As the founder of PayPal, and the one of the first external investors in Facebook. it’s hard to argue that Peter Thiel doesn’t understand innovation or technology companies. But in his new book, Zero to One. Thiel takes somewhat of a radical approach to these concepts, drawing a line in the sand that may irk many traditional tech firms, as well as their investors.

Despite being both the largest and most well-known firm in The Valley, Thiel’s personal opinion is that Apple ( NASDAQ: AAPL )  isn’t much of an innovator these days: Just a few years ago, Apple’s stock was a bet on new technology — today, it’s a bet against it (at least according to Thiel).

In a recent phone interview, Thiel told me why he doesn’t consider firms like Apple, and most of the members of the Nasdaq 100, to be technology companies, and what that might mean for their investors.

An odd transformation

Thiel has somewhat of a problem with the concept of a tech firm — or at least, what people generally define one to be. In Thiel’s mind, true technology companies are firms leveraged to innovation — to new business models designed to shake up the status quo. Plenty of firms begin their life as a tech company, but those that find success often become something quite different.

A whole bunch of the Nasdaq 100 stocks are bets against innovation. it’s a long list. [There’s] a very short list of companies where you’re actually betting on innovation. Most of [the members of the Nasdaq 100] just throw off huge cash flows, and the risk is actually that there’s some innovation. These companies are always described as ‘tech stocks’ because they were tech stocks. at some point in the past, but [today] they’re bets against technology.

Although most still consider Apple, Oracle, and Microsoft to be technology firms, few hold the same opinion of General Motors. Yet according to Thiel, it’s all relative — simply a matter of timing and perspective.

GM was a tech stock in the 1920s — it was still sort of a tech stock in the 1950s. [But] by the 1980s, you invested in GM as a bet against German and Japanese innovation. You said, ‘I’m long GM because Germany and Japan are never going to build cars that are that good.’ At some point, a lot of these tech stocks become weirdly changed to being bets against technology. [Of course] the companies can never say that, because their internal narrative and their external story is [based] so much around how they were historically innovative.

Know what you’re buying

Admittedly, General Motor’s transformation from technology firm to incumbent took decades, but Thiel believes the shift is often far more straight-forward: Simply look for the founder to depart. With Apple, the change occurred just over three years ago, with the passing of Steve Jobs that thrust Tim Cook into the spotlight.

Thiel is a fan of Cook’s management skills (I think Tim Cook has done a very good job in an impossible position to try to fill Steve Jobs’ shoes, he told me) but believes the Apple story is fundamentally different with him at the helm: Once, people bought stock in Apple because it was creating revolutionary new products — today, it’s all about the cash flow.

No one is investing in Apple because they think it will create new products. People are investing in Apple because it’s generating massive cash flows, and the bet is that the cash flows will go on [for] somewhat longer than people think. that the rest of the world will not innovate; will not succeed in closing the gap.

While plenty of investors may disagree with Thiel (the new Apple Watch, for one, gives investors something to look forward to) it’s indisputable that Apple is generating billions of dollars of cash, largely on the back of one product: the iPhone. Apple generated $10.3 billion in cash flow alone last quarter — enough to acquire many members of the S&P 500 outright. The iPhone brings in more than half of Apple’s revenue, and likely the bulk of its profits.

Not a bad investment

But even if Apple’s best work is behind it, it doesn’t make it a bad investment. In fact, Thiel believes Apple could be an excellent stock — so long as the iPhone cash-cow continues to deliver.

Apple [will keep] generating massive cash flows so long as nothing much changes — as long as it maintains a certain brand lead, a certain premium on the iPhone. [If so,] it will generate huge cash flows [for many years]. the risk is that other people will catch up.

That risk could come from rival handsets. Competitors like Xiaomi and OnePlus have attracted a fair amount of attention recently for their quality handsets, which they sell at a fraction of what Apple charges for the iPhone. Or it could come from advanced wearables — watches and other gadgets designed to replace the traditional smartphone. It may come from a radical reinvention of the handset — something like Project Ara, that shakes the current smartphone business model to its core.

Of course, it may not come at all — or if it does come, not for many, many years. In which case, the cash flows should continue, and Apple should reward its shareholders.

Maybe there’s not much innovation happening. Maybe people overestimate innovation. but I think it is very helpful to try to get the framing right and understand, ‘OK, I’m betting against technology here.’

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