"Tech" companies

 Apparently, "tech" has become synonymous with web startups.

Frankly, I think that this is bullshit.

Admittedly, successful web startups sometimes require a fair amount of technological knowledge and expertise. Is is not for nothing that Google hires some of the best software engineers, and some of the scientific research and engineering coming out of Google is amazing. The same applies to Facebook.

However, in most cases, the real technological challenges only come with success. Most web startup business models are easily bootstrapped. And the average retail web business, even if successful, will hardly venture into unexplored technological areas. Recommendation engines? User clustering? Get a copy of Machine Learning for Hackers or Programming Collective Intelligence and get over it - these things have been solved, at least up to the second or third approximation (and check out the Netflix Prize for the fourth and fifth).

"High tech", or just "technology", in their true meanings, comprise much more than just web technology. What about gene sequencing technologies, biocatalysis, solar cells, power transmission, electric cars, flying into space?

Of course these companies qualify as "high tech", much more so than many companies actually labelled as "tech".

I would like to suggest that the true tech companies are those with business models built on a fundamental extension, or improvement, of existing technology.

So why is it that the web sector has so successfully claimed the label "tech"? I don't have an answer to this question -- but I would like to note that there is a vested interest of web startups, and indeed web startup clusters, in suggesting that the sets of "technology startups" and "web startups" are mostly identical.

So why is it that the public (replace with"many journalists"/"bloggers", if desired) has (have) accepted this confusion of terms? Two factors, in my opinion, are

• Technological complexity. It is much more complicated to evaluate the prospects of a true tech company than the business model of an arbitary pseudo-tech online retailer.
  
  True tech investment often requires a bet on the odds of success of an unproven technology. You better have some solid technical understanding if you want to be successful in these bets.
• Scalability, consumer-centric. A successful online shoe retailer can easily scale to millions of customers (or so the thinking goes). If this works out, there are going to be huge returns for the investors.
  
  For true tech companies, things are often not that clear. Scalability arguments often assume a certain uniformity on the customer side of things. High-tech customers, however, do not tend to be particularly uniform in their needs and desires.
  
  (Potentially, however, there are huge returns for investors too, partly driven by the potential monopolization of ideas due to patents.)

In summary, web technology startups promise easier returns than true technology startups, and simplicity is a big driving force behind reporting and perception. There are not many people, apart from those who already know better, who have an interest in pointing out that web tech != tech.

Note that I am not in any way against web startups - rather to the contrary. However, the (primarily societal and secondarily financial)  returns from tackling a big problem - such as cancer, renewables, etc. - are probably much bigger than the returns of tackling a small problem - such as creating an efficient online marketplace for shoes.

We should all keep on trying to make small improvements - such as efficient online markets for everyday goods. However, this should not prevent us from focusing on the more important stuff at times.

Radioactivity, guys - stay tuned!