The Internet has spawned scores of individual millionaires, but we are still adding up whether investors in aggregate will prove to have made money from the technology, given how much capital was committed to its development. The past experience of the railways, motor car and aircraft industries is salutory in this respect. Many of the potential gains from these new technologies were competed away through a surfeit of investment, to the benefit of consumers but at the expense of investors.
5. Winning the technology battle is no guarantee of commercial success. Nor does the best technology always win
The winners of these competitive struggles are not always those who have the best technology, but those who can most clearly see the way that an industry or market is likely to develop.
6. Insiders usually make the best returns from new technologies
Thanks to the Model T, Ford was able to achieve and sustain compound returns to its investors of more than 50% per annum for nearly 20 years. Unfortunately, the company was so successful financially that it was entirely self-financing throughout this period. Only the initial investors who participated in its first fundraising in the early 1900s enjoyed the benefit of these returns (but note that this company was the third that Henry Ford started, the other two having failed).10. Understanding technology is a vital component of generating superior returns – but investing in early-stage technology companies is a losers’ game
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