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Anyone think that SoftBank seems to be investing a dangerously large amount of money in these startups, which could be a big risk if there's multiple failures?

Anyone think that SoftBank seems to be investing a dangerously large amount of money in these startups, which could be a big risk if there's multiple failures? Or is it all good if it's private money?

chx 8y ago
Based on https://www.cnn.com/2018/10/15/tech/softbank-stock-saudi-arabia/index.html https://www.cnn.com/2018/10/15/tech/softbank-stock-saudi-ara... https://techcrunch.com/2016/10/14/softbank-and-saudi-arabias-pif-planning-100bn-tech-fund/ https://techcrunch.com/2016/10/14/softbank-and-saudi-arabias... it seems about half of that is Saudi money, a quarter of it is SoftBank money and while there are a few trust accounts among the SoftBank principal shareholders https://group.softbank/en/corp/irinfo/stock/ownership/#sec-01 https://group.softbank/en/corp/irinfo/stock/ownership/#sec-0... they do not seem to have a large percentage. How bad it would be if the Saudis would lose a few (ten) billion dollars, that I can't tell. Arm Holdings is held fully by SoftBank and the Vision Fund, should they fail, i am not sure what would happen but my guess is Arm would get out of the tumble relatively unscathed, it's too valuable.
liftbigweights 8y ago
Masayoshi Son ( founder of SoftBank ) is legendary for betting big and winning big and also betting big and losing big. During the dotcom boom, he became the richest man in the world for a few days by betting big and then during the crash, he lost almost all of his net worth. https://www.quora.com/How-did-Masayoshi-Son-lose-70-billion-during-the-dot-com-crash https://www.quora.com/How-did-Masayoshi-Son-lose-70-billion-... He was able to maintain power and keep softbank afloat while losing billions during the dotcom crash. So he has powerful backers and contacts who believe in him and are willing to carry him during rough times. That's very rare. In many ways, he reminds me of bezos and musk. For some reason, they are able to get the support of big money while losing a lot of money.
Iv 8y ago
They are using the mud-shotgun technique: throw a thousand mud piles at the wall and see which one sticks. It may fail but it can't be a worst investment than just giving it away as dividends.
shry4ns 8y ago
I think it's setting a very dangerous precedent. A lot of startups may be overvalued because of these massive investments
- anonymous5133 8y ago
  IMO, It is quite obvious there is a bubble in tech forming. I look at some of these companies and don't even know how they can justify the current investor expectations. I see people justify amazon's high valuation by saying stuff like "well if they get x % of WORLD retail sales...". It just shows the lack of depth in understanding that these people have. I am sure there is similar overly optimistic views occurring in the VC space as well.
IBM 8y ago
I mean it's obviously bad for the LPs if it all goes to zero. But there's no systemic risk to the financial system that taxpayers will have to shoulder if that happens, which is what the government or regulators should care about.
anonymous5133 8y ago
Yes, of course there is going to be a lapse in their due diligence at some point. It is just like the whole housing crisis in 08. Banks eventually were giving money to practically everyone and then we all know what happened in the end. As a VC, at some point, you need to get your money back plus a return to keep the fund going.

chx 8y ago

Based on https://www.cnn.com/2018/10/15/tech/softbank-stock-saudi-arabia/index.html https://www.cnn.com/2018/10/15/tech/softbank-stock-saudi-ara... https://techcrunch.com/2016/10/14/softbank-and-saudi-arabias-pif-planning-100bn-tech-fund/ https://techcrunch.com/2016/10/14/softbank-and-saudi-arabias... it seems about half of that is Saudi money, a quarter of it is SoftBank money and while there are a few trust accounts among the SoftBank principal shareholders https://group.softbank/en/corp/irinfo/stock/ownership/#sec-01 https://group.softbank/en/corp/irinfo/stock/ownership/#sec-0... they do not seem to have a large percentage. How bad it would be if the Saudis would lose a few (ten) billion dollars, that I can't tell. Arm Holdings is held fully by SoftBank and the Vision Fund, should they fail, i am not sure what would happen but my guess is Arm would get out of the tumble relatively unscathed, it's too valuable.

liftbigweights 8y ago

Masayoshi Son ( founder of SoftBank ) is legendary for betting big and winning big and also betting big and losing big. During the dotcom boom, he became the richest man in the world for a few days by betting big and then during the crash, he lost almost all of his net worth. https://www.quora.com/How-did-Masayoshi-Son-lose-70-billion-during-the-dot-com-crash https://www.quora.com/How-did-Masayoshi-Son-lose-70-billion-... He was able to maintain power and keep softbank afloat while losing billions during the dotcom crash. So he has powerful backers and contacts who believe in him and are willing to carry him during rough times. That's very rare. In many ways, he reminds me of bezos and musk. For some reason, they are able to get the support of big money while losing a lot of money.

Iv 8y ago

They are using the mud-shotgun technique: throw a thousand mud piles at the wall and see which one sticks. It may fail but it can't be a worst investment than just giving it away as dividends.

shry4ns 8y ago

I think it's setting a very dangerous precedent. A lot of startups may be overvalued because of these massive investments

anonymous5133 8y ago
IMO, It is quite obvious there is a bubble in tech forming. I look at some of these companies and don't even know how they can justify the current investor expectations. I see people justify amazon's high valuation by saying stuff like "well if they get x % of WORLD retail sales...". It just shows the lack of depth in understanding that these people have. I am sure there is similar overly optimistic views occurring in the VC space as well.

IBM 8y ago

I mean it's obviously bad for the LPs if it all goes to zero. But there's no systemic risk to the financial system that taxpayers will have to shoulder if that happens, which is what the government or regulators should care about.

anonymous5133 8y ago

Yes, of course there is going to be a lapse in their due diligence at some point. It is just like the whole housing crisis in 08. Banks eventually were giving money to practically everyone and then we all know what happened in the end. As a VC, at some point, you need to get your money back plus a return to keep the fund going.