SoftBank & The Cost of Being Bold

It is one of the exciting technology investment company our there, but its recent WeWork blunder hurt its reputation built upon decades of successful investments.

Ride-Hailing Puppet Master

SoftBank has invested in almost all the ride-hailing services in the world:

As of today, Grab is majority-owned by SoftBank, not its two founders. It has even invested in Lyft, Uber’s major competitor in the US through DiDi. It is clearly responsible for the inflated valuations of ride-hailing companies.

The Master Strokes

Most of SoftBank’s returns came from its early investment in Alibaba. Softbank owns 29.4% of Alibaba and is its largest shareholder. Softbank invested $20 million in Alibaba back in 2000 when it was a young startup. In fact, Softbank founder and CEO Masayoshi Son was the one that bought into Alibaba. Softbank’s Alibaba stake is now worth nearly $125 billion.

Billion USD

Value Investor

When SoftBank invests in a company, it holds its position for a long time. It shows Son’s strategy of focusing on Value, similar to Warren Buffet. It invests only in companies that it believes will transform the future.

Biggest Strengths become greatest weaknesses

The key characteristics of SoftBank are that it is:

  1. Bold
  2. Rich
  3. Dedicated

But these have been its biggest weakness in the past few years.

  1. High Cost of failure

WeWork is in recovery mode, after a botched IPO attempt in August that ended with the ousting of cofounder Adam Neumann as CEO, and a backs-to-the-wall rescue deal with major a backs-to-the-wall rescue deal with major backer SoftBank that chopped WeWork’s valuation from $47 billion to just $8 billion.

2. Bad Timing

In the recent 50 Billion $ acquisitions at a time when the cost of raising capital was high, none have made SoftBank any money so far.

A Visionary

Masayoshi Son still is one of the most brilliant entrepreneurs and investors of our age.

  • He invested in the iPhone when it was still a secret. Masayoshi Son won iPhone exclusivity after pitching Apple cellphone to Steve Jobs. He scored exclusive Japanese rights to sell the first iPhone after pitching a crude drawing of an imagined iPod-cellphone hybrid to Steve Jobs.
  • He invested in Alibaba and Yahoo when both of them were at a very early stage. Arguably, one of the biggest returns in the age of the internet.

History has not yet made a judgment on the Vision Fund and it will take several decades to fully understand the future of technology. WeWork debacle is definitely a setback, but with the determination and vision of Son, it may again generate historic returns.

Random musings on Finance, Technology, Media, AI, and Venture Capital.