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Tech, SectorTech, Tech-enabled, AI-enabled

Ryan Frederick | February 29th, 2024 | Dublin, OH

Every industry sector now has its tech label. Agtech, Fintech, HealthTech, and so on. However, this has created a problem because many companies and products that align with one of the categories do so because they are more tech-enabled than full-on Tech. Associating to a {insert sector}Tech label makes a tech-enabled company seem more like a pure technology play. It creates a problem for the companies, customers, and investors when the tech enablement piece doesn’t become a core part of how the company operates and remains a tool, but this won’t slow down or stop it.

Tech-enabled itself is an interesting term. It means a company that uses technology in a unique and differentiating way to operate more efficiently than competitors, thereby being of more value to customers, investors, and overall. In some cases, this happens and works. Still, in many cases, more than the tech enablement is needed to drive enough efficiency and scalability for a company, causing it to remain a primarily non-scalable company at its core with a lower-than-expected margin. Tech enablement helps, but more is needed for the company to cross the threshold from a non-tech company to a tech company. Suppose more than the tech part of a tech-enabled company is required to take over a meaningful part of a company’s core operations to help a company do more faster. In that case, the Tech is window dressing for positioning purposes.

So how did we get here? Tech-enabled companies and their associated tech sector became all the rage mainly to get higher valuations, raise investment, and be more appealing to customers than traditional companies in an industry. An AgTech company sounds way more interesting than an Ag software or an Ag company. As Tech grew as an industry and became widespread, it facilitated a need for companies to be more specific about what sector they were working in. It became a way to categorize tech companies like SIC codes for general business sectors. This categorization was fine until it wasn’t. Now, tech-enabled companies, with Tech being only a tiny part of what a company does and how it does it, attach themselves to a tech sector and, therefore, get viewed as tech companies when they aren’t.

Being tech-enabled is not a tech company. Across every industry, companies are tech-enabled, and no one would consider them pure or core technology companies. Insurance, banking, hospitality, restaurant, retail, and so on are now tech-enabled, but they provide a non-tech product or service at their core. Every company is tech-enabled, yet not everyone should be referred to {insert sector} Tech and be considered a tech company.

Accelerators and conferences have contributed to the {insert sector}Tech labeling and tech-enabled morass. It is nearly impossible to go to a startup, innovation, Tech, or digital conference and not have the schedule be divided into {insert sector}Tech tracks. Accelerators now have {insert sector}Tech specific programs and cohorts. Sometimes, the programs are with a sponsoring company, such as a retail giant only keen on seeing RetailTech ideas and products. Because some venture firms have funds with a thesis in investing in a particular sector, accelerators will respond with sector-specific programming and cohorts.

Tech-enabled isn’t inherently wrong. Every company should be tech-enabled at this point. However, saying you are tech-enabled doesn’t change your core product, service, or operating model. Tech-enabled means a company is strategically leveraging Tech as a tool. Nothing wrong with that. It gets wonky when a company believes it is a tech company at its core rather than acknowledging its use of Tech as a tool.

AI-enabled is sure to be the next label that companies and products use to describe themselves, and just as with Tech, most of them won’t be AI companies at their core but a company that uses AI as a tool. Will things go as far as to have AgAI, FinAI, RetailAI, etc? I hope not, but probably. It will happen for the same reasons {insert sector} Tech has. We can’t help ourselves. We like things with labels and categories. It helps us understand and compartmentalize the world, even if the result is squishy and messy.

So be Tech, tech-enabled, or AI-enabled; just be clear about which and why you are what you are and act accordingly. Believing and acting like you are something you aren’t doesn’t play out well.