Why Do Traditional Investors Miss Disruptive Technology?

Martin Casado says traditional investors miss disruptive technology because they judge revenue quality before anyone knows the pricing model. Business models always lag disruptive technologies. Nobody knew how to monetize the internet at the start, and the shift from perpetual to recurring took years of argument.

A traditional finance mindset, applied too early, is not evaluating the technology or its disruptive power. It looks at the quality of revenue, which pulls the investor toward technology that is not disruptive, because a disruptive product often has no known business model and no known market size. If the belief is that technology creates the market, market size is the wrong worry.

Each way of investing can be legitimate. The failure is mixing them. Calling yourself a disruptive-technology investor while screening for good net revenue retention does not hold together.