The edge that has outperformed 10x in an increasingly efficient market

Please note, this interview was recorded Monday 13th April, 2026.

Growth investing has never been easy, but in today’s market, it may be harder than ever. Information moves faster, narratives reprice in real time, and what once looked like an edge can quickly evaporate or be arbitraged away. So, where does alpha come from when everything feels more efficient?

That was the starting point for my conversation with Joseph Ziller, founder and CIO of Ziller Funds Management, whose entire approach is built around identifying something the market consistently underweights: the power of founder-led businesses.

“The market is becoming more and more efficient over the years, and in order to earn alpha, you need to find mispricings in the market. You need to go a bit deeper.”

For Ziller, that means going beyond financials and into the harder-to-measure elements such as culture, leadership, and product value proposition. It also leads him to a compelling conclusion backed by decades of data.

“Over the past 30 years, founder-led stocks have outperformed by 10x.”

In this interview, we cover where that edge still exists, why concentration matters, how to think about valuation when nothing looks cheap, and the stocks and themes he believes will define the next leg of growth.

INTERVIEW SUMMARY

Why founder-led businesses outperform

After 15 years as a value manager and accountant - roles which focused heavily on the numbers - Ziller kept coming back to one idea. The biggest winners in markets are often driven by a small group of founders who build, adapt, and scale over long periods.

He points to a deep body of research showing founder-led companies consistently generate superior returns, and argues that the edge comes from qualities that don’t show up in a spreadsheet.

In his view, this outperformance is rooted in the "The Founder’s Mentality," a framework developed by Chris Zook. That outperformance comes down to three defining traits.

First is what Zook calls “frontline obsession,” a relentless focus on customers and product quality. Second is an “owner’s mindset,” where founders act with urgency and discipline because it is their capital at stake. Third is “business insurgency,” the instinct to challenge incumbents and reshape industries.

“These traits energise the culture and flow through to financials and long-term returns," says Ziller.

“These traits energise the culture and flow through to financials and long-term returns" says Ziller. 

Importantly, he sees this pattern repeating across history, with a small cohort of exceptional founders consistently driving the majority of wealth creation.

Concentration is a feature, not a bug

Ziller runs a deliberately concentrated portfolio, typically holding between 15 and 25 stocks. In an environment where the cost of being wrong is rising, that might seem counterintuitive. But for him, it is central to the strategy.

“Ours is designed to give targeted exposure to exceptional founders.”

Rather than diversifying broadly, he focuses on building exposure to a select group of high-quality businesses operating within structural growth themes. Risk is managed through position limits, thematic diversification, and correlation analysis.

“The key point is that around 20 stocks gives you roughly 90% of the diversification benefits available.”

In other words, beyond a certain point, diversification adds complexity without meaningfully reducing risk.

Valuation requires looking beyond the numbers

One of the most challenging aspects of growth investing is valuation. The best companies often look expensive on traditional metrics, particularly in their early stages.

“Some of the best growth stocks look expensive at the time, but prove very cheap in hindsight" posits Ziller. 

His solution is to combine traditional financial analysis with a deeper assessment of intangible factors such as leadership, culture, and execution capability.

Rocket Lab (NASDAQ: RKLB) is a clear example. At the time of investment, its financials were not overly compelling. But Ziller identified something more important.

“When we looked at the founder, Peter Beck, and the culture, we saw an exceptional ability to do more with less.”

That insight provided the conviction to invest early, before the broader market recognised the company’s potential.

Where the real growth opportunities sit

Ziller structures his portfolio around 10 structural growth themes, which he believes will drive around half of global GDP growth over the next decade.

“We focus on 10 structural growth themes that we believe will drive about half of global GDP growth.”

Among the most important are artificial intelligence, e-commerce in emerging markets, digital media, cybersecurity, and fintech.

His focus is not just on growth, but on durability. He is cautious of areas where growth is driven by temporary supply constraints rather than long-term demand.

“We’re less interested in areas where growth is driven by short-term supply constraints rather than durable demand.”

This emphasis on persistence over hype helps filter out crowded or cyclical trades.

Two stocks that illustrate the strategy

Ziller highlighted two current holdings that reflect his approach: Coinbase (NASDAQ: COIN) and Figma (NYSE: FIG) - the latter of which has been sold off aggressively since listing in August last year. 

On Coinbase, he sees a business that has evolved well beyond its origins as a crypto exchange.

“Coinbase started off as a broker and exchange, but has evolved into the technology and regulatory leader in crypto.”

Its scale is now a key advantage, holding more crypto than its next four competitors combined. That creates a foundation for future growth through new products and services. One of the most important of those is stablecoins.

“These enable faster, cheaper international payments, and volumes are already exceeding traditional networks like Visa and Mastercard combined.”

Figma, by contrast, represents a more contrarian opportunity.

“Software has sold off due to AI concerns, but we see that as creating opportunity.”

As AI accelerates software development, Ziller believes the bottleneck shifts to design, an area where Figma is deeply entrenched.

“So rather than AI reducing its opportunity, we think it actually expands it.”

Volatility as an opportunity, not a risk

Finally, Ziller emphasises that volatility is not something to be avoided, but embraced.

“Volatility is part of the process. It’s uncomfortable, but it also creates opportunity.”

He points to periods like 2022, when high-quality growth stocks sold off sharply, creating entry points for long-term investors. The key, he adds, is having conviction in your process and, most importantly, leadership. That conviction is reinforced by the longevity of the founders he backs.

“Our portfolio has founder CEOs with an average tenure of 19 years versus around 5 years globally.”

For Ziller, that experience provides confidence that these businesses can not only survive difficult periods, but also emerge stronger on the other side.

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