There was a time, not too long ago, where the “tech” sector was huge. There was a large group of young, quickly growing companies developing or popularizing new technologies, and an audience of millions of investors eager to get a piece of the action.
Today, we still have this paradigm, to an extent. When people mention “tech stocks,” they’re likely referring to companies like Apple, Microsoft, Google, and Amazon – tentpoles of the core “technology” industry responsible for creating the devices, cloud products, and services that continue to change the way we live and work.
But on another level, this differentiation is becoming somewhat arbitrary. In many ways, every new company in the modern world is a tech company.
How did this change manifest – and does a change in our terminology really matter?
The Need for Core Tech
Every company is a tech company, even if it doesn’t directly innovate new technologies itself. Why? Because modern companies – even those in traditional industries and those operating in a small, niche, local capacity – are practically required to invest in core technologies to operate efficiently.
- Websites. Every modern business needs a website. For some, it functions as a digital billboard. For others, it’s a centralized location where your customers can find information, research your top products, and eventually buy from you.
- eCommerce platforms. In line with this, many modern companies sell exclusively or primarily through an online platform. Customers can conveniently add products to a cart and check out online – even if they live halfway across the country.
- Customer portals. Some companies use technology to give consumers more transparency and accessibility; it’s possible for a customer to log in, review past purchases, research their subscription options, and manage their data – all without needing to consult with a human agent.
- Marketing and advertising. Most modern companies rely on tech, like automated bidding platforms and analytics apps to control their digital marketing and advertising. Even if your company still relies heavily on traditional advertising methods, like printing and distributing brochures, you’ll be relying on online platforms and high-tech internal systems to make them a reality.
- Internal communications. Of course, most modern businesses also rely heavily on technology for internal communication systems. Phone calls and text messages are still used frequently, but most organizations need a variety of other high-tech platforms to communicate effectively. These include things like online chat, email, and project management platforms where people can exchange ideas and resources fluidly.
- Internal productivity. It’s also important for modern businesses to invest in internal productivity software to boost the performance of employees. For example, time tracking software makes it easier to account for time spent on various projects and identify points of weakness or inefficiency.
- Tracking and monitoring. Even more importantly, new tech allows companies to track and monitor just about everything. Robust IoT systems allow businesses to keep tabs on their products and inventory at every operational stage. Other platforms can track employee productivity and project progress.
- Social media engagement. Most consumers expect businesses to have a social media presence – even if they’re in a more traditional industry. Social media serves as a public, tech-focused extension of a brand.
- Customer service. Technology also allows companies to provide more in-depth customer service. Customers can self-serve with online educational resources, FAQ pages, chatbots, and live agent chats – or submit a ticket through an automated online system.
- Data analytics. Every business needs to invest in some form of data analytics; it’s the only way to truly gauge how your business is performing, figure out your strengths and weaknesses, and eventually adapt.
Do you know of any operational companies in the modern world that don’t integrate or use these technologies?
Additionally, modern companies face enormous competitive pressure to adopt and harness the full power of new technologies.
- Products, services, and customer appeal. New tech can allow businesses to invest in new products, new services, or other forms of customer appeal. A restaurant that offers online ordering is instantly more valuable and more competitive than another restaurant that only serves walk-in customers (all other things being equal).
- Efficiency and productivity. Technology is also important for boosting the efficiency and productivity of a given business. Even if all you do is incorporate a new accounting system or automate a handful of otherwise manual tasks, you can save yourself hours of time and effort. If a competitor incorporates time-saving technology on a big enough scale, it’s practically impossible for any non-tech-savvy company to compete with them.
- Bottom-line profitability. Better technology also leads to higher bottom-line profitability (in most cases). Assuming the tech offers a modest return on investment, it can save you time, save you money, and help you get more paying customers – all simultaneously. These benefits also tend to compound with the addition of complementary tech products and services.
If all your major competitors are incorporating new tech to see these benefits, how can you expect to thrive in such an environment?
Expansion and Growth
It also stands to reason that any company hoping to expand or grow is likely going to need the help of technology to do it. When it comes to payroll, inventory tracking, accounting, and other critical systems, only scalable, flexible software platforms have the capacity to help a business scale up. It’s technically possible to grow in an entirely manual, effort-powered way, but it’s incredibly difficult to remain competitive with such an approach.
