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dannykwells

Can anyone tell me an example where Softbank has been spectacularly correct in the past few years?

We all know the failures - are there any major success in their portfolio? Or is it all meh?

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The CEO Masayoshi Son lost spectacularly during the dot com crash.

https://en.wikipedia.org/wiki/Masayoshi_Son

> s of October 2021, Bloomberg Billionaires Index estimated Son's net worth at US$23.1 billion, making him the second richest man in Japan and 68th richest person in the world,[1] despite having the distinction of losing the most money in history (approximately $70bn during the dot com crash of 2000).[4]

After that the big success came with investment in Ali Baba.

https://en.wikipedia.org/wiki/SoftBank_Group

> In October 1999, SoftBank became a holding company.[21] In 2000, SoftBank made its most successful investment – $20 million to a then-fledgling Chinese Internet venture called Alibaba.[22] This investment turned into $60 billion when Alibaba went public in September 2014.[23][24]

https://visionfund.com/portfolio

ByteDance, Grab, Ola, Uber, Opendoor, Slack, DoorDash, Didi, Coupang were/are all great bets.

According to CrunchBase (https://news.crunchbase.com/news/softbank-vision-fund-strate...), as of March 31, 2021 Vision Fund 1 was worth $146.5 billion from $86.2 billion in initial investment. I don't know enough about the space to judge whether that is considered good enough or not.

This is still underperforming the sp500 who went up 87% in the same 5 years.

Investors in Vision Fund likely have the goal of returns for this investment that are not similar to the S&P 500 or other public equity indices. I'd further bet that 15-20% annualized is considered a very good result for this part of those investors' portfolios.

sp500 has both better returns and better diversification so less overall risks. And I am sure Vision Fund has higher expenses ratio than most of sp500 indexes. The only ones winning here is the execs of the fund.

You aren't understanding how capital and risk allocation work at a portfolio level. The people putting money in the SoftBank funds ALREADY have hundreds of billions invested in public equities. They are looking to diversify their portfolio across different asset classes. Your comment isn't relevant.

This is correct: an uncorrected return stream that underperforms market beta is often still highly desirable / sought after.

Probably meant *correlated

No I meant uncorrelated

maybe it's just me but the tone of this comment reads unnecessarily hostile

so they'd rather plow it in a fund that buys options on exactly the equities that make up the index? or blow it on bets like oyo, wework et al? all the while expense ratio blowing through the roof.

My brother was a buy side banker at softbank, we all know the kind of debauchery that went on in there.

If you went 5 years back, I don’t think you would have predicted that sp500 will be yielding 87%. At that point in time, SoftBank would have looked pretty reasonable. So there is a survivorship bias when people compare with sp500.

Now, let’s look at next 5 years. Would you be willing to bet that sp500 continues its streak? Would all macro-economic coincidences and government actions continue in same manner for next 5 years?

It's not as simple a comparison. We don't know the annual return % since all the money wasn't invested on day 1 but at various different points over 5 years. And the majority of it is still tied up in companies that haven't exited yet, so the value is mostly theoretical.

Sp500 is meant to be the benchmark. This is very unfair to present worst numbers than the benchmark and present it as a win even if numbers can be off.

I mean, 90% of large cap investors have underperformed the sp500. It's not about optimal returns, it's about diversification and portfolio risk. The Saudi's want some of their money in things that aren't correlated with oil, and pretty much everything in the physical word is. Technology is one of the few things that may even be inversely correlated.

https://www.cnbc.com/2020/09/18/stock-picking-has-a-terrible...

That's assuming that the Saudis are being rational with their money. Given that they are currently trying to build a city that's a straight line[0], and a "shape based" floating octagon city[1], that assumption might not be correct. It's entirely likely that the real answer has less to do with Softbank's performance and their need to diversify, and more to do with MBS liking Masayoshi Son.

0 - https://www.architecturaldigest.com/story/saudi-arabia-build...

1 - https://markets.businessinsider.com/news/stocks/saudi-arabia...

The line one actually looks brilliant. It has the appeal of letting any new growth easily happen and keep transport options simple. Though most likely there will be uneven development even on this design.

It's genuinely the dumbest city design I have ever seen, and it makes transport an absolute nightmare assuming you're interacting with real technology and not magic.

Cities are generally round for a good reason. You put the important stuff in the middle and your average transit trip remains as low as possible. Straight lines do the opposite, as you guarantee that each new resident is in literally the worst possible position for transit possible, and you over tax the center’s transit in order to move people to the ends of the line.

Oh, and consider the cost for things like sewage and water. They’re a bit component of a city’s cost, and here they’re laid out as inefficiently as possible.

May be. But think not about the utilization or optimization for a moment and focus on the maintainability and buildability aspects. Something that looks this regular probably be both built and maintained through pure automation. I mean self driving is super simple in this layout (as they mention their transport is automated). Compare the same to the ever expanding cities that quickly run out of central space and end up having a premium center and poor suburbs.

Obviously line is not the only thing that can provide these benefits. How about a large square or circle with the center purely reserved for green space. Anything beats the shitty cities we have today where people stay outside because they cant afford the rent and have to travel towards the center for work.

Vision Fund's minimum term is 12 years, and it will likely go on for a lot longer than that. Comparing its very early years to a stock market bull run is pointless. Like 40 out of 400-500 total investments have even seen an exit yet.

The pandemic killed a lot of good bets at Soft Bank. The rogue wave was not kind to anyone.

> According to CrunchBase (https://news.crunchbase.com/news/softbank-vision-fund-strate...), as of March 31, 2021 Vision Fund 1 was worth $146.5 billion from $86.2 billion in initial investment. I don't know enough about the space to judge whether that is considered good enough or not.

Also Crunchbase is imperfect data so those numbers could be WAY off for all we know.

For growth stock ... doesn't seem very impressive.

But consider how big they are, probably not too bad?

Yahoo, Alibaba?

That did not happen "in the past few years"

Question was "are there any major success in their portfolio?", time period was not specified.

Maybe you want to read the comment again?

Sorry. Overlooked the first part of the question.

Pretty much a bunch of tech-illiterate people buying the latest buzzword without due diligence. Lighting money on fire. Even the successes were bought at the all time high prices (Bytedance) or mismanaged (Arm) and brought negative returns.

Take a look at these comical slides from Softbank back when they took over WeWork after it collapsed: https://news.crunchbase.com/news/the-best-slides-from-softba...

Depends on what you mean "past few years", and also VisionFund is huge as has a finger in a lot of pies. https://visionfund.com/portfolio

If we talk news worthy stuff, ByteDance could be the biggest name on that list ?

Basically they won big with Alibaba and everything else is... not great.

So probably about the same as most VC companies.

I honestly can't tell how the Softbank vision fund is doing. News articles on it report record breaking profits and losses. The two vision funds were recently-ish reported as being worth $150b, but I can't tell what that translates to in annualized returns, or how that looks relative to the NASDAQ.

They are the main investor in goPuff which will win the instant needs market.

Really? You think gopuff is going to win that space? Why?

The “This Week in Startups” podcast from last week, episode 1378, interviewed the CEO.

They are hiring their own drivers and building their own delivery hubs, meaning products you order are coming from their hubs, not from CVS or Walmart. They have more control over efficiency.

They even acquired BevMo and are converting those into hubs.

I'm still skeptical that anyone will win that space. The core problem (instant delivery logistics in a dense urban area) is just too expensive for the average consumer to bear. Right now every player is VC subsidized, but what happens when that money dries up?

The core problem is the whole business model is a solution looking for a problem. The number of people who actually need this is tiny, the rest are just being lazy and as soon as it gets expensive they’ll stop being lazy. The only way around this is to ‘disrupt’ local shops out of business which I’m sure is the plan and afaict that’s a net negative for everyone apart from them.

Why do you think it’s (eventually) too expensive? Do you think distribution is too expensive?

No, the labor is too expensive. Ultimately you are paying someone for a couple hours of work, plus spending on vehicle deprecation, gas, parking, storage, all to deliver someone a packet of chips.

Wasn't GoPuff in the news lately for spending tens of thousands of dollars per week on Instacart? The magical cycle of VC money...

How do they scale demand for peak times with a fixed workforce? It seems trivially easy for say Uber to start hubs if they wanted to and they have a huge existing base.

But it comes down to execution and it will be interesting to see the space in another 5 years.

They own the hubs but the drivers are technically contractors like all the others.

Softbank stake in Alibaba is worth north of $80 billion.

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