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The more I hear about this the more it looks like this entire scheme has turned into a pyramid scheme. Pouring more money into investments to try and boost the

The more I hear about this the more it looks like this entire scheme has turned into a pyramid scheme. Pouring more money into investments to try and boost the valuation. Using previous investments to invest and boost the value of new investments, guaranteeing massive loans in order to get others to invest at huge valuations. It just looks more and more like laundering money through all sorts of different mechanisms to create paper gains that don't reflect reality. The interesting point though is that this is basically all being done using money that private investors have given, so really there's no public accountability or outrage. The question is whether the investors in the vision fund start asking to open the books and check the valuations themselves. If they don't then this will just continue until Masayoshi finds a way of getting his hands on and even bigger pile of money in order to continue to cover up the dodgy valuations - because that's what you'd have to do right? You'd have to do another massive fund to have enough cash to continue driving up these valuations? You would want another massive fund raised quickly before the existing investments start fallling apart. I wonder what Masayoshi is doing these days.

claudeganon 7y ago
I think that you’re correct and what is happening is that, in our era of extreme inequality, pyramid schemes are being forced farther up the food chain. It used to be that you could make a pretty penny soaking the lower classes directly with things like MLMs. But as their wealth was hollowed out by globalization and the Great Recession, you have to shift your predation upward to things like their pension funds, sovereign wealth, etc. While the people managing these resources can sometimes be more savvy than your average sucker signing up to a pyramid scheme, it’s very easy to pull one over on them with stories about “technological innovation” (counter to logic or evidence of profitability) because this is the grand, wishful story of our era.
- CPLX 7y ago
  Don’t forget “cryptocurrency”
  - ghaff 7y ago
    Arguably crypto was more about FOMO. End result doesn't look much different of course.
- klenwell 7y ago
  Interesting thesis. But I'd guess pyramid schemes (or MLMs) are still all over the food chain and over-represented at the lower tiers. A variation on this theme, and this has basically been Matt Levine's take on SoftBank if I'm not mistaken: SoftBank, and Adam Neumann in turn, each spotted an opportunity for pyramid schemes at a higher tier of the food chain that hadn't previously been fully exploited. And they exploited it. Perhaps even unwittingly. They were incentivized by the market. From Levine's 10/23 column: Look, here I am speculating, and I don’t mean to speak for Neumann’s subjective experience of his WeWork career, but from the outside, in hindsight, objectively, one could describe it like this: He spotted a bubble in venture-subsidized fast-growing money-losing capital-intensive low-margin tech-adjacent companies, noticed in particular that SoftBank seemed to be on the long side of that bubble, and set himself up to profit on the other side—by raising money for his own ultra-unicorn, by setting up the governance of that unicorn in a maximally self-interested way, and by selling and margining a bunch of his personal shares. When investors like SoftBank were frenziedly buying unicorn stock, he was frenziedly selling it. He set himself up to profit from the collapse of the unicorn bubble, and accelerated that collapse. Lessons were learned, and he taught them. Now he’s rich.
papito 7y ago
Thankfully the regulations saved the public before WeWork could enter the stock exchanges. As long as it stays this way, I really don't care if Saudi Arabia sinks billions of dollars into a turkey like I will sink my teeth into one tonight.
- reaperducer 7y ago
  The risk is that suddenly all tech investors will want to know what's going on with all of the companies they invested in, and demand actual returns and not pixie dust and double talk. Can you imagine if the SV bubble was held to the same expectations as real world companies? Half of the Bay Area would curl up and blow away overnight.
  - meddlepal 7y ago
    You say that like it's a bad thing. Sometimes things need to fail and fail hard so everything can get better in the long run.
    - deleted 7y ago
      [deleted]
  - rifta 7y ago
    >Half of the Bay Area would curl up and blow away overnight. So your suggesting that only 50% of the Bay is BS?
  - ghaff 7y ago
    How big is the frothy part of the SV tech (and tech adjacent) landscape relative to the tech landscape as a whole though--much less relative to the total Bay Area economy? It looks to me as if companies that seem to have no credible business plan are already starting to be punished. I don't doubt that scrutiny will probably increase further and people should probably think harder about joining startups that don't seem to have a path to profitability. But I expect something like a major downturn in ad tech would have a much greater impact than some will-never-be-profitable startups circling the drain.
nabla9 7y ago
SoftBank bonds account for half of the bonds sold to Japanese retail investors. Ordinary Japanese savers are going to bet burned if SoftBank collapses.
- dpflan 7y ago
  This is an interesting point. Do you have data / references? I’m very curious about this. I’ll search on my own too.
  - dpflan 7y ago
    Cursory searching is revealing: - Softbank "now responsible for more than half of all corporate and financial debt issuance" in Japan [1] - Softbank's own bond data [2] - Seeking Alpha's review of SB's bond [3] [1] https://www.ft.com/content/24c4a8a8-7885-11e9-bbad-7c18c0ea0201 https://www.ft.com/content/24c4a8a8-7885-11e9-bbad-7c18c0ea0... [2] https://group.softbank/en/corp/irinfo/stock/bond/ https://group.softbank/en/corp/irinfo/stock/bond/ [3] https://seekingalpha.com/article/4308627-forget-uber-wework-7_4-percent-yield-softbank-bonds-steal https://seekingalpha.com/article/4308627-forget-uber-wework-...
