Dear Tech CEO, Now is the Time to Grow Sales and Profits

During the dotcom days we often made trips to San Jose and Washington, DC to meet with tech companies and heard stories of how fast rent was increasing for commercial office space. In fact, commercial real estate was perhaps the biggest long-term beneficiary of the dotcom bubble days.

Today’s economy is so very different. The pandemic coupled with “future of work” tech has narrowed down the economy to two primary sectors: tech and healthcare.

The valuations of commercial real estate, urban real estate, apartment buildings, retail, restaurants, hospitality, etc. have been decimated by the current environment with no end in sight.

Moreover, massive amounts of investment dollars have become available thanks to central bank and government policies.

All this while companies need tech more than ever to help them transition to the post-pandemic way of working. SD-WAN, cybersecurity, collaboration, UCaaS, e-commerce, fintech, etc., are all on the upswing.

As a result, much of this money is pouring into tech and healthcare startups.

In short, we are looking at a continued tech boom.

What this means is competition for marketshare is going to continue to heat up. Not just from incumbent companies afraid to lose it but the new entrants who have a war chest to spend.

Most importantly, cloud, microservices and other technologies have made newer companies more efficient than their predecessors, meaning they can more quickly react to customer needs.

In many cases, these startups are wiping out established companies in terms of their growth rates and marketshare. The contact center as service space (CCaaS) is just one example of where this is happening.

An excellent article from Harvard Business Review argues that you shouldn’t cut you budget in a recession. Written by Nirmalya Kumar and Koen Pauwels, the piece discusses how Reckitt Benckiser actually grew revenues by 8% and profits by 14%, when most of its rivals were reporting profit declines of 10% or more because they viewed advertising as an investment rather than an expense.

Tech CEOs need to realize that now is the best time to gain or at least hold on to share. More importantly, while parts of the economy are slowing, tech is booming because companies realize now, more than ever, it helps them embrace the new normal way of working. Still, tech companies are going to lose customers due to bankruptcy because they happen to be in unlucky sectors such as restaurants or hospitality. Tech companies need to replace these unlucky customers with new companies in growing spaces. This is yet another reason to actually invest in your company’s growth via marketing.


 

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