Thursday December 24, 2020 |Big tech trends

All tech is not big tech

Most tech companies are small businesses. While big tech sets the tone for the media coverage of the entire tech industry, it's helpful to keep in mind that most tech companies are not "big tech". There are countless retailers, independent brands, digital product creators, and others that have found ways to create businesses that thrive online.

It's not helpful to assign the negative qualities associated with big tech to every digital-native company. Three are undoubtedly problems with the way many tech companies operate and there are worthwhile questions about monopolistic behaviors, shifting shopping habits away from local businesses, etc. Most tech companies would prefer a more level playing field where it's not a near requirement to pay a tax to big tech with growth.

The current environment is dominated by a few companies because most people choose to spend time on a select few properties. With shopping, most default to Amazon. For search, most go to Google. For social, most use a Facebook property. And for iPhone, users add new features via the App store. It's quite difficult to gain enough of an audience to thrive without going through at least one of those four companies.

This is not entirely unlike the physical world. If a store wants shoppers, they must pay rent to the commercial property owner. To provide a social setting, restaurants and bars do the same. However, there's a big difference in the upfront costs, as well as the potential for risk and reward.

Operating a physical business is a big upfront cost. Rent is extremely expensive, overhead costs are high, and it's nearly impossible to start without making a big leap entailing a high risk. In the best case, retailers and restaurants can make a decent profit that is capped both in terms of profit margin and total revenue.

Meanwhile, starting a digital native business is a much lower risk endeavor. The upfront costs are low, it's relatively easy to launch side projects, it's easy to take many bets, and it doesn't require a huge leap of faith at some point.

Most tech business are borne out of the same entrepreneurial spirit as the classic physical business owner. They both look to serve a community in a meaningful way. A digital-native business is not antithetical to a physical business. There are for more similarities between them than between most tech companies and 'big tech.'

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