The biggest mistake investors make is that they think about technology adoption as binary — it either works or it doesn't. But the more important question is where you are on the S-curve, because the returns are radically different depending on whether you're investing at the beginning, the middle, or the end of that S-curve.
The best investors in technology don't just understand the technology itself — they understand where they are on the S-curve. Most people anchor to the present and extrapolate linearly, but the whole game is recognizing when adoption is about to inflect and when it's about to plateau.
The mistake most investors make is they think about technology investing as stock picking, when really it's about cycle recognition. If you can identify where you are on the S-curve of a technology's adoption, the individual stock selection becomes almost secondary to being in the right part of the cycle at the right time.
The business of investing in technology is really the business of identifying where you are on the S-curve, because most of the money that's ever been made in technology investing has been made by people who correctly identified that they were in the early innings of a very long S-curve, and most of the money that's ever been lost has been by people who thought they were in the early innings when they were actually in the late innings.
Compute is still growing exponentially. But AI adoption curves often look like S-curves... there's going to be deceleration. So OpenAI shot up to basically a billion MAU, monthly active users... that curve is slowing down. There's just no way you can be like, yeah, actually, we're expecting 10 billion ChatGPT users next year because there aren't 10 billion people.
