Finding the Next Great Tech Compounders | John Tinsman

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Sep 25, 2025

In this discussion, John Tinsman, the portfolio manager of the AOT Growth and Innovation ETF, shares insights from his investing journey, focusing on low marginal cost businesses. He emphasizes the transformative power of AI in enhancing profitability and software development. John explains the concept of digital toll booths as a future model for software, and he contrasts today’s profitable tech firms with the dot-com era. He also shares his strategies for portfolio construction, advocating for large-cap growth technology as a sustainable investment choice.

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INSIGHT

Modern Tech Is More Profitable Than Dot‑Com Era

Today's tech winners are more profitable than many prior-era growth darlings, reducing bubble-like failure risk.
The NASDAQ now contains companies with higher average profit margins than the S&P 500.

INSIGHT

Scale Limits Differ For Digital Firms

The law of large numbers matters less for low marginal cost firms because growth can be extended via new digital services and monetization.
John argues large tech firms can keep innovating and scaling without the same physical constraints.

ADVICE

Avoid Highly Dilutive Small‑Cap Tech

Avoid small-cap tech with large stock‑based compensation because it dilutes shareholders and reduces upside.
Prefer large-cap profitable tech that buys back shares and keeps compensation as a small revenue percentage.

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In this episode of Excess Returns, we sit down with John Tinsman, portfolio manager of the AOT Growth and Innovation ETF (AOTG). John shares how his investing journey began, the lessons he learned from both successes and failures, and how those experiences shaped his current investment philosophy. We dive deep into the concepts of low marginal cost, profitable growth, digital toll booths, and the transformative impact of AI. John also discusses his approach to valuation, position sizing, and why he believes large-cap growth and technology will continue to lead in the years ahead.

Main topics covered:

John’s path from personal investing to launching an ETF
Lessons learned from early stock picks and market-making experience
The power of low marginal cost businesses and long-term compounding
How AI is reshaping software development, innovation, and profitability
The importance of revenue and earnings growth in stock selection
Digital toll booths as the future of software business models
Differences between profitable vs. unprofitable growth companies
Why technology leadership today differs from the dot-com era
The role of sectors, valuation, and position sizing in portfolio construction
John’s views on growth vs. value, large-cap vs. small-cap, and future innovation trends

Timestamps:
00:00 The riskiest thing in investing
02:00 John’s background and early investing journey
05:00 Lessons from Apple, Boeing, Visa, and Potash
10:00 Insights from agriculture and value investing
12:00 AI’s impact on software development and innovation
16:00 Sectors, classifications, and thematic approaches
18:00 Comparing AI disruption to past bubbles
21:00 Profitability in today’s tech companies
22:00 Will the top companies stay dominant?
26:00 Large-cap vs. small-cap technology investing
28:00 Growth vs. value in today’s market
30:00 Demographics, Buffett’s lessons, and sector shifts
34:00 Value vs. software companies
35:00 Digital toll booths explained
37:00 Growth sustainability and digital infrastructure
40:00 Semiconductor cycles and long-term demand
44:00 Screening for growth and low marginal cost
47:00 Sell discipline and valuation checks
49:00 Position sizing and portfolio management
51:00 ETF tax benefits and structure
53:00 Where AOTG fits in portfolios
54:00 One belief peers disagree with
56:00 One lesson for the average investor
57:00 Closing thoughts and outro