Hey Everyone,

It's good to be back on Strawman. Feels like a fresh start, and what better way to restart than by diving into the ever-fascinating world of ASX tech?

This time around, my focus is squarely on the new cohort of ASX tech companies. But before we gaze into the crystal ball of future potential (and AI!), I think it's crucial to anchor ourselves in the lessons of the past.

Let's cast our minds back to the class of 2016. Just take a moment to reflect on those names and where they are now. It's frankly astonishing. By some measures, they've delivered an average 20-bagger return in a decade.

And that brings me to a somewhat painful, but essential, confession. For the last five years, I've been consistently tripped up by one fundamental error: I haven't let my winners run.

Like many, I fell victim to the siren song of valuation metrics. Everything always looked too expensive. "Surely this can't last," I'd think. "The multiples are stretched." And so, I'd trim, I'd sell, I'd rotate into something "cheaper."

The hard truth? I was wrong. Dead wrong.

The lesson, hammered home by the rearview mirror of the class of 2016, is this: Valuation metrics can be incredibly misleading when you're dealing with truly exceptional, compounding growth stories. Businesses that relentlessly grow revenue and earnings attract investor demand regardless of what traditional metrics scream. And that demand fuels further valuation expansion, even if it seems "unreasonable" on paper.

My own private investing bears testament to this. Remember Pro Medicus (PME)? I dipped my toes in back in 2022, felt clever for a year, and then… I sold. "Locked in a profit!" I told myself. Fast forward, and that round trip cost me a gut-wrenching 100% return. A 100% return I could have captured by simply… doing nothing and focusing on the bigger picture of their earnings and cash flow trajectory.

The real cost wasn't the profit I didn't make on a trade; it was the opportunity cost of missing out on truly compounding capital.

So, as we turn our attention to the new generation of ASX tech – and I've listed some names below (open to your suggestions, community!) – I'm approaching it with a renewed perspective. I'm still realistic. I don't expect a repeat of the 2016 cohort's phenomenal run. But I also recognize the potential, especially with the AI wave potentially creating new service layers and opportunities.

This time, I'm determined to prioritize compounding potential over the seductive, but often misleading, comfort of rigid valuation rules. The class of 2016 taught me a valuable lesson, and I’m hoping to apply it to this new era of ASX tech.

What are your thoughts? Are there companies missing from this initial list? And how are you navigating the challenge of valuation versus growth in today's market? Let's discuss.