The impact of Masayoshi Son’s $100B fund will be profound
economist.com
economist.com
> But one investment—$20m sunk into Alibaba—is regarded as one of the best in history. The Chinese internet titan went public in 2014 in the world’s biggest IPO. SoftBank’s 28% stake in the firm is now worth $140bn.
Kind of mind-boggling who the real titan is here: Alibaba. Both Softbank and the late Yahoo (USA)'s core value were derived solely on Alibaba's market cap, able to prop up whole other companies.
I've always assumed that Softbank was getting its money from Softbank, but surprising to learn they derived most of their value from Alibaba stock just like Yahoo. If you've ever seen their Pepper robots, it's pretty indicative of how dysfunctional their main offerings are. The robot is somehow everywhere in Japan, but 100% useless as well.
> But one investment—$20m sunk into Alibaba—is regarded as one of the best in history. The Chinese internet titan went public in 2014 in the world’s biggest IPO. SoftBank’s 28% stake in the firm is now worth $140bn.
Frankly that's luck. No doubt he is smart and has smart people working for him but that's pure luck. All but one gone and that tiny $20 mil investment saves it all.
All investment is "luck" if you put it that way.
> All but one gone and that tiny $20 mil investment saves it all.
That investment didn't save it all. Softbank was a multibillion dollar company before and after their investment in alibaba. With or without alibaba, they would still be around.
Not sure where you are getting the idea that alibaba saved softbank. Softbank's Alibaba stake makes softbank very valuable, but it would be around without alibaba.
Without Alibaba they would have lost, say, 100% of their investment in the 90's. Makes a great "trust us with $100 Billion, we have a great record" pitch.
Also, "still being around" and worth a lot of money and still being trusted with investment money are two very different things.
https://i0.wp.com/www.eurotechnology.com/b/wp-content/upload...
Softbank didn't originate with Vodafone; it was already 25 years old and a sprawling conglomerate, well-known for many ventures, when it acquired the mobile operator.
Also, your chart doesn't fit your story. Softbank offered the iPhone in 2008 and the other carriers got it in 2012–2013, but that corresponds to a dip and then a very modest gain in the chart.
I would be careful to even call them just a telco.
I can say for a fact they have other robotics efforts as well. Yes they have not had the best luck in monetizing them.
Ironically, we are associated with some of their newer R&D efforts in robotics: https://skymind.ai/press/softbank
I can say they have not made ideal decisions in a lot of areas, but I wouldn't count them out based on 1 bad robot. They are a lot more diverse than that.
Source: I have softbank as a customer, have dealt with numerous executives here, and actually live in japan. I don't just read the news.
"The stake Naspers bought for just $32 million in 2001 -- when Tencent was an obscure Web firm in a nation where few people used the Internet -- is now worth $175 billion."
"While the investment has made Naspers the most valuable company in Africa, its market capitalization of about $122 billion lags well behind the value of the Tencent holding, suggesting investors assign no value to its other businesses."
https://www.bloomberg.com/news/articles/2018-03-22/naspers-s...
There have been a few massive percentage returns that have been similarly outsized over the years, not equal to the top line scale however. Peter Thiel's investment into Facebook produced something like a 5,000 fold return.
The parents of Jeff Bezos put $50,000 into Amazon in its initial $1m round, which has produced something around a $2b to $3b fortune for them (a ~40,000+ fold return).
There have also been some infamous misses that would have produced comparably extreme returns. Paul Allen owned 25% of AOL right before it become a giant; he sold his position for a few hundred million dollars in a fit, because they wouldn't allow him to buy a larger position in it; that stake would have solidly been worth $40 billion at the peak. [1]
Larry Ellison wanted to buy a very large position in Apple, in the process of returning Jobs to the CEO role. Jobs talked him out of it on a moral high ground basis. [2] It's hard to speculate what that might be worth today or if Ellison would have screwed everything up instead, could have been a couple hundred billion dollar miss.
[1] https://www.forbes.com/forbes/1999/1115/6412186a.html
[2] https://www.cultofmac.com/428587/larry-ellison-steve-jobs-sh...
Excite had the chance to buy Google way back, IIRC, for $800K by Larry and Sergey. Probably the tech would have died down there, but the founders hired the right people, chased money instead of ethics and Google is worth 3/4 of a TRILLION.
Cash for investments have to come from somewhere.
I was impressed by how fast WeWork expands. In Berlin it now has 7 co-working spaces all fairly close located. They recently bought meetup.com.
they are looking for a return of more than 10% p.a. It'll take lots of design freelancers to produce $500m in cash
I kind of wonder which way the causation runs. Those "tech multiples" are supposedly a reflection of profit & growth potential. Growth requires investment. Margins tend to be in some way linked to investment too. It's easier to have a better margin if (a) you have cheap money and (b) if you can afford to take some risks for long term gain. Both have to do with multiples.
Why doesn't Tesla have an auto manufacturer multiple?
Unfortunately, without concerted effort, the public will willfully reject an alternate history if it's more nuanced. Exhibit A, who invented the telephone?
I don’t know what skin in the game Canada has when they passed a resolution recognizing Bell Graham as the inventor.
Honestly to me it looks like there is not a clear answer. You can pick either of them you want, draw an abitrary line in the sand about what a ‘telephone’ really is and use that line to defend your choice.
Any rational argument on the topic will have to start with both parties agreeing on what a telephone is first and then looking at the two parties to see which invented their agreed definition.
It’s like knowing about ICBC, the largest bank in the world but most people have never seen a branch of it.
Couple that with them being like an investment firm outside of Japan. They could be as obscure as Berkshire, a big player, but one most consumers don’t come into contact with.
It was you not paying attention. Softbank has been doing this at a big level for ~23 years now.
They had a $40 billion stake in Yahoo at the peak of the dotcom bubble (first stake was purchased for $2m in 1995) and had invested into at least a hundred start-ups back then.
1999, Forbes, Master of the Internet
"Venture capitalists scoffed when Christos Cotsakos hit the road in the spring of 1996 to round up $9 million for his fledgling on-line brokerage, E-Trade. It took Masayoshi Son's venture firm just 30 minutes to agree to fork over the funds."
"All told, Son has invested $1.7 billion in more than 100 Internet companies. Softbank and its venture capital arm have sunk $906 million into eight Internet firms that have gone public, an investment now worth $14.1 billion. Son is now about to invest at least $1.2 billion more in the next few months. By Son's count, Softbank holds 7% to 8% of the publicly listed value of all Internet properties"
A bit of regionalism and a bit of not paying attention. They were getting going doing some local stuff (in Japan) in the early 90s when I lived there - much like ASCII was. And Sega, a bit, I guess, as they were trying to re-re-invent themselves.
They came to America (SV) about the time I got back to America - they invested in yahoo.com, and Rob Glaser's real.com, and about 100 others. Not huge amounts or huge stakes by today's standards - but still significant. They never seemed to be quite as discriminating as some of the big-name VCs that you probably know, but 1995 (or so) through 1998 (or so) was a reasonably reasonable time to be spreading your bets across the entire table.
Is this good/bad for the silicon valley ecosystem? Is there a point at which massive investment groups get treated as monoplies and regulated?
Uber and Grab (both SoftBank investments) merged into one in the Philippines: https://www.bloomberg.com/news/articles/2018-03-26/grab-vanq...
The bad news is that they are absolutely incompetent VCs. Just look at their recent investments in things like impossible io. Whenever I think who the hell in their right mind will invest in this completely bogus and fraudulent company, SoftBank comes around and buys them up with billion dollars. They have no differentiation between betting on risky startup vs betting on bogus startup. They are currently biggest party responsible for hyping up lots of startups for absolutely no apparent reason.
To be fair, if he gets one or two homeruns (like with Alibaba) the returns for the fund will be positive. Quite remarkable actually, 90% of these investments could go to zero, and he might still end up making a boatload.
Even if he did alibaba again, unlikely bc it was one of the best investments ever, the current stake is only worth $140B. If that's your only winner you'd be better off buying mutual funds
His strategy probably isn't just to get a financial return like typical VCs, he probable has more of a financial engineering / corporate raider / empire building strategy
The ride sharing market is an example. He's invested in several ride sharing cos with leadership in different geographies. If a company doesn't want his money, he can threaten to give $5B to a competitor. That's an almost predatory, and certainly not founder friendly move. not quite as aggressive as Carl Icahn for ex, but certainly not something most VCs would do (maybe I'm giving VCs too much credit).
Once he invests in a company I imagine he will use each company as a chess piece in reshaping industries. If there's a battle between two ride sharing companies over leadership of a new market, he'll probably be in a position to influence how that plays out.
So maybe the fund is less about investing in innovation and more about staking claims to pieces of the digital economy and playing a game of chess against the rest of the global tech industry
They certainly would, but they don't have enough cash to do that.
I even read somewhere he already wants to raise a second Vision fund.
No they don't. They offer fluff. This article is just fluff and years old news. Maybe because I work in the tech industry, but this article didn't offer anything of value. It doesn't take a genius to figure out that $100 billion dollar fund dedicated to tech investing ( especially in developing nations ) is going to have an impact.
The NY Post has been in circulation for over 200 years. Not sure what your point is.
> is ranked as the most trusted journalistic publication
That isn't a good thing. Think about it.
> do yourself a favor, get the print edition convince yourself. I've been a reader for years and highly recommend it.
Does it seem like I've never read the economist to you? It's information pollution. You are dumber and more misinformed for having read it. The economist along with every other media publication should come with a warning like cigarettes.