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I made this same point when it was announced three months ago that Wag (another major Vision Fund investment) was struggling: https://news.ycombinator.com/item?

I made this same point when it was announced three months ago that Wag (another major Vision Fund investment) was struggling: https://news.ycombinator.com/item?id=21095990 https://news.ycombinator.com/item?id=21095990 Yet somehow people still seemed to defend the strategy ("you underestimate biotech ROI" or "investing in moonshots was not the point of the fund"). Most criticism is invalid because it misses the underlying flaw of the Vision Fund: If you're going to waste $24+ billion on the Adam Neumann's of the world, you could not have performed any worse by taking on riskier projects. It was obvious to everyone that WeWork was going to flop (even if Softbank got some money back from an IPO, the ensuing stock price crash would've tarnished their reputation and who knows how quickly they could've exited) and that Adam Neumann was a con. So the return there was going to be heavily negative. I doubt $10+ billion into drug research would've yielded as negative of results, especially in this era. The only valid critique of our approach I've heard is that it's a logistical pain to try and spread and manage $100 billion around $5 million at a time.

Judgmentality 6y ago
> The only valid critique of our approach I've heard is that it's a logistical pain to try and spread $100 billion around $5 million at a time. It's almost as if the fund was just a terrible idea to begin with. Masayoshi Son is famous for losing more money than anyone in modern history. https://arstechnica.com/information-technology/2012/10/how-sprints-new-boss-lost-70-billion-of-his-own-cash-and-still-stayed-rich/ https://arstechnica.com/information-technology/2012/10/how-s... He made lots of investments but made all his money on Alibaba. In my opinion, he's actually a below average investor, and that bar is pretty fucking low. And it really shows when you look at how horribly the Vision Fund is performing. He got lucky once and has cultivated a personality around it, and people were dumb enough to believe him. He's not the brilliant investor that Warren Buffet is, he's the talented con man that Adam Neumann is. Maybe that's why he was happy to give him so much money.
- N1H1L 6y ago
  SoftBank is also Oyo's biggest investor, and get ready to hear about the billions they will lose there too.
  - gordon_freeman 6y ago
    I had absolutely worst experience at Oyo. I had an overnight flight from Delhi to SFO and went there to get a few hours of sleep but ended up shouting frequently at their unprofessional staff for making too much noise. I could not get any sleep and thought I could have been better served by just reaching the airport early instead of staying at Oyo. Just adding my feedback here to illustrate that they have absolutely no oversight to maintain the quality standards at the hotels being booked by them.
    - mkagenius 6y ago
      Ritesh Agarwal the CEO of Oyo, is a bigger con-artist(1) than his fellow Neuman. Now if you indulge me, I propose that he will attribute his failure to Covid-19 and be forgiven unlike his fellow Neuman who didn't had that luck. Oh and an intereting fact, Sequoia just sold all its shares in Oyo, a few months back with a good ROI. Sequoia does make money even with con-artist founders. They are good. 1. https://www.livemint.com/Companies/7CN7u5d4i3bfYgBAZLdLpM/Will-the-real-Ritesh-Agarwal-please-stand-up.html https://www.livemint.com/Companies/7CN7u5d4i3bfYgBAZLdLpM/Wi...
      - robbiep 6y ago
        Already happening right? https://www.google.com.au/amp/s/www.bloomberg.com/amp/news/articles/2020-04-12/son-s-2-billion-guarantee-at-risk-as-virus-hits-softbank-star https://www.google.com.au/amp/s/www.bloomberg.com/amp/news/a...
      - geodel 6y ago
        One difference is at least now US media is calling Neuman what he is. Where as Ritesh dude is still an Indian hero as per local media.
- adventured 6y ago
  He got lucky in a big way twice. The reason he was able to lose more money than anyone in history, is because the first time he got lucky like that was with Yahoo when a relatively small investment became worth tens of billions of dollars. He failed to sell though and Yahoo of course didn't have a sustainable position (unlike Alibaba). The epic boom in his Yahoo position is what initially made him famous during the dotcom bubble. It started the mythology of Masayoshi as a finder of those types of investments.
  - sharadov 6y ago
    Masayoshi Son seems like someone who started believing like Midas, that anything he touches would turn to gold. I heard the guy speak, and he seemed full of himself. And he's taken Saudi money, I would not want to be in his shoes to say the least.
    - wolco 6y ago
      He is still way better off than your average hs commentor. It will be easy to pivot into anything.. flower shop.. ebay jeans store the sky is the limit.
    - chmod775 6y ago
      > Masayoshi Son seems like someone who started believing like Midas, that anything he touches would turn to gold. It is so incredibly common in the investment world to mistake extreme luck for skill and cling to flawed methodologies as if they were gospel because they worked once by chance. Your typical investment "strategies" are hardly better than someone bringing his lucky shoes to a gambling den.
  - hkmurakami 6y ago
    Do you mean yahoo japan? They’re a separate company from Yahoo, and still very profitable and a 11 figure item on their balance sheet.
    - adventured 6y ago
      > Do you mean yahoo japan? No. Yahoo US was once worth ~$125 billion ($200b today) and Masayoshi's SoftBank owned 28% of it during the peak bubble days of 1999-2000. [1] Yahoo was a very big deal at the time, it was briefly an Internet juggernaut. That's a key reason why he was so rich during the dotcom bubble. That single position propelled his image and made him famous. To put into perspective how relatively massive SoftBank's Yahoo position was considered to be at the time in the tech world (and more broadly): if you go back to early 1995, it's a sum comparable to what Microsoft was worth ($30-$35b), and more than Intel was worth. The notion that a tech company could be more valuable than the old industrial giants like GM was still a rather confounding premise. [1] https://www.forbes.com/forbes/1999/0705/6401146a.html https://www.forbes.com/forbes/1999/0705/6401146a.html
siruncledrew 6y ago
It's true Adam Neumann is a con - being a con, though, is not industry specific. Elizabeth Holmes is a con and investors still wasted their money on Theranos, which was more moonshot-esque emerging technology than some office buildings. Every industry has snake oil salespeople, and the Vision Fund should have put in more due diligence with their choices.
- lotsofpulp 6y ago
  I think the VCs that invested the money into Neumann and Holmes are also snake oil salespeople, hoping to to dump it off on the public markets during frothy times. Is anyone supposed to believe that the smartest people educated at the finest institutions in the world don't know how to do basic due diligence before throwing their money at businesses that don't scale, yet valuing them as if they do?
  - searchableguy 6y ago
    Or that wealth is not an indicator of anything and some stupid people are rich because of a fragile broken system which doesn't reward based on meritocratic standards always.
  - sjtindell 6y ago
    In my opinion very few of the smartest, most successful businesspeople attribute their success to anything they learned at an institution. There are essentially no traditional institutions that can teach you how to be a great entrepreneur, identify those people, or help them be successful.
    - wolco 6y ago
      A good entrepreneur knows how to navigate a downturn. A successful entrepreneur gets lucky (or puts themselves in better positions) and isn't afraid to gamble.
      - OnuRC 6y ago
Animats 6y ago
Wag. Booking for dog walkers. Why did that ever get funded at a high level? $300 million in funding?
- oh_sigh 6y ago
  What does 10% off the top of the informal dog walking economy look like?
  - dmix 6y ago
    May I draw you a upward line on a chart?
  - vikramkr 6y ago
    in return for what? I'd also like to take 10% off the top of some industry - let's say off of lawn mowing. Cool, so now invest 300 million dollars into my lawnmowing app. What value is it providing? what's going to justify that 10% of the lawnmower market? I've got to go and create a few billion more dollars in value before I can skim off some of it and justify a 300 million dollar investment. I've got to grow the lawnmower market by 11% or create 11% more value before the players in the space would find it worth it to give me 10% of it. I don't know if it was clear how a dog walking startup was going to do that.
    - adrr 6y ago
      Reducing the friction of finding a lawn care company to maintain your lawn for the customer and for the lawn care company, reducing the friction of finding customers. 1-800-dentist is a good example in a non-technology driven scenario. They paired potential patients with dentists for a slice of the pie. There are whole industries that just connect customers with people selling things like real estate. Lawn mowing tech company's competitor is really other adverting platforms and mediums that lawn care companies use to acquire customers. Thats the pie they are eating. 1-800 dentists biggest competitor was the yellow pages in the phonebook.
      - 6y ago
duxup 6y ago
Biotech is a weird space for "tech" like ventures. Generally actual tech startups don't have a lot of patience. Biotech research as I understand it is naturally highly iterative and immediate payouts are rare.
- goatinaboat 6y ago
  Generally actual tech startups don't have a lot of patience. The tech that Silly Valley was originally built on was hardware with multi-year development cycles. “Tech” as a synonym for “ad supported website” is a very recent thing.
  - creamyhorror 6y ago
    1998 is not that recent any more, to be honest. Though admittedly it wasn't called 'tech' back then, but "dot com". Still, it was the same thing: web service startups.
- bsder 6y ago
  > Generally actual tech startups don't have a lot of patience. This wasn't true in the pre-2000. It was only the DotCom(tm) era that spoiled VC's who all wanted hits within 36 months. The history of the valley was the history of slow investments. Semiconductors are money hungry and slow--yet VC's invested in them until about 2000. I would argue a lot of the lack of progress in tech is because all the VC money is chasing fast returns. I find Musk insufferable, but, credit where it is due, he put investment money into two VERY slow industries.
  - ericd 6y ago
    Do you know if the standard 10 year fund life was different back then? If not, I'm curious how that interacted with their relatively slow investments. Maybe it's just that companies went public at a much earlier stage back then.
    - achillesheels 6y ago
ksj2114 6y ago
It certainly was not obvious to everyone that wework was going to flop.
- anm89 6y ago
  It was obvious to anyone that was looking as of about a year ago. It was so flagrantly obvious that it didn't even get the chance to make it to the public markets to flop, because it was clearly visibly a bad enough idea for everyone to run screaming before that was able to materialize.
rubber_duck 6y ago
I have one question related to this - when we are talking these astronomical figures (10s or 100s of billions) - is there actually enough room to create new investment opportunities in such field or would it just bid up the prices on the existing ones and possibly screw up the price/return ratio ? Biotech does not sound like computer programming - I can't turn my hobby project in to a product or train myself to enter the field in a relatively short amount of time ? Let's say you redirect a huge amount of money in to biotech startups - are there really that many opportunities waiting to be invested in ? The way I see it is best case scenario is you bid up the market price and drive interest in the industry - but that's going to lag years and there's no reward for the people going in ? On the other hand real-estate/financial speculation seems almost infinitely scalable in comparison.
- hkmurakami 6y ago
  Many biotech startups sell themselves for 8-9 figures before their drugs or therapies reach full market maturity, so that they transfer remaining risks to larger pharma companies. If we quantify the post acquisition capital spend by the big pharma then we can get a picture for what kind of follow on investment market is available.
lend000 6y ago
> It was obvious to everyone that WeWork was going to flop Always easy to say this so confidently in hindsight, but did you or anyone you know become a millionaire shorting WeWork after it went public? Wag, I get. But I was bullish on the idea of WeWork and the model until the founder's corruption and mismanagement started getting major attention.
- zhoujianfu 6y ago
  (Un)fortunately WeWork didn’t go public!
- tozeur 6y ago
  Precisely. Hindsight is very 20/20. Although about 5 years ago I visited their office as a student and was quite curious to hear they had a multi billion dollar valuation and only a handful of office spaces...
- ineedasername 6y ago
  You can't short a company that never went public. I think there were enough skeptics though that would have raked in a few million when it's valuation dropped from $40+ Billion to wherever it's at now. Of course now everyone claims to have seen it for what it was from the start.
  - intuitionist 6y ago
    Someone—not me, probably not you, but someone—could have made money buying credit default swaps on WeWork debt.
    - ineedasername 6y ago
      Definitely not me. WeWork was barely on my radar as a thing until the last exorbitant round of funding, to which my reaction was, "seems high, but I don't know much about their market competition or growth prospects." Though it took very little time at all after that for it to look sketchy: CEO paying himself to sell his work product, as CEO, back to the company was a bit of a sign that mass value extraction and/or strip mining was taking place.
vladislav 6y ago
Seriously. The entire annual budget of the NSF if $7.8B. When throwing around that kind of money deep tech becomes a hedge.

Judgmentality 6y ago

> The only valid critique of our approach I've heard is that it's a logistical pain to try and spread $100 billion around $5 million at a time. It's almost as if the fund was just a terrible idea to begin with. Masayoshi Son is famous for losