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Interesting hit piece. I know Alex from the gaming industry - he's very smart, very driven and very nice. 3 thoughts: 1. 375mm is a huge number. 375mm is al

Interesting hit piece. I know Alex from the gaming industry - he's very smart, very driven and very nice. 3 thoughts: 1. 375mm is a huge number. 375mm is also 1/3 of 1% of the fund... so small potatoes. Any numbers they throw around are going to look enormous and make great headlines. 2. If some of the investments don't sound a little crazy to you, then what is their differentiation or thesis? Remember PG's essay about good companies often start off sounding like terrible ideas. 3. Yes, anyone that can raise large amounts of money, well, that may be their core strength. Raising money. They need to pair that with someone that can build a team. It's not a bad thing to be able to raise funds. Every SoftBank funded company must have an army of reporters looking for weakness. One of the cons of getting money too easily I suppose. That said, I did not / do not understand Wag, and I have 3 dogs and I pay for dog walkers. Against my will, I'm married, she insists. I'm not totally craZy.

OnlineGladiator 7y ago
> 2. If some of the investments don't sound a little crazy to you, then what is their differentiation or thesis? Remember PG's essay about good companies often start off sounding like terrible ideas. It's very different when you're investing at the seed stage as opposed to putting in what would normally be considered late stage capital. By that point, your valuation should be justified by your numbers, not your dreams.
tmpz22 7y ago
Are you saying lighting $375m on fire at the same time wealth inequality is imploding is not a newsworthy item? That a CASCADE of laughable investments by Softbank is not newsworthy to the VC/tech/software establishment?
- anm89 7y ago
  Correct. You are not understanding the VC business model. It's only lighting money on fire if the fund as a whole fails to generate returns. The EXPECTATION is that many component investments will fail. This is exactly the same model as YCombinator. Most of their individual investments fail and this isn't, nor should it be, news worthy.
  - tmpz22 7y ago
    Not according to YC’s own website [1]. YC’s average deal size is 150k. In order for YC to burn 135m they would have to invest in ~900 different companies compared to Softbanks one bet on robotic pizzas. Investing in 900 different companies is a much more diverse portfolio and an entirely different value proposition. If you want to cheer on the intelligence of Softbank because they lucked out with an investment in Alibaba early on, you must still hold stock in Yahoo!... [1]: https://www.ycombinator.com/deal/ https://www.ycombinator.com/deal/
GCA10 7y ago
It's the cognitive dissonance of your Point 1 that makes this so fascinating. I think we're all at peace with the idea that a $100m venture fund will periodically write a $375,000 check to a couple crazy dreamers -- just to see if they can make their long-shot idea come good. And when funding is tiny, it fits into our sense of what risk-taking should be. These are garage/spare bedroom startups with no salaries, a count-the-pennies reliance on AWS to get it going, and an MVP that's "brought to market" via some brave/crazy little scheme that's very dependent on other people's goodwill and tolerance. If it works, hurray, and if not, everyone regroups fast and moves on. Multiple all the numbers by 1000x, and the distortions get very strange. Yes, the fund is still making a "tiny bet." But the founders now can goof around with more money than most serious presidential candidates enjoy during primary season. And that feels like a pretty unfortunate misallocation of society's resources.
- mdonahoe 7y ago
  > And that feels like a pretty unfortunate misallocation of society's resources. Unsuccessful startups don't do much damage to society. It's the successful startups that you have to watch out for!
unishark 7y ago
> 3 thoughts: 1. 375mm is a huge number. 375mm is also 1/3 of 1% of the fund... so small potatoes. To paraphrase Everett Dirksen, a few hundred million here, a few hundred million there, and pretty soon you're talking real money. Seriously though, a silly robot pizza idea that they can't even get to work is something VC's waste 5 million on, but 375 million?

OnlineGladiator 7y ago

> 2. If some of the investments don't sound a little crazy to you, then what is their differentiation or thesis? Remember PG's essay about good companies often start off sounding like terrible ideas. It's very different when you're investing at the seed stage as opposed to putting in what would normally be considered late stage capital. By that point, your valuation should be justified by your numbers, not your dreams.

tmpz22 7y ago

Are you saying lighting $375m on fire at the same time wealth inequality is imploding is not a newsworthy item? That a CASCADE of laughable investments by Softbank is not newsworthy to the VC/tech/software establishment?

anm89 7y ago
Correct. You are not understanding the VC business model. It's only lighting money on fire if the fund as a whole fails to generate returns. The EXPECTATION is that many component investments will fail. This is exactly the same model as YCombinator. Most of their individual investments fail and this isn't, nor should it be, news worthy.
- tmpz22 7y ago
  Not according to YC’s own website [1]. YC’s average deal size is 150k. In order for YC to burn 135m they would have to invest in ~900 different companies compared to Softbanks one bet on robotic pizzas. Investing in 900 different companies is a much more diverse portfolio and an entirely different value proposition. If you want to cheer on the intelligence of Softbank because they lucked out with an investment in Alibaba early on, you must still hold stock in Yahoo!... [1]: https://www.ycombinator.com/deal/ https://www.ycombinator.com/deal/

GCA10 7y ago

It's the cognitive dissonance of your Point 1 that makes this so fascinating. I think we're all at peace with the idea that a $100m venture fund will periodically write a $375,000 check to a couple crazy dreamers -- just to see if they can make their long-shot idea come good. And when funding is tiny, it fits into our sense of what risk-taking should be. These are garage/spare bedroom startups with no salaries, a count-the-pennies reliance on AWS to get it going, and an MVP that's "brought to market" via some brave/crazy little scheme that's very dependent on other people's goodwill and tolerance. If it works, hurray, and if not, everyone regroups fast and moves on. Multiple all the numbers by 1000x, and the distortions get very strange. Yes, the fund is still making a "tiny bet." But the founders now can goof around with more money than most serious presidential candidates enjoy during primary season. And that feels like a pretty unfortunate misallocation of society's resources.

mdonahoe 7y ago
> And that feels like a pretty unfortunate misallocation of society's resources. Unsuccessful startups don't do much damage to society. It's the successful startups that you have to watch out for!

unishark 7y ago

> 3 thoughts: 1. 375mm is a huge number. 375mm is also 1/3 of 1% of the fund... so small potatoes. To paraphrase Everett Dirksen, a few hundred million here, a few hundred million there, and pretty soon you're talking real money. Seriously though, a silly robot pizza idea that they can't even get to work is something VC's waste 5 million on, but 375 million?