    - Animats 7y ago
      Issuance, not holdings? What fraction of outstanding debt in Japan? If Uber and WeWork both go to zero, how big a hit is that?
      - whatok 7y ago
        Issuance should be roughly equal to holdings for retail investors in Japan as the market for those only exist because JGBs pay nothing. I think if both of those went under it looks extremely bad but SoftBank Group gets a dividend from the SoftBank Corp (telecom) that has enough dependable operating income that should be good for servicing debt. Additionally, SoftBank Group is still trading at a discount to its BABA stake + everything else. There definitely is an increasing chance of a perfect storm where multiple bad things happen that could quickly evaporate this whole thing: - China gets worse domestically with or without trade war ratcheting up and BABA is collateral damage - S/TMUS merger fails from domestic regulatory pressure (just had TX and NV AGs settle but other states are not on board still) - UBER, WEWORK, and others (Oyo?) get dragged and there are some feedback loops on other portfolio companies - Funding pressures. There was an article on FT about domestic banks being skeptical on lending more to SOFTBK. Stuff like that becomes a self-fulfilling prophecy after a while and can quickly spiral out of control. That said, SOFTBK has something like 20bn cash on hand so that should only really become a problem if there's prolonged weakness. - Vision Fund 2 more than likely not going to be able to raise its envisioned amount. Obviously no one wants to touch this right now. I think there's definitely been internal discussions on how some of this $ would be used to bail out VF1 portfolio companies through acquisitions. Additionally, if I had to make a forecast, there's not enough companies out there right now that could absorb $100bn of VC money and be able to profitably exit. I think the biggest problem going on right now is that all of these companies were built upon endlessly flowing capital and business models were based on that. Now that everyone is focused on "profitability", I'm not sure if you can easily pivot some of these business models without completely imploding businesses. None of these companies have created anything that consumers cannot live without. VC-subsidized luxuries brought to the masses can have a very fleeting existence; people got around before UBER. If any of these companies ever try to raise prices in an attempt to display profitability, they could be in a rude awakening for ECON101 price elasticity/inelasticity lesson.
TaylorSwift 7y ago
I want to point out that a lot of these valuations are signed off by well-known accounting firms, valuation firms, and consulting firms. If it's really one big conspiracy to prop up valuations via recent financing, loans, or market comparables, then wouldn't one of these parties call it out (well, inherently a lot of these are paid by organizations to do their valuations, so true independence is a question here). Additionally, corporate management theoretically exercise due diligence, along with the valuation committees and the board looking into the reasonableness of the models and associated inputs and outputs. It would be awkward to say that these valuations are wrong with so many people having their inputs.
- CPLX 7y ago
  > so true independence is a question here You managed to figure it out before even hitting the end of the sentence in which you posed the question. Money works kind of like particle physics. Once you start to operate on a fundamentally different scale, basic laws of nature start to change.
- brown9-2 7y ago
  Have you forgotten about the housing bubble and crash of 2007/2008 already?
  - AlexandrB 7y ago
    Exactly. As long as everyone keeps getting paid no one has any incentive to stop the gravy train.
- chewz 7y ago
  > It would be awkward to say that these valuations are wrong with so many people having their inputs. The purpose of external consultant is to guess what client is expecting from you and deliver exactly that. Usually the management requires a stack of papers to cover their asses in case of risky deal, sometimes to get an argument in some internal struggle. They never expect objective truth or independent thinking. There is no conspiracy here just the market forces at work. Imagine what happens to consultancies who do not deliver..
thkim 7y ago
Could it be that Vision Fund is a grand scheme to vacuum global liquidity, especially from the Middle East? In the absence of war these days, Weapons of Financial Mass Destruction might exactly be what is needed.
- Danieru 7y ago
  Sadly for such a scheme the Vision Fund is structured with the Saudi money backed by the SoftBank stake. Thus loses and mis-spending will fall on the shoulders of SoftBank Group shareholders before they eat into Saudi's portion.
Alex3917 7y ago
> Pouring more money into investments to try and boost the valuation. Using previous investments to invest and boost the value of new investments, guaranteeing massive loans in order to get others to invest at huge valuations. It just looks more and more like laundering money through all sorts of different mechanisms to create paper gains that don't reflect reality. Is this uncommon? E.g. I don't have any inside information as to what went on with the Coinbase acquisition of Earn.com, but from an outsider perspective it certainly looks like: 1) A16Z invests tens of millions of dollars in Earn.com, which fails. 2) A16Z has their other portfolio company Coinbase buy Earn.com to shift some of their profits from Coinbase back into their earlier fund. (Which as far as I can tell is not only completely useless to Coinbase, but is also a huge legal liability.) 3) A16Z uses the "success" of their fund with Earn.com to raise more money. 4) A16Z then compensates Coinbase by investing in them at a higher paper valuation. I could easily be 100% off base so I don't want to libel anyone, all I'm saying is that that's just what it looks like as someone who wasn't privy to the actual details.
