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I'm not very optimistic about Uber, but where else can you potentially get a 10x return on a 10 digit investment?

Retric 10y ago
Lot's of smaller but good investments vs a lower quality bad investment. The best option for sovereign wealth funds is probably buying the widest possible swath of companies that reach some basic criteria. I suspect they do massive deals because internal politics means being in charge of such a deal let's you gain more power even if it costs the country on average because a huge win on a 3.5 billion investment means little at that scale.
- harryh 10y ago
  Splitting up money into a bunch of smaller investments significantly decreases your chance of an outsized return and increases your chance for achieving the mean return for that asset class.
  - Retric 10y ago
    A sovereign wealth fund already faces this problem as 3.5 billion is peanuts (aka under 1%) to them. Now if they could get a 10x return in one year that would be something, but a tiny odds for a 10x return in a decade is not worth the significant risks involved in such a terrible investment.
    - harryh 10y ago
      You might be correct that Uber turns out to be a terrible investment. But there are a lot of smart people out there that disagree with you. And, unlike you, a lot of them have gotten to look at the details of Uber's financials. I share your skepticism, but I'm not super confident in that belief.
      - sslayer 10y ago
        If Uber can stay afloat until we have full adoption of self-driving cars, they will profit big-time. They will have a fleet of cars at almost no cost to them as car owners get in line to sign up to rent out their car during "off" periods.
        tyingq 10y ago
        That's the bit I wondered about. If they are losing 120 to 800 million per quarter, are there enough investors willing to wait through those losses for X years? I've heard wildly varying estimates for the value of X.
      - Retric 10y ago
        Another way of looking at this is they want to invest 0.5% of the worlds capital you can't get above 'market' rates for very long. And the longer you do, the harder this becomes. However, you can easily get below market rates.
hkmurakami 10y ago
Backing the top 10 VC funds as LPS -- then again they're probably already doing that.

Lot's of smaller but good investments vs a lower quality bad investment. The best option for sovereign wealth funds is probably buying the widest possible swath of companies that reach some basic criteria. I suspect they do massive deals because internal politics means being in charge of such a deal let's you gain more power even if it costs the country on average because a huge win on a 3.5 billion investment means little at that scale.

harryh 10y ago
Splitting up money into a bunch of smaller investments significantly decreases your chance of an outsized return and increases your chance for achieving the mean return for that asset class.
- Retric 10y ago
  A sovereign wealth fund already faces this problem as 3.5 billion is peanuts (aka under 1%) to them. Now if they could get a 10x return in one year that would be something, but a tiny odds for a 10x return in a decade is not worth the significant risks involved in such a terrible investment.
  - harryh 10y ago
    You might be correct that Uber turns out to be a terrible investment. But there are a lot of smart people out there that disagree with you. And, unlike you, a lot of them have gotten to look at the details of Uber's financials. I share your skepticism, but I'm not super confident in that belief.
    - sslayer 10y ago
      If Uber can stay afloat until we have full adoption of self-driving cars, they will profit big-time. They will have a fleet of cars at almost no cost to them as car owners get in line to sign up to rent out their car during "off" periods.
      - tyingq 10y ago
        That's the bit I wondered about. If they are losing 120 to 800 million per quarter, are there enough investors willing to wait through those losses for X years? I've heard wildly varying estimates for the value of X.
    - Retric 10y ago
      Another way of looking at this is they want to invest 0.5% of the worlds capital you can't get above 'market' rates for very long. And the longer you do, the harder this becomes. However, you can easily get below market rates.

hkmurakami 10y ago

Backing the top 10 VC funds as LPS -- then again they're probably already doing that.