This article originally appeared in The Tennessean.
Believe it or not, there was once a time when being a nerd wasn’t all that cool.
Often shunned by the popular kids, our big thick glasses and obsessions with things like “Star Wars,” Dungeons and Dragons, and computers, sometimes made life difficult.
But somewhere along the line, something changed.
With the dawn of the dot-com era in the 90’s, entrepreneurs and investors started seeing that technology was more than just a weird hobby for us geeks. Bill Gates, Steve Jobs, and a slew of pocket-protected-billionaires showed the world that starting a “tech company” could make you super rich.
This was good news for me and my fellow tech geeks.
For the first time, nerdiness was popular. Companies began to embrace tech not only as a critical component of their success, but also as a core part of their identity.
With the dawn of the dot-com era in the 90’s, entrepreneurs and investors started seeing that technology was more than just a weird hobby for us geeks. Bill Gates, Steve Jobs, and a slew of pocket-protected-billionaires showed the world that starting a “tech company” could make you super rich.
This was good news for me and my fellow tech geeks.
For the first time, nerdiness was popular. Companies began to embrace tech not only as a critical component of their success, but also as a core part of their identity.
Is Uber a tech company or a transportation company? Is Peloton in the technology business or is it a fitness company? Is Netflix a tech company or an entertainment company?
Some argue that it doesn’t matter. And others point out that it’s not an either/or description. But given that a company’s identity has a significant impact on everything from raising money to recruiting employees, understanding who you are is essential.
Perhaps the most well-known corporate identity crisis in recent years is the case of the shared office space rental company WeWork. WeWork raised billions of dollars positioning itself as a tech company. Despite billions of dollars per year in losses, the firm was valued as a big tech growth player at $47 billion before investors began to realize that the company was really in the real estate rental business. As a real estate company, WeWork’s value dropped to less than $3 billion—turning it into one of the worst investments of all time.
But claiming the tech company label when you’re not a tech company can hurt more than just wealthy investors. It can threaten small and medium sized businesses as well. For those without deep pockets, managing limited resources is even more critical. Understanding who you are and how you generate revenue drives how you spend precious time and money. Understanding your identity ultimately can be the difference between success and failure.
So, what is a tech company?
Most companies are technology users, and many companies depend on technology to run their business. But true tech companies have at least one of the following characteristics:
- Most of their revenue comes directly from technology products and services. There are obvious ones, like Microsoft, Apple, Dell, or IBM – they sell tech.
- The technology they use to deliver their services is customer-facing. Uber, Netflix— their technology a key part of their service that enables customers to use their services.
- Technology is what differentiates them from their competitors. Like Tesla, their tech is what makes them distinctive.
- Technology allows them to expand without large capital investments. For every new user on Facebook and Amazon, their costs remain relatively unchanged. This allows them to grow their profits quickly.
As cool as it might seem to be a tech company today, being a nerd is not so easy. Whether you’re an investor or an entrepreneur, before joining the nerd bandwagon, take a look in the mirror, and make sure your pocket protector and glasses are firmly in place.
JJ Rosen is the founder of Atiba. A Nashville software development and IT consulting firm.
