Operators make better owners

Technology is easy to admire and hard to own. The economics of a software or infrastructure business are visible in a spreadsheet; whether they survive contact with customers, regulators and competitors is visible only from the inside.

Having built technology operating companies, the firm reads a technology business differently. It asks who actually pays, how long they stay, what it costs to serve them, and what happens when a well-funded competitor decides the same market is attractive. It is sceptical of growth that is bought and respectful of growth that is earned.

That is not caution for its own sake. Concentrated, long-held positions in technology businesses with real economics have been among the best investments of the past two decades. The point is to find the businesses, not the narratives.

The views expressed are those of Tao Capital Management Limited and are general in nature. They do not constitute investment advice and do not refer to any particular holding.