Value investors like Warren Buffet, on the other hand, make gambles on the assumption that not much changes. Consider some of Berkshire Hathaway’s holdings: American Express, Visa, Mastercard. American, Southwest and Delta Airlines. Bank of America, Bank of New York, Wells Fargo, Goldman Sachs. Verizon, Apple, IBM. People will always want to buy stuff, fly places, manage their wealth, communicate, and automate their lives with tech, right?
This hypothesis—VCs bet on change, value investors bet against it—was the main nugget that I ingested from Marc Andreessen’s appearance on the Tim Ferriss Show. But after a period of reconsideration, I think the difference between these two classes of investors is more subtle.
In The Net Delusion, internet scholar and critic Evgeny Morozov utters the innocuous line, “Technology changes all the time: human nature hardly ever.” This is, for me, the true difference between VCs and value investors. The former specialise and invest in all things technological. Their modus operandi is to sit uncomfortably on the bleeding edge, support promising tech, and profit in a gargantuan manner when their chosen software—or hardware—eats the world. The latter bet that while the specific manifestation of human nature varies endlessly, our core remains the same. So the difference is not so much for-or-against change, but more about technology’s ability to influence human nature and human nature’s ability to resist modification delivered via technological means.