Don’t we love labels?
Yes, we do. At least psychologists agree. It helps us categorize and put things into place, into perspective. But when we talk about startups, they are assumed to be tech- by the entrepreneurs themselves and everyone else.
We wonder, why is that.
The startup culture
Entrepreneurs were misfits, risk-takers, market leaders and many other things- more than the number of startups out there. This was an ecosystem of businesspersons and entrepreneurs providing employment to people otherwise. But, then the number of people graduating from universities increased. Especially engineers. There were more engineers than the market could employ. They had no option but to create jobs for themselves by starting their own ventures. Entrepreneurs who founded startups in the tech industry also helped alumni from their institutions get jobs at their startups.
The advent of web 2.0 acted as fertilizer for the growth of entrepreneurial ventures. With new technologies coming up, there were more and more opportunities for techpreneurs to grab them. The novelty of tech also attracted curious customers and the whole industry saw a boom that saw more success than failures. Investors- especially the ones those who were a part of the lemming culture realized this boom and started pumping money into the tech industry.
Due to the sudden success of so many startups, it also gained media attention. Blogs, articles, research papers, news pieces, columns, were full of overnight success stories and how another startup raised another seven-digit figure.
The startup era even included startups that teach you how to startup.
Stereotypes and typecasts
After gaining all this media attention, tech startups became ubiquitous. Everyone wanted to be a part of Silicon Valley and the startup culture to become overnight millionaires. After the dot com bubble crash, this was the next bubble that was blowing up.
Then came statistics. 90% of startups fail. This figure included a maximum number of tech startups. Why? Because there were more tech startups. All the startup reportage had glamorized entrepreneurship which not only created a trend of tech but also gave unrealistic expectations of the returns to entrepreneurs and investors for the return on investment they must bank on.
Some other stereotypes that birthed out of this boom were that the industry welcomes only the young, that it was the quickest way to make millions, that coding must be your second language, that Silicon Valley must be your core vision, that the tech world is devoid of creativity and design amongst many other baseless perceptions.
The startup culture was then, both romanticized and criticized.
Pros and Cons
Is categorizing your startup a strategic decision or a factual one?
Yes, there are a few perks that are involved in being a tech company. For example, attracting a huge chunk of investors. There is a value in being attached to a trend. But, it must stay substantial to you.
Let's determine that through some pros and cons of being a 'tech startup.'
Positives:
• Appeals to new talent
• Attracts funding
• Some tax incentives and subsidies (depending on the country the HQ is located in)
Negatives:
• Invest in the wrong talent
• Unrealistic growth expectations
The existential choice
So why to adopt the tech label?
Are you a tech producing company or a tech-enabled company? How do you define your own functionality? What is it that you are providing the customer? There are a few questions you need to answer before you brand yourself as a tech startup.
Let’s look at the case of Uber- a startup that is getting investment left, right and center. The primary provision of Uber is to get you a ride. Although, it is a tech company instead of a transportation company.
There is a myriad number of jargons that have managed to enter the startup space.
FinTech (Financial Technology)
EdTech (Educational Technology)
LegalTech, HelathTech, CivicTech and even SexTech. You get the drill, right?
Tech has become a ubiquitous word in the startup world.
At the end of the day, what matters is the needs of the customers, the gap you are trying to fill in. Not technology.
These overapplied labels might seem to have surpassed their usefulness, but categorization helps us understand better when we are entirely unfamiliar with the concepts.
The real deal
Today, companies across every industry- from finance to fashion are adopting the tech label. Shakespeare once said, What’s in a name?
In that case, why do branding studios give out naming service?
Today, every company is at least a little bit of a tech company but the real question is, is tech a substantial part of your startup?
Because when you brand yourself as a tech startup, you enter a sea of literally thousands of other startups posing as a part of the tech ecosystem. According to classic branding theories, standing out is what gets you the deserving attention. At the same time, if tech is what describes you the best, become the best in tech.
— by Manas, Content Strategist, Slangbusters Studio
