What constitutes a tech company in 2019?

Despite working in tech PR for most of my adult life, even I’m confused about what constitutes a technology company these days.

When I joined Wildfire 13 years ago, our definition of a tech company was, ‘any company that designs, manufactures or sells technology’. Far from arguing with our definition, I’m confident that the members of the general population who cared (not many) would have agreed with this simple definition and for me, it made identifying companies for the purposes of lead generation extremely simple.

The day the world changed

The evening that Confused.com won the tech category at a prestigious PR awards ceremony, all hell broke loose and our beautifully simple definition of a tech company went swizzling down the khazi.

Fast forward to 2019 and The Sunday Times Tech Track 100 features a range of companies that don’t come anywhere near to our definition of a tech company circa 2006. These companies don’t sell technology, let alone manufacture it. Most of them are delivering products and services to customers (particularly in B2C-land) that, I presume, couldn’t give two hoots about the technology being used per se.

Non-tech tech companies

Take Gousto as an example. In my, albeit very old and siloed mind, Gousto should sit at its highest level within the ‘food and beverage’ industry. An innovative food and beverage company, but a food and beverage company, nonetheless.

Despite this, Gousto has secured attention from a broad range of tech publications from WIRED to TechCrunch and beyond. And having read about it now in several publications, I can’t deny the strength of its tech story.

According to the company’s spokespeople, Gousto is prioritising the majority of its investment in tech to accelerate its growth, focusing on factory and logistics efficiencies through the use of automation and data.

Shaun Pearce, Gousto’s CTO, can regularly be found alongside the tech industry’s great and the good at key events including the most recent AWS Summit (where he spoke about business innovation) and is quoted regularly in the tech media. And the message is compelling: “The idea is we send you the exact ingredients so you don’t throw anything out — but we can only stand by that if we’re not throwing out a whole bunch of stuff in our warehouse as well. So our forecasting uses AI, and as a result we have an industry-leading food waste rate of plus or minus 3% accuracy; if you compare that to some of the supermarkets and what they’re throwing out, it’s quite good.” 

You’re not wrong Shaun, that is indeed quite good.

Combine this tech-led narrative with the company’s drive to get more people cooking and in turn, improve the health of the nation — Gousto has a solid social purpose story too. So much so, it’s attracted investor Joe Wicks AKA The Body Coach — a self-made health and fitness guru (despite the fact that it is publicly known that Wicks turned down a ￡1m+ contract to work with Sainsbury’s on its ready meals merely months beforehand…).

Funding and valuations

As a startup, a good reason to work hard on your tech story is that there appears to be much more funding available for ‘tech companies’ than there are for startups that position themselves in alternative sectors such as ‘food and beverage’. In January 2019, Gousto raised ￡18m, which followed and earlier funding round from the year before of ￡28.5m, which it used to “invest in its machine learning and factory automation”.

On the other side of the coin, fashioning your business as a tech company, without sufficient justification, can ultimately lead your brand into hot water a la WeWork. Harvard Business Review recently published an article which categorically claims that WeWork was not entitled to the various advantages it was afforded as a ‘tech company’, including its over-inflated valuation.

Food tech

The relatively young foodtech industry, which covers everything from agriculture to your AGA, is maturing at a rate of knots. Earlier this week, CNN reported that BIS Research predicts the global food tech market to be worth more than $250 billion by 2022.

Whether it’s making use of robotics and machines, 3D printing, drones or — as Gousto has done — applying technology to the much needed challenge of reducing waste (Forbes reports that a whopping 40% of American food is thrown away each year), foodtech is a welcome tech category and here to stay. 

What constitutes a tech company in 2019?

There are differing opinions on what constitutes a modern tech company, some of them are outlined in the HBR article mentioned above. For the purposes of my job as the primary outbound lead generator for a tech PR agency, the way I identify a tech company is by looking for businesses that are using technology not just as an enabler, but specifically that the proprietary technology they’ve developed is crucial to their competitive advantage.

Because on that basis, there’s a good chance that there is a real tech story to be told.

I’m comfortable with that. What do you think?