That said, there are some modern businesses that have no intention of scaling – such as local restaurants or bars – so this factor may not apply to them.
Today’s youngest adults are technically members of Gen Z – also sometimes affectionately called “zoomers.” Our oldest millennials are approaching their 40s, while Generation X is rising to become an elder generation.
Given that even Generation X grew up in a fast-paced technological era, our business environment is now almost completely dominated by young people who appreciate the value that new technology can bring (and who often prefer engaging with technology to engaging with human beings). Accordingly, there’s more pressure – both from business leaders and from employees – to adopt new technology and incorporate it into the core business model.
What’s in a Name?
The term “tech company” may be outdated, given that every modern company relies heavily on technology and must innovate, in some way, to survive. So what? Does this distinction really matter beyond a discussion of semantics?
Changing how we define and think about tech companies could have a variety of positive changes. For starters, “old school” businesses that have historically been reluctant to adopt new technologies or change their business models may feel more pressure.
Understanding that their company is, in fact, a “tech company,” whether it started that way or not, can lead to a meaningful reimagining of the company’s operations and internal culture.
This could also force us to redefine and segment the existing “tech sector” (as it exists in its purest form). Describing a company as a “tech company” is no longer meaningful. It’s important to create new broad segments and classifications that allow us to have better conversations and conduct research that matters.
Additionally, this idea establishes a new precedent – that you don’t necessarily have to invent an entirely new technology to be an innovator in the tech space. Instead of creating an entirely new product or service, you can merely change how you use products and services that are already on the market.
In some ways, this discussion is largely subjective; whether or not a company is described as a “tech company” is somewhat arbitrary, since it doesn’t directly change what the company does or who its target audience is.
Still, it’s valuable to reestablish just how dependent on technology modern companies are – and reinforce the true value of tech innovation, even within traditional types of companies.
Image Credit: pixabay; pexels
Fintech Kennek raises $12.5M seed round to digitize lending
London-based fintech startup Kennek has raised $12.5 million in seed funding to expand its lending operating system.
According to an Oct. 10 tech.eu report, the round was led by HV Capital and included participation from Dutch Founders Fund, AlbionVC, FFVC, Plug & Play Ventures, and Syndicate One. Kennek offers software-as-a-service tools to help non-bank lenders streamline their operations using open banking, open finance, and payments.
The platform aims to automate time-consuming manual tasks and consolidate fragmented data to simplify lending. Xavier De Pauw, founder of Kennek said:
“Until kennek, lenders had to devote countless hours to menial operational tasks and deal with jumbled and hard-coded data – which makes every other part of lending a headache. As former lenders ourselves, we lived and breathed these frustrations, and built kennek to make them a thing of the past.”
The company said the latest funding round was oversubscribed and closed quickly despite the challenging fundraising environment. The new capital will be used to expand Kennek’s engineering team and strengthen its market position in the UK while exploring expansion into other European markets. Barbod Namini, Partner at lead investor HV Capital, commented on the investment:
“Kennek has developed an ambitious and genuinely unique proposition which we think can be the foundation of the entire alternative lending space. […] It is a complicated market and a solution that brings together all information and stakeholders onto a single platform is highly compelling for both lenders & the ecosystem as a whole.”
The fintech lending space has grown rapidly in recent years, but many lenders still rely on legacy systems and manual processes that limit efficiency and scalability. Kennek aims to leverage open banking and data integration to provide lenders with a more streamlined, automated lending experience.
The seed funding will allow the London-based startup to continue developing its platform and expanding its team to meet demand from non-bank lenders looking to digitize operations. Kennek’s focus on the UK and Europe also comes amid rising adoption of open banking and open finance in the regions.
Featured Image Credit: Photo from Kennek.io; Thank you!
Fortune 500’s race for generative AI breakthroughs
As excitement around generative AI grows, Fortune 500 companies, including Goldman Sachs, are carefully examining the possible applications of this technology. A recent survey of U.S. executives indicated that 60% believe generative AI will substantially impact their businesses in the long term. However, they anticipate a one to two-year timeframe before implementing their initial solutions. This optimism stems from the potential of generative AI to revolutionize various aspects of businesses, from enhancing customer experiences to optimizing internal processes. In the short term, companies will likely focus on pilot projects and experimentation, gradually integrating generative AI into their operations as they witness its positive influence on efficiency and profitability.
Goldman Sachs’ Cautious Approach to Implementing Generative AI
In a recent interview, Goldman Sachs CIO Marco Argenti revealed that the firm has not yet implemented any generative AI use cases. Instead, the company focuses on experimentation and setting high standards before adopting the technology. Argenti recognized the desire for outcomes in areas like developer and operational efficiency but emphasized ensuring precision before putting experimental AI use cases into production.
According to Argenti, striking the right balance between driving innovation and maintaining accuracy is crucial for successfully integrating generative AI within the firm. Goldman Sachs intends to continue exploring this emerging technology’s potential benefits and applications while diligently assessing risks to ensure it meets the company’s stringent quality standards.
One possible application for Goldman Sachs is in software development, where the company has observed a 20-40% productivity increase during its trials. The goal is for 1,000 developers to utilize generative AI tools by year’s end. However, Argenti emphasized that a well-defined expectation of return on investment is necessary before fully integrating generative AI into production.
To achieve this, the company plans to implement a systematic and strategic approach to adopting generative AI, ensuring that it complements and enhances the skills of its developers. Additionally, Goldman Sachs intends to evaluate the long-term impact of generative AI on their software development processes and the overall quality of the applications being developed.
Goldman Sachs’ approach to AI implementation goes beyond merely executing models. The firm has created a platform encompassing technical, legal, and compliance assessments to filter out improper content and keep track of all interactions. This comprehensive system ensures seamless integration of artificial intelligence in operations while adhering to regulatory standards and maintaining client confidentiality. Moreover, the platform continuously improves and adapts its algorithms, allowing Goldman Sachs to stay at the forefront of technology and offer its clients the most efficient and secure services.
Featured Image Credit: Photo by Google DeepMind; Pexels; Thank you!
UK seizes web3 opportunity simplifying crypto regulations
As Web3 companies increasingly consider leaving the United States due to regulatory ambiguity, the United Kingdom must simplify its cryptocurrency regulations to attract these businesses. The conservative think tank Policy Exchange recently released a report detailing ten suggestions for improving Web3 regulation in the country. Among the recommendations are reducing liability for token holders in decentralized autonomous organizations (DAOs) and encouraging the Financial Conduct Authority (FCA) to adopt alternative Know Your Customer (KYC) methodologies, such as digital identities and blockchain analytics tools. These suggestions aim to position the UK as a hub for Web3 innovation and attract blockchain-based businesses looking for a more conducive regulatory environment.
Streamlining Cryptocurrency Regulations for Innovation
To make it easier for emerging Web3 companies to navigate existing legal frameworks and contribute to the UK’s digital economy growth, the government must streamline cryptocurrency regulations and adopt forward-looking approaches. By making the regulatory landscape clear and straightforward, the UK can create an environment that fosters innovation, growth, and competitiveness in the global fintech industry.
The Policy Exchange report also recommends not weakening self-hosted wallets or treating proof-of-stake (PoS) services as financial services. This approach aims to protect the fundamental principles of decentralization and user autonomy while strongly emphasizing security and regulatory compliance. By doing so, the UK can nurture an environment that encourages innovation and the continued growth of blockchain technology.
Despite recent strict measures by UK authorities, such as His Majesty’s Treasury and the FCA, toward the digital assets sector, the proposed changes in the Policy Exchange report strive to make the UK a more attractive location for Web3 enterprises. By adopting these suggestions, the UK can demonstrate its commitment to fostering innovation in the rapidly evolving blockchain and cryptocurrency industries while ensuring a robust and transparent regulatory environment.
The ongoing uncertainty surrounding cryptocurrency regulations in various countries has prompted Web3 companies to explore alternative jurisdictions with more precise legal frameworks. As the United States grapples with regulatory ambiguity, the United Kingdom can position itself as a hub for Web3 innovation by simplifying and streamlining its cryptocurrency regulations.
Featured Image Credit: Photo by Jonathan Borba; Pexels; Thank you!