hinton, CEO of Sheffield-based technology consultant Razor. It's a tech firm if you take away the technology that it's built and it doesn't survive.
"It doesn't count if you buy or consume someone else's technology straight out of the box." In this instance, you're not a tech firm at all. To properly be termed a tech firm, you must have developed technology that sets you apart from the competitors.
"You don't have to offer technology outright or as a service." If technology's contribution to your business and consumers has become a fundamental part of your operations, it's time to consider whether you're a firm in X industry or a tech company that also happens to be in X industry. "A shift in concentration might be the key to unlocking your next level of development."
This is most likely the reason why Uber and Airbnb are classified as technology firms. They're identified by the software platforms they've built to disrupt sectors other than technology.
"A technology firm or startup is a company that, without its technology or their technology partner, would cease to be able to function successfully," explains James Brookes, Head of Projects at Manchester startup consultant The Startup Factory.
Companies that are focused on technology
Then there are firms that used to be in one field but now call themselves tech companies.
The Manchester-based Auto Trader is an online automobile marketplace that used to be a print journal. They're an example of a conventional business that has weathered the digital publishing storm and is now even thriving.
"I increasingly don't think of IT firms in terms of what they do, but how they do it," Alison Ross, Customer Experience and Operations Director at Auto Trader, explains. A car manufacturer, a bank, or any store may be considered a tech firm now (or should be).
"It's typically shorthand for a certain corporate culture and approach: collaborative, inventive, purpose-driven, and values-based," says the author.
Phil Hall, the UK Managing Director of digital agency Valtech, agrees.
"A tech firm, by definition, uses technology to gain a competitive edge.
"At Valtech, we think that the most successful tech firms are those who not only leverage technology to create fantastic experiences, but also keep a persistent emphasis on serving the requirements of its users and customers."
Technology in the context of culture and values
Some simply characterize technology firms as those that are guided by the industry's own culture and ideals.
"A truly 'tech' organization is one that will never stop learning," explains Amy Gornall, PR and Marketing coordinator at IT employment agency Doris. It's led by a varied collection of dedicated people that want to help our next generation have a better, smoother, and more fun future!
"They're also companies that wouldn't exist if it weren't for technology, or were founded on a technological product or service (like Doris)!" Otherwise, in today's environment, every company would be a tech company."