- bhouston 7y ago
  Was earn.com acquired at a higher than fair valuation? If so the shareholders of coinbase.com should sue.
  - andrewprock 7y ago
    It's possible it was "sold at a loss" but the early investors made money. e.g. by investment round: A: $1m for a $10m valuation B: $5m for a $40m valuation C: $12m for a $100m valuation A "fire sale" of $15m would yield a profit for Series A investors, a probable loss for B, and a certain loss for C.
    - gaogao 7y ago
      Liquidation preference for later rounds might muck up that calculation.
    - ska 7y ago
      Or if they were already in financial trouble and C came in with 1.x liquidation preference, they get everything (or near it)
perlgeek 7y ago
> I wonder what Masayoshi is doing these days. Trying to invest the rest of the Vision Fund v1, so that he can raise Vision Fund v2.
- smabie 7y ago
  He’s already invested all of the 100bn for the first Vision Fund.
  - samsonradu 7y ago
    I find it a bit funny that both comments say ‘invest’. Can we use that word to describe what actually looked like spending?
Barrin92 7y ago
Agreed, and I also found it extremely hilarious that Softbank styled itself as the "300-year company", but their biggest investments are ridesharing companies, a real estate subleasing company, several eCommerce stores and so on. I mean, if you're going all-in on the future where is the biotech, pharmacology and the robots? It's not just softbank that to me looks fishy, the entire industry looks like it has drunk its own kool-aid.
- OnlineGladiator 7y ago
  > I mean, if you're going all-in on the future where is the biotech, pharmacology and the robots? The Vision Fund has invested billions into robotics companies. Cruise is making self-driving cars. Nuro is making autonomous delivery bots. Zume is supposedly automating pizza (I say supposedly because they do have a robot for making pizza, but their valuation is almost entirely "justified" by a patent to cook food in a moving vehicle - yes really). Granted, I think the way they invested in these companies still has all of the financial shenanigans of their investments and they really aren't long-term plays - but they are putting more money into robotics than just about anyone. That said, I don't think it's going to bear fruit.
  - pkaye 7y ago
    > patent to cook food in a moving vehicle Also known as a food truck.
    - OnlineGladiator 7y ago
      It's a little more nuanced than that. If you didn't happen to be an expert on both robots and restaurants (as you can imagine, this is an extremely niche group) you would actually think it is an innovative solution. In fact, before the Vision Fund even existed, I was surprised how many investors were looking into this exact space (food trucks for pizza that cook the food during delivery). However, once you dig into the details, it quickly unravels into another valuation-inflating scheme for Softbank.
    - paggle 7y ago
Andromeda88 7y ago
Check YzerGroup for a real "money laundering". They started with YzerProperty(2014 or so). Then YzerMotors (2016). Now YzerChat. These startups all involves billionaires from Dubai. Btw YzerProperty and Motors do not exist anymore.
- mindentropy 7y ago
  Do you have any material on their money laundering?
  - Andromeda88 7y ago
    No. I don't. It is just a rumor in the market.
mathattack 7y ago
The Saudi government was the major investor. He pays them back with positive PR. It becomes tricky when he mixes Vision Fund business with SoftBank business.
- tenpies 7y ago
  And if you're the Saudi government, your biggest concern is probably not Softbank, the Vision Fund, or WeWork - it's the Aramco IPO. The valuation range for that was comical with it being anywhere from slightly under $1 Trillion USD to $2 Trillion USD depending on who you ask. I mean you can use WeWorks as a scale for that sort of spread.
  - mathattack 7y ago
    Yes. And that’s an entirely new shell game. (Similar though - small float of shares yields a huge valuation which can be borrowed against...)
wczekalski 7y ago
I really liked this video featuring Chamath Palihapitiya[1]. It's essentially a rant about most of VC being a ponzi scheme: https://www.youtube.com/watch?v=RwRZtZQoLtQ https://www.youtube.com/watch?v=RwRZtZQoLtQ [1] (from Wikipedia) Chamath Palihapitiya an is a venture capitalist and the founder and CEO of Social Capital. Palihapitiya was an early senior executive at Facebook, joining the company in 2007 and leaving in 2011. He is a minority stakeholder and board member of the Golden State Warriors.
dboreham 7y ago
Sounds like venture capital.
Iv 7y ago
It is not a pyramid scheme, it is called a "pump and dump" scheme: https://en.wikipedia.org/wiki/Pump_and_dump https://en.wikipedia.org/wiki/Pump_and_dump
cinquemb 7y ago
>I wonder what Masayoshi is doing these days. Smart Slumlord™ junk rated deals in preparation for its Softbank Fire Sale: "SoftBank will utilize its technology deployment insights to introduce advanced technologies to shopping malls and other commercial facilities, hospitals, and the entire Lippo Village area," Hidebumi Kitahara, SoftBank's vice president and head of global business strategy, said at a signing ceremony. "Through this, we aim to develop Lippo Village as a smart city model case in Southeast Asia."[0] [0] https://asia.nikkei.com/Business/Business-deals/SoftBank-and-Indonesia-s-Lippo-partner-on-smart-city-development https://asia.nikkei.com/Business/Business-deals/SoftBank-and...
Lucadg 7y ago
Potentially similar story at an earlier stage: Oyo, a budget hotel chain from India. They raised 1.7 B, mostly from Softbank, and are now getting in the vacation rentals space in Europe. Their approach is unclear. I spoke to their representatives and it seems unclear for them too. Nothing seems to make sense in what they are doing in this vertical. The only logical explanation seems that they are trying raise the valuation of the brand. It could be the next WeWork.

claudeganon 7y ago

I think that you’re correct and what is happening is that, in our era of extreme inequality, pyramid schemes are being forced farther up the food chain. It used to be that you could make a pretty penny soaking the lower classes directly with things like MLMs. But as their wealth was hollowed out by globalization and the Great Recession, you have to shift your predation upward to things like their pension funds, sovereign wealth, etc. While the people managing these resources can sometimes be more savvy than your average sucker signing up to a pyramid scheme, it’s very easy to pull one over on them with stories about “technological innovation” (counter to logic or evidence of profitability) because this is the grand, wishful story of our era.

CPLX 7y ago
Don’t forget “cryptocurrency”
- ghaff 7y ago
  Arguably crypto was more about FOMO. End result doesn't look much different of course.
klenwell 7y ago
Interesting thesis. But I'd guess pyramid schemes (or MLMs) are still all over the food chain and over-represented at the lower tiers. A variation on this theme, and this has basically been Matt Levine's take on SoftBank if I'm not mistaken: SoftBank, and Adam Neumann in turn, each spotted an opportunity for pyramid schemes at a higher tier of the food chain that hadn't previously been fully exploited. And they exploited it. Perhaps even unwittingly. They were incentivized by the market. From Levine's 10/23 column: Look, here I am speculating, and I don’t mean to speak for Neumann’s subjective experience of his WeWork career, but from the outside, in hindsight, objectively, one could describe it like this: He spotted a bubble in venture-subsidized fast-growing money-losing capital-intensive low-margin tech-adjacent companies, noticed in particular that SoftBank seemed to be on the long side of that bubble, and set himself up to profit on the other side—by raising money for his own ultra-unicorn, by setting up the governance of that unicorn in a maximally self-interested way, and by selling and margining a bunch of his personal shares. When investors like SoftBank were frenziedly buying unicorn stock, he was frenziedly selling it. He set himself up to profit from the collapse of the unicorn bubble, and accelerated that collapse. Lessons were learned, and he taught them. Now he’s rich.

