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So Softbank will have invested nearly $16Bn (10.5 already + 5 now) in something that even they think is only worth $8Bn? Am I reading this correctly because th
by goatinaboat 7y ago
So Softbank will have invested nearly $16Bn (10.5 already + 5 now) in something that even they think is only worth $8Bn? Am I reading this correctly because that makes no sense whatsoever. Except for Neumann who walks away with his $700Mn regardless!
- perlgeek 7y agoIf they've already invested $10.5Bn, that money is gone (especially if WeWork fails). If they truly think they will get $8Bn worth for investing 4-5Bn now, it's a rational choice. Adding your past investments to the tally is an instance of the sunk cost fallacy.
- mushufasa 7y agoWell, maybe you could think about it like this: If they don't intervene, they lose all their previous investment guaranteed. So just consider all of that previous investment gone (sunk cost). If they invest $5b they may make an $8b valuation. And they may still think there is upside beyond that. Not sure if that's what they really think, but a lot of posters here seem to accuse softbank of sunk cost fallacies without considering that they are surely aware of investing 101.
- goatinaboat 7y agoThe sunk cost fallacy has a name because people keep doing it, even knowing what it is