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We must be pretty important for Softbank as a signal - even if they didn't believe in the company, allowing such a major investment take such a big hit would be

We must be pretty important for Softbank as a signal - even if they didn't believe in the company, allowing such a major investment take such a big hit would be rather bad. Worth them pouring a few $bn more in instead of an IPO, if only to shore up faith in the rest of their portfolio? All that being said, someone needs to be mentoring the CEO, like right now. That S1 was... not... great.

nindalf 7y ago
Not a fan of "Community adjusted" EBITDA I take it?
- wastedhours 7y ago
  They win my respect for their confidence in trying, but they don't win my money!
Braighni 7y ago
Softbank invested at a $47 billion valuation. An IPO at $20bn, that may tank afterwards, would really hurt their paper profits.
- _flwm 7y ago
  The risk may be more existential for Softbank than just knocking profits -- coming after Uber
goatinaboat 7y ago
SoftBank business model: make an investment at valuation X. Make another investment at valuation 2X. Declare that the value of the first investment has doubled! The wheels come off when anyone else gets to value the investment. That’s happening now. I wonder how other SoftBank businesses like ARM will be impacted.
- onion2k 7y ago
  I wonder how other SoftBank businesses like ARM will be impacted. I don't think many investors dispute the ~$28b valuation that Softbank paid for ARM.
  - antoniuschan99 7y ago
    ARM might be king now, but looking into RiSC-V and the Made In China 2025 initiative, I wonder what the landscape will be like in the future https://news.ycombinator.com/item?id=20838030 https://news.ycombinator.com/item?id=20838030
navigatesol 7y ago
>Worth them pouring a few $bn more in instead of an IPO, if only to shore up faith in the rest of their portfolio? I'd love to know how throwing good money after bad would shore up the faith in the rest of the portfolio? "No one else wants this, but we can't afford to mark-to-market, so we're going to throw more money in with the hopes of maintaining an illusory valuation." At the end of the day, it's a bad business. Can't fake your way out of it.
- wastedhours 7y ago
  > I'd love to know how throwing good money after bad would shore up the faith in the rest of the portfolio? I mean, I'm just throwing something out there - I can't see how they were funded in the first place... But, there's definitely a scenario where We taking a 50% haircut after several large-scale late rounds led by one prominent fund could lead to other companies valued at a level by the same late stage fund being valued less. The optics of that to other investors, whilst common for a lot of funds, at this late stage could raise some eyebrows. $3bn to maintain We's valuation on the private market might mitigate against several multi-$bn write downs across the portfolio, especially if they're planning IPOs as well. No idea if it's a decent strategy, but this is VC we're talking about...
- heymijo 7y ago
  Softbank has over $10 billion of its $100 billion Vision Fund invested in WeWork. That's a hell of a big bet. It's not hard to imagine Softbank will do whatever it can, rational or not, to try to get WeWork to a point where they can cash out.
  - tomatocracy 7y ago
    Yes. It’s a pretty common conflict of interest between the manager of the fund (which has a strong incentive to raise new fund while they can as quickly as possible so will want to prop up any losers until the current round of fundraising is complete) and the investors in the fund (who may or may not also be invested in the manager itself).
  - navigatesol 7y ago

nindalf 7y ago

Not a fan of "Community adjusted" EBITDA I take it?

wastedhours 7y ago
They win my respect for their confidence in trying, but they don't win my money!

Braighni 7y ago

Softbank invested at a $47 billion valuation. An IPO at $20bn, that may tank afterwards, would really hurt their paper profits.

_flwm 7y ago
The risk may be more existential for Softbank than just knocking profits -- coming after Uber

goatinaboat 7y ago

SoftBank business model: make an investment at valuation X. Make another investment at valuation 2X. Declare that the value of the first investment has doubled! The wheels come off when anyone else gets to value the investment. That’s happening now. I wonder how other SoftBank businesses like ARM will be impacted.

onion2k 7y ago
I wonder how other SoftBank businesses like ARM will be impacted. I don't think many investors dispute the ~$28b valuation that Softbank paid for ARM.
- antoniuschan99 7y ago
  ARM might be king now, but looking into RiSC-V and the Made In China 2025 initiative, I wonder what the landscape will be like in the future https://news.ycombinator.com/item?id=20838030 https://news.ycombinator.com/item?id=20838030

navigatesol 7y ago

>Worth them pouring a few $bn more in instead of an IPO, if only to shore up faith in the rest of their portfolio? I'd love to know how throwing good money after bad would shore up the faith in the rest of the portfolio? "No one else wants this, but we can't afford to mark-to-market, so we're going to throw more money in with the hopes of maintaining an illusory valuation." At the end of the day, it's a bad business. Can't fake your way out of it.

wastedhours 7y ago
> I'd love to know how throwing good money after bad would shore up the faith in the rest of the portfolio? I mean, I'm just throwing something out there - I can't see how they were funded in the first place... But, there's definitely a scenario where We taking a 50% haircut after several large-scale late rounds led by one prominent fund could lead to other companies valued at a level by the same late stage fund being valued less. The optics of that to other investors, whilst common for a lot of funds, at this late stage could raise some eyebrows. $3bn to maintain We's valuation on the private market might mitigate against several multi-$bn write downs across the portfolio, especially if they're planning IPOs as well. No idea if it's a decent strategy, but this is VC we're talking about...
heymijo 7y ago
Softbank has over $10 billion of its $100 billion Vision Fund invested in WeWork. That's a hell of a big bet. It's not hard to imagine Softbank will do whatever it can, rational or not, to try to get WeWork to a point where they can cash out.
- tomatocracy 7y ago
  Yes. It’s a pretty common conflict of interest between the manager of the fund (which has a strong incentive to raise new fund while they can as quickly as possible so will want to prop up any losers until the current round of fundraising is complete) and the investors in the fund (who may or may not also be invested in the manager itself).
- navigatesol 7y ago