papito 7y ago

Thankfully the regulations saved the public before WeWork could enter the stock exchanges. As long as it stays this way, I really don't care if Saudi Arabia sinks billions of dollars into a turkey like I will sink my teeth into one tonight.

reaperducer 7y ago
The risk is that suddenly all tech investors will want to know what's going on with all of the companies they invested in, and demand actual returns and not pixie dust and double talk. Can you imagine if the SV bubble was held to the same expectations as real world companies? Half of the Bay Area would curl up and blow away overnight.
- meddlepal 7y ago
  You say that like it's a bad thing. Sometimes things need to fail and fail hard so everything can get better in the long run.
  - deleted 7y ago
    [deleted]
- rifta 7y ago
  >Half of the Bay Area would curl up and blow away overnight. So your suggesting that only 50% of the Bay is BS?
- ghaff 7y ago
  How big is the frothy part of the SV tech (and tech adjacent) landscape relative to the tech landscape as a whole though--much less relative to the total Bay Area economy? It looks to me as if companies that seem to have no credible business plan are already starting to be punished. I don't doubt that scrutiny will probably increase further and people should probably think harder about joining startups that don't seem to have a path to profitability. But I expect something like a major downturn in ad tech would have a much greater impact than some will-never-be-profitable startups circling the drain.

nabla9 7y ago

SoftBank bonds account for half of the bonds sold to Japanese retail investors. Ordinary Japanese savers are going to bet burned if SoftBank collapses.

dpflan 7y ago
This is an interesting point. Do you have data / references? I’m very curious about this. I’ll search on my own too.
- dpflan 7y ago
  Cursory searching is revealing: - Softbank "now responsible for more than half of all corporate and financial debt issuance" in Japan [1] - Softbank's own bond data [2] - Seeking Alpha's review of SB's bond [3] [1] https://www.ft.com/content/24c4a8a8-7885-11e9-bbad-7c18c0ea0201 https://www.ft.com/content/24c4a8a8-7885-11e9-bbad-7c18c0ea0... [2] https://group.softbank/en/corp/irinfo/stock/bond/ https://group.softbank/en/corp/irinfo/stock/bond/ [3] https://seekingalpha.com/article/4308627-forget-uber-wework-7_4-percent-yield-softbank-bonds-steal https://seekingalpha.com/article/4308627-forget-uber-wework-...
  - Animats 7y ago
    Issuance, not holdings? What fraction of outstanding debt in Japan? If Uber and WeWork both go to zero, how big a hit is that?
    - whatok 7y ago
      Issuance should be roughly equal to holdings for retail investors in Japan as the market for those only exist because JGBs pay nothing. I think if both of those went under it looks extremely bad but SoftBank Group gets a dividend from the SoftBank Corp (telecom) that has enough dependable operating income that should be good for servicing debt. Additionally, SoftBank Group is still trading at a discount to its BABA stake + everything else. There definitely is an increasing chance of a perfect storm where multiple bad things happen that could quickly evaporate this whole thing: - China gets worse domestically with or without trade war ratcheting up and BABA is collateral damage - S/TMUS merger fails from domestic regulatory pressure (just had TX and NV AGs settle but other states are not on board still) - UBER, WEWORK, and others (Oyo?) get dragged and there are some feedback loops on other portfolio companies - Funding pressures. There was an article on FT about domestic banks being skeptical on lending more to SOFTBK. Stuff like that becomes a self-fulfilling prophecy after a while and can quickly spiral out of control. That said, SOFTBK has something like 20bn cash on hand so that should only really become a problem if there's prolonged weakness. - Vision Fund 2 more than likely not going to be able to raise its envisioned amount. Obviously no one wants to touch this right now. I think there's definitely been internal discussions on how some of this $ would be used to bail out VF1 portfolio companies through acquisitions. Additionally, if I had to make a forecast, there's not enough companies out there right now that could absorb $100bn of VC money and be able to profitably exit. I think the biggest problem going on right now is that all of these companies were built upon endlessly flowing capital and business models were based on that. Now that everyone is focused on "profitability", I'm not sure if you can easily pivot some of these business models without completely imploding businesses. None of these companies have created anything that consumers cannot live without. VC-subsidized luxuries brought to the masses can have a very fleeting existence; people got around before UBER. If any of these companies ever try to raise prices in an attempt to display profitability, they could be in a rude awakening for ECON101 price elasticity/inelasticity lesson.

