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Comment by Havoc | Hacker News Reader

They'll make it work.

Worked with the SB guys briefly and my take on it was that they're willing to stack the chips higher than anyone else. And if gravity gets in the way they'll keep stacking until gravity no longer applies

Despite the mockery and we work drama I reckon their all or nothing strategy is sound. If this project fails it'll probably be concurrent with a SV collapse in which case does it even matter?

If you're gonna take risks that involve catastrophic failure anyway you might as well bet big on upside

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> If this project fails it'll probably be concurrent with a SV collapse in which case does it even matter?

If I invest $100 in MSFT and you invest your entire life savings in MSFT when the share price goes down it kind of does matter.

>If you're gonna take risks that involve catastrophic failure anyway you might as well bet big on upside

Or, to put it more reasonably, if you're going to take high risk opportunities do it with a chunk of investment you're able to lose, don't risk your entire company on it - which Softbank seem to do. Does it not concern you that Softbank almost managed to bring their entire business into jeopary because of a single failed investment?

>If I invest $100 in MSFT and you invest your entire life saving

Thats missing the point I'm trying to convey. Try this analogy:

If you owe the back 100 Mil you've got a problem. If you owe the bank a 100 billion the bank has a problem.

The rules shift if you up the stakes enough. Return, time frames, values etc start becoming malleable concepts. You think it's a coincidence that masa talks about 300 year time frames?

Not convinced this will work. But I am convinced he's a step ahead of everyone else in rolling this dice. And if it does work it'll crush everyone else.

>Or, to put it more reasonably

Nothing about this is reasonable. That's why it could work

> If you owe the back [sic] 100 Mil you've got a problem. If you owe the bank a 100 billion the bank has a problem.

SoftBank is big, but not big enough to threaten the solvency of the Gulf states. Nobody has an incentive to bail out the Vision Fund apart from Masa. He’s already raiding SoftBank's balance sheet.

The reason the bank line works is banks are highly leveraged. A small hole blows the stack. That gives the $10bn borrower leverage over the trillion-dollar bank. Not so with the Vision Fund, where the prime LPs are lending out of equity and the employees are the ones leveraged.

But they won't owe the bank 100 billion. They're going to owe several totalitarian states 100 billion. They're going to owe money to the guys that chopped up Jamal Khashoggi.

The thing is though, 100 billion is a lot for venture capital, but it's less than 1/10th of the market cap of some of the largest publicly traded companies. That's part of why everyone is so skeptical of Softbank, because the second they come into contact with a liquid market, they have problems.

>Nothing about this is reasonable. That's why it could work

No. Even if it does work that will not be why.

Definitely disagree. You're essentially making the argument that Softbank is too big to fail. This is not true.

> If this project fails it'll probably be concurrent with a SV collapse in which case does it even matter?

It certainly matters. SV collapses are not and should not be the end of the world for strong companies - indeed that is how you separate the wheat from the chaff. Many companies came through the tech bubble collapse in 00 just fine and some are still going strong today.

If you're running a company that will be wiped out by the next SV collapse, you're in a fragile position and might want to rethink your strategy.

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