“We’re a tech-focused company for X” has become one of the most improperly used phrases in the startup ecosystem.

Many early stage founders think that calling themselves a tech company makes their startup “sexy” for investors and talent. The things that make your company “sexy” to stakeholders are your mission, product, service, growth and profit. It doesn’t matter if you’re a tech company or not.

These founders seem to miss the fact that savvy investors (you know, the type you really want on your cap table) see through all of this. Investors who know what they’re doing aren’t influenced by catch phrases and commonly used labels — you shouldn’t take their money if they are. Well, maybe you should.

Most successful companies aren’t tech companies; they’re tech enabled. What that means is that they use technology to make their business more efficient. Honestly, most successful companies are either tech enabled or have a lot of untapped potentional because they aren’t. HyreCar is a great tech enabled company. They have an engineering team, a mobile app, and a proprietary way of using technology to match drivers with available vehicles, yet most of their employees fill roles that have nothing to do with technology (e.g. sales, marketing, customer service, etc.).

It can be difficult classifying your business especially if your startup relies on technology. Here’s a simple question that will help you define your type of business:

“A tech company uses technology to create an unfair advantage in terms of product uniqueness or scale or improved margins. Ask the question: Could this company exist without technology? If the answer is no, it has to be a tech company.” —  Greg Bettinelli

Labeling yourself as a tech company when you’re not one can do a lot of damage, and it may not be immediately apparent:

  1. You’ll hire unneeded talent
  2. You’ll focus on the wrong areas of business
  3. You’ll take longer to go-to market

Many founders are adamant about building software from the ground up without realizing that they are trying to reinvent the wheel. There is rarely good reason for doing so. For example, your company’s app may need a scheduling component which may seem easy to build from the ground up but turns out to be very difficult. Instead of building your own scheduler, it would make sense to use an existing solution. Using off-the-shelf solutions will allow you to focus on the core product/service. Don’t be afraid to outsource anything that isn’t absolutely vital for your business. Here’s a great way to think about building on other people’s work:

“It’s best to leverage the work of others to craft your ‘perfect’ product and then along the way, if you find things that need to be optimized/further developed, they can be put on your technology roadmap.” — Anthony Kelani

It’s better to focus on using existing solutions or outsourcing early stage work for custom software so that you can benefit from experts in the field. Trying to position your startup as a tech company for aesthetics could push you away from hiring the right type of sales, marketing, customer support and product design people.

Tech companies have fundamentally different cultures and growth metrics. Investors expect tech companies to grow quickly. Having a board that bought into the business because they thought it was something else could be suffocating. You should spend as little time as possible making sure investors are happy, all of that time should be spent on growing your business.

So, what’s the point?

You’re better off owning the fact that you’re not a tech company. That doesn’t mean that your startup doesn’t use technology, it just means that your core focus is on something else. You simply use technology to enable your business to outcompete competitors — and that’s OK.