The problem is that this labelling does nothing but infer potential profitability.
1. Notice how the author mentions the term "tech industry"? However, when most people talk about "tech companies" they refer to it as an industry. It's not.
2. People get lost in the semantics and just think companies are a binary "tech co" or "not a tech co". I disagree. Tech is actually an operating model which can help propel a company into high gross margins. When we analyze businesses we usually put them on a spectrum of "IT Support Business" -> "Tech Enabled Business" -> "Tech Lead Business" (with the latter synonymous with that people call a "tech company").
3. A "Tech company" and a "software company" is nothing more than an investors way to imply underlying business fundamentals, which usually translate into high gross margins. It can often be used to cloud judgement about the actual underlying fundamentals.
1. Notice how the author mentions the term "tech industry"? However, when most people talk about "tech companies" they refer to it as an industry. It's not.
2. People get lost in the semantics and just think companies are a binary "tech co" or "not a tech co". I disagree. Tech is actually an operating model which can help propel a company into high gross margins. When we analyze businesses we usually put them on a spectrum of "IT Support Business" -> "Tech Enabled Business" -> "Tech Lead Business" (with the latter synonymous with that people call a "tech company").
3. A "Tech company" and a "software company" is nothing more than an investors way to imply underlying business fundamentals, which usually translate into high gross margins. It can often be used to cloud judgement about the actual underlying fundamentals.