Low Tech is Bringing Sexy Back

At some point we must drop this distinction between high tech and low tech businesses. Frankly the terms have become outmoded, like the terms “space age” and “modernism,” which describe decades-old design styles. With computers and other digital technology pervading every research center, business, and household and with scientific advances accelerating in areas such as material science, medicine, and mechanical engineering, how can anyone draw the distinction between what is high tech versus low tech?

Many would still use the label of low tech to describe fields of research and business outside of the traditional investment scope of the venture capital industry. By this definition low tech is everything not directly related to innovation in information technology hardware and software, biotechnology, medical devices, or the Internet. Now nano technology and cleantech have snuck into the VC lexicon, and these fields typically involve innovation in the analog world of the physical sciences. So does this mean that low tech is now sexy to venture capitalists?

The answer is unequivocally “yes!” Digital technology is merely a tool towards an end; however, for the past 30 years we have focused on tool building. Now that high technology pervades everything, we are witnessing the commoditization of these tools (i.e., lower margins) as well as increased specialization (i.e., less market potential). Nevertheless, these tools now promote efficiency and accelerate the rate of innovation in other fields of science and business. Low tech innovation, therefore, has begun to accelerate, and the timing is perfect.

Global climate change, insatiable energy demand, food shortages, the struggle for potable water, global health epidemics, resource conservation, species preservation, aging population demands, and nuclear proliferation are challenges we must now face in order to maintain the quality of life, and even the survival of future generations. The focus of innovation has begun to shift to loftier goals than HDTV, an eCRM system, and the ability to purchase books, cars, or real estate online. To be perfectly clear, I am not denigrating these innovations. My life is better with college football in high definition, customer service reps that already know about my previous service calls, and the ability to buy almost anything online and avoid the real world shopping experience (e.g., parking, crowds and long lines). Nevertheless, high tech has now empowered us to innovate low tech, where the real action will be in this century.

We have shifted from Andrew Carnegie, Henry Ford, Thomas Edison, and Alexander Graham Bell to Robert Noyce/Gordon Moore, Bill Gates/Paul Allen, Steve Jobs/Steve Wozniak, and Sergey Brin/Larry Page as our archetypal entrepreneurs, coinciding with the shift from an analog to a digital economy. However, as digitalization and information technology empower innovation in previously low tech fields of science, both entrepreneurs and researchers should be emboldened to solve the challenges of our brave new world, whether man-made or not, and make a handsome profit in the process.