top of page

On Avoiding “Technology”

You can listen to this episode here:

Many investors, particularly those brought up in the traditional “value investing” school, pride themselves on avoiding “technology.” The term “technology” is used derisively to refer to anything new, anything one does not understand.

That’s a very counterproductive attitude. If we were setting up shop in 1860, there would be very little to invest in—by modern standards, anyway. Yet that period was the start of a series of technological revolutions: railroads, electricity, telephone, and the internal combustion engine, to name a few. Entirely new business models, and enterprises, were created.

An investor insistent on avoiding technology would’ve been left behind, like a buggy whip manufacturer unwilling to understand the automobile.

The author Douglas Adams once wrote that “I’ve come up with a set of rules that describe our reactions to technologies: Anything that is in the world when you’re born is normal and ordinary and is just a natural part of the way the world works. Anything that’s invented between when you’re fifteen and thirty-five is new and exciting and revolutionary and you can probably get a career in it. Anything invented after you’re thirty-five is against the natural order of things.”

As investors, we must lean against this innate tendency to dismiss the new.

A more useful definition of technology is that espoused by Clayton Christensen in The Innovator’s Dilemma: “Technology […] means the processes by which an organization transforms labor, capital, materials, and information into products and services of greater value.”

That’s tremendously refreshing. Everything around us is technology, and at one point, it too was considered high tech: the wheel, indoor plumbing, and everything else you take for granted (because it was invented before you were born).

Judging by the steepness of technology adoption curves, the world is indeed changing faster than ever, at least in domains touched by information technology (which are many; after all, software is eating the world, in the words of Marc Andreessen).

Investors unwilling to be learning machines and to stay on top of new technologies do so at their—and their investors—own peril.


bottom of page