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The fund isn't about building stuff. It's about trying to acquire key components of the digital and internet based economy. So mergers and financial stuff is th

The fund isn't about building stuff. It's about trying to acquire key components of the digital and internet based economy. So mergers and financial stuff is the intent -- it's essentially a digital infrastructure fund. 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.

aaavl2821 8y ago
I think it will be much much more difficult to get a market beating return with a $100B fund than the $1.7B SoftBank invested back in the 1990s. The denominator is a huge issue -- to get a 3x on a $100B fund, which most VCs target and what is roughly needed to beat the market over the ~10 year life of a fund you need your investments to generate $200B of value. That's 25% of Alphabets value for reference. So if 90% go to zero, he'd not only need to catch the next Google but also would need to own 25% of it when it's worth $800B 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
- petra 8y ago
  Can you please explain your last sentence ?
  - aaavl2821 8y ago
    I think the vision fund will probably act less like a typical VC fund and more like a private equity / leveraged buyout fund. Rather than invest in really early but promising companies, invest in companies that are more mature and are leaders in industries with high growth potential. And then use your huge wallet as a weapon to move and shape those industries as you see fit 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
    - charlesdm 8y ago
      > but certainly not something most VCs would do 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.

aaavl2821 8y ago

I think it will be much much more difficult to get a market beating return with a $100B fund than the $1.7B SoftBank invested back in the 1990s. The denominator is a huge issue -- to get a 3x on a $100B fund, which most VCs target and what is roughly needed to beat the market over the ~10 year life of a fund you need your investments to generate $200B of value. That's 25% of Alphabets value for reference. So if 90% go to zero, he'd not only need to catch the next Google but also would need to own 25% of it when it's worth $800B 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

petra 8y ago
Can you please explain your last sentence ?
- aaavl2821 8y ago
  I think the vision fund will probably act less like a typical VC fund and more like a private equity / leveraged buyout fund. Rather than invest in really early but promising companies, invest in companies that are more mature and are leaders in industries with high growth potential. And then use your huge wallet as a weapon to move and shape those industries as you see fit 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
  - charlesdm 8y ago
    > but certainly not something most VCs would do 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.