Joseph Ziller explains why he bought founder-led SaaSpocalypse stocks on the way down and the reason a defence IPO is on his watchlist.
When tech stocks took a beating earlier this year over fears of AI disruption, it created an opportunity for Joseph Ziller. As the founder and CIO of Ziller Funds Management, a lot of businesses that fall under his founder-led investment strategy tumbled to more attractive valuations.
Among the buys were names like Pro Medicus and Axon Enterprise, which have both experienced strong recoveries after deep drops. It’s a strong argument for Ziller’s founder focus, where he goes beyond the financials and looks at the person running the show.
That’s also the rationale behind his latest watchlist pick. It’s not a company that investors can find on the public markets yet, but with chatter about an IPO on the horizon, Ziller is keeping an eye on defence products firm Anduril.
In this Q&A, Ziller breaks down the case for the SaaSpocalypse stocks that are making a recovery, why SpaceX’s post-IPO sell-off is this week’s win, and shares the piece of advice he gives to every new investor.
Ziller Funds Management’s Joseph Ziller
What’s your most recent investment and why?
Pro Medicus (ASX: PME) — our first Australian holding, purchased in February. We’d tracked it since the Fund’s inception in 2022: it passed our Founder and Business filters from day one, but the valuation only recently became attractive.
Founder-CEO Dr Sam Hupert is a rare combination — the clinical insight of a practising physician with the relentless execution of a tech entrepreneur. Visage 7, the company’s imaging platform, is the technology benchmark in radiology software: its streaming architecture opens even the largest studies in under a second, which is why it has become the platform of choice for America’s top academic health systems.
The AI-driven derating of software stocks over the past year — the so-called SaaSpocalypse — offered us a compelling entry point in February. Over time, we believe it will become clearer that Pro Medicus is a beneficiary of AI as imaging volumes grow and AI tools get deployed through exactly the kind of platform Visage has built.
Which investment did you add to your watchlist this week?
We run a tight global focus list of 80 structural winners led by exceptional founders. No changes this week — but alongside it we track the IPO pipeline for names in our hitting zone, and we added one: Anduril (Defence Tech), founded by Palmer Luckey.
As a teenager, Luckey amassed the world’s largest private collection of VR headsets and built his own prototypes in his parents’ garage, funding the work by repairing phones and cleaning boats. When his future co-founders first saw the Oculus Rift, it was a tape-covered brick buried under cables. Within two years, Facebook bought Oculus for US$2 billion.
Anduril is the second act: a US defence company built to mass-produce low-cost autonomous systems. It funds development with its own capital and sells finished products at fixed prices — the inverse of the primes’ cost-plus model. Cheap, scalable autonomy is the thesis here.
“We’re not a defence contractor — we’re a defence products company. When we fail to make a product that works, we don’t get paid… Imagine if the iPhone had been built on a cost-plus contract — it wouldn’t have worked.” — Palmer Luckey
What is the most recent investment you have trimmed or sold and what drove this decision?
Axon Enterprise (NASDAQ: AXON). We added through the SaaSpocalypse and the stock rallied 80% from its April lows to its early-July peak. We trimmed into that strength as valuation became less compelling.
Since listing in 2001, Axon has compounded at more than 30% a year — a total return of ~100,000%. Founder Rick Smith started the business with a personal mission — to make the bullet obsolete — after two friends were killed in a shooting. Thirty-three years on, he still runs it, still owns it, and is still obsessed with it.
Tasers, body cameras, digital evidence — Axon is the operating system of American policing. At the centre sits Axon Evidence: 400+ petabytes of mission-critical data across more than 18,000 agencies. Churn is close to zero as switching providers risks compromising evidence in live prosecutions.
The SaaS sell-off was an opportunity to double down on a rare compounder at a rare price — mispriced on the same fear that hit Pro Medicus: that AI kills the software incumbent. Both own the layer AI must ship through to reach the end user.
For Axon that’s the point of capture — cameras and Tasers at the edge — and the evidence data behind it, so AI in policing arrives through Axon as revenue, not against it as competition. Quarterly results are proving this out with AI revenue growing roughly 700% year-on-year last quarter.
What’s your favourite chart or data point from this week?
One I was thinking about a bit this week.. a chart posted by Brian Armstrong, Founder and CEO of Coinbase (portfolio holding) on AI token spend. As tech-forward companies lean into the power of AI, the explosion in token spend is becoming a key financial bottleneck. Brian detailed how Coinbase has managed to halve their token costs while increasing their token usage.
One of the interesting implications for us, as holders of Palantir as well, is that Palantir’s Ontology — its pre-built ‘dictionary’ of every enterprise’s data, workflows, and assets — is exactly the infrastructure that solves this problem at scale for enterprises: rather than each AI agent burning expensive tokens reconstructing context from scratch, Palantir as orchestrator hands it a precise, pre-labelled briefing, meaning companies running Palantir’s platform can grow their AI usage without a proportional blowout in compute costs.
What was your weekly high – a standout market moment or highlight?
SpaceX (NYSE: SPCX) sold-off back to IPO levels. We are keen buyers of SpaceX at the right price and are excited about the growing opportunity to own this stock. Low-cost reliable launch is in scarce supply with SpaceX having a near monopoly here.
By owning this short supply, SpaceX has one of the few sets of keys unlocking the application layer. For example, SpaceX’s Communication division grew revenue 50% last year at high 30s operating margin with the division now representing ~60% of SpaceX’s total revenue.
What was your weekly low – a market disappointment or challenge from the week?
Memory stocks ripping early in the week. We are believers in the AI infrastructure rollout and are positioned accordingly, however, we have aligned with businesses with higher through-the-cycle returns on capital.
What first drew you to markets or this sector and what continues to keep you inspired today?
My mum was a counsellor, and my dad was a banker. What drew me to markets and one aspect that I still love today is learning about the people behind the numbers. The brilliant leaders. We’ve found there to be asymmetric upside here, with the best leaders often deeply undervalued in the market. This is the core thesis of our Fund.
What’s one piece of advice you’d give to new investors?
There are experts who have a track record of being right and experts who have a track record of eloquent reasoning. When they disagree, which can be often, follow the one with the track-record of being right.
How do you unwind when you’re not thinking about the market?
Nature walks with my wife.
Rapid fire!
What is your favourite investing book?
The Outsiders — William Thorndike.
What is your favourite investing or finance/markets related podcast?
How I Built This with Guy Raz.
What’s the first thing you read each morning?
My top follows for each portfolio holding on X.
What is your favourite restaurant?
Bessie’s & Alma’s.
What’s something people are surprised to learn about you?
I counted cards at the casino during university.
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