TaylorSwift 7y ago

I want to point out that a lot of these valuations are signed off by well-known accounting firms, valuation firms, and consulting firms. If it's really one big conspiracy to prop up valuations via recent financing, loans, or market comparables, then wouldn't one of these parties call it out (well, inherently a lot of these are paid by organizations to do their valuations, so true independence is a question here). Additionally, corporate management theoretically exercise due diligence, along with the valuation committees and the board looking into the reasonableness of the models and associated inputs and outputs. It would be awkward to say that these valuations are wrong with so many people having their inputs.

CPLX 7y ago
> so true independence is a question here You managed to figure it out before even hitting the end of the sentence in which you posed the question. Money works kind of like particle physics. Once you start to operate on a fundamentally different scale, basic laws of nature start to change.
brown9-2 7y ago
Have you forgotten about the housing bubble and crash of 2007/2008 already?
- AlexandrB 7y ago
  Exactly. As long as everyone keeps getting paid no one has any incentive to stop the gravy train.
chewz 7y ago
> It would be awkward to say that these valuations are wrong with so many people having their inputs. The purpose of external consultant is to guess what client is expecting from you and deliver exactly that. Usually the management requires a stack of papers to cover their asses in case of risky deal, sometimes to get an argument in some internal struggle. They never expect objective truth or independent thinking. There is no conspiracy here just the market forces at work. Imagine what happens to consultancies who do not deliver..

thkim 7y ago

Could it be that Vision Fund is a grand scheme to vacuum global liquidity, especially from the Middle East? In the absence of war these days, Weapons of Financial Mass Destruction might exactly be what is needed.

Danieru 7y ago
Sadly for such a scheme the Vision Fund is structured with the Saudi money backed by the SoftBank stake. Thus loses and mis-spending will fall on the shoulders of SoftBank Group shareholders before they eat into Saudi's portion.

Alex3917 7y ago

> Pouring more money into investments to try and boost the valuation. Using previous investments to invest and boost the value of new investments, guaranteeing massive loans in order to get others to invest at huge valuations. It just looks more and more like laundering money through all sorts of different mechanisms to create paper gains that don't reflect reality. Is this uncommon? E.g. I don't have any inside information as to what went on with the Coinbase acquisition of Earn.com, but from an outsider perspective it certainly looks like: 1) A16Z invests tens of millions of dollars in Earn.com, which fails. 2) A16Z has their other portfolio company Coinbase buy Earn.com to shift some of their profits from Coinbase back into their earlier fund. (Which as far as I can tell is not only completely useless to Coinbase, but is also a huge legal liability.) 3) A16Z uses the "success" of their fund with Earn.com to raise more money. 4) A16Z then compensates Coinbase by investing in them at a higher paper valuation. I could easily be 100% off base so I don't want to libel anyone, all I'm saying is that that's just what it looks like as someone who wasn't privy to the actual details.

bhouston 7y ago
Was earn.com acquired at a higher than fair valuation? If so the shareholders of coinbase.com should sue.
- andrewprock 7y ago
  It's possible it was "sold at a loss" but the early investors made money. e.g. by investment round: A: $1m for a $10m valuation B: $5m for a $40m valuation C: $12m for a $100m valuation A "fire sale" of $15m would yield a profit for Series A investors, a probable loss for B, and a certain loss for C.
  - gaogao 7y ago
    Liquidation preference for later rounds might muck up that calculation.
  - ska 7y ago
    Or if they were already in financial trouble and C came in with 1.x liquidation preference, they get everything (or near it)

perlgeek 7y ago

> I wonder what Masayoshi is doing these days. Trying to invest the rest of the Vision Fund v1, so that he can raise Vision Fund v2.

smabie 7y ago
He’s already invested all of the 100bn for the first Vision Fund.
- samsonradu 7y ago
  I find it a bit funny that both comments say ‘invest’. Can we use that word to describe what actually looked like spending?

Barrin92 7y ago

Agreed, and I also found it extremely hilarious that Softbank styled itself as the "300-year company", but their biggest investments are ridesharing companies, a real estate subleasing company, several eCommerce stores and so on. I mean, if you're going all-in on the future where is the biotech, pharmacology and the robots? It's not just softbank that to me looks fishy, the entire industry looks like it has drunk its own kool-aid.

OnlineGladiator 7y ago
> I mean, if you're going all-in on the future where is the biotech, pharmacology and the robots? The Vision Fund has invested billions into robotics companies. Cruise is making self-driving cars. Nuro is making autonomous delivery bots. Zume is supposedly automating pizza (I say supposedly because they do have a robot for making pizza, but their valuation is almost entirely "justified" by a patent to cook food in a moving vehicle - yes really). Granted, I think the way they invested in these companies still has all of the financial shenanigans of their investments and they really aren't long-term plays - but they are putting more money into robotics than just about anyone. That said, I don't think it's going to bear fruit.
- pkaye 7y ago
  > patent to cook food in a moving vehicle Also known as a food truck.
  - OnlineGladiator 7y ago
    It's a little more nuanced than that. If you didn't happen to be an expert on both robots and restaurants (as you can imagine, this is an extremely niche group) you would actually think it is an innovative solution. In fact, before the Vision Fund even existed, I was surprised how many investors were looking into this exact space (food trucks for pizza that cook the food during delivery). However, once you dig into the details, it quickly unravels into another valuation-inflating scheme for Softbank.
  - paggle 7y ago

Andromeda88 7y ago

Check YzerGroup for a real "money laundering". They started with YzerProperty(2014 or so). Then YzerMotors (2016). Now YzerChat. These startups all involves billionaires from Dubai. Btw YzerProperty and Motors do not exist anymore.

mindentropy 7y ago
Do you have any material on their money laundering?
- Andromeda88 7y ago
  No. I don't. It is just a rumor in the market.

mathattack 7y ago

The Saudi government was the major investor. He pays them back with positive PR. It becomes tricky when he mixes Vision Fund business with SoftBank business.

tenpies 7y ago
And if you're the Saudi government, your biggest concern is probably not Softbank, the Vision Fund, or WeWork - it's the Aramco IPO. The valuation range for that was comical with it being anywhere from slightly under $1 Trillion USD to $2 Trillion USD depending on who you ask. I mean you can use WeWorks as a scale for that sort of spread.
- mathattack 7y ago
  Yes. And that’s an entirely new shell game. (Similar though - small float of shares yields a huge valuation which can be borrowed against...)

wczekalski 7y ago

I really liked this video featuring Chamath Palihapitiya[1]. It's essentially a rant about most of VC being a ponzi scheme: https://www.youtube.com/watch?v=RwRZtZQoLtQ https://www.youtube.com/watch?v=RwRZtZQoLtQ [1] (from Wikipedia) Chamath Palihapitiya an is a venture capitalist and the founder and CEO of Social Capital. Palihapitiya was an early senior executive at Facebook, joining the company in 2007 and leaving in 2011. He is a minority stakeholder and board member of the Golden State Warriors.

dboreham 7y ago

Sounds like venture capital.

Iv 7y ago

It is not a pyramid scheme, it is called a "pump and dump" scheme: https://en.wikipedia.org/wiki/Pump_and_dump https://en.wikipedia.org/wiki/Pump_and_dump

cinquemb 7y ago

>I wonder what Masayoshi is doing these days. Smart Slumlord™ junk rated deals in preparation for its Softbank Fire Sale: "SoftBank will utilize its technology deployment insights to introduce advanced technologies to shopping malls and other commercial facilities, hospitals, and the entire Lippo Village area," Hidebumi Kitahara, SoftBank's vice president and head of global business strategy, said at a signing ceremony. "Through this, we aim to develop Lippo Village as a smart city model case in Southeast Asia."[0] [0] https://asia.nikkei.com/Business/Business-deals/SoftBank-and-Indonesia-s-Lippo-partner-on-smart-city-development https://asia.nikkei.com/Business/Business-deals/SoftBank-and...

Lucadg 7y ago

Potentially similar story at an earlier stage: Oyo, a budget hotel chain from India. They raised 1.7 B, mostly from Softbank, and are now getting in the vacation rentals space in Europe. Their approach is unclear. I spoke to their representatives and it seems unclear for them too. Nothing seems to make sense in what they are doing in this vertical. The only logical explanation seems that they are trying raise the valuation of the brand. It could be the next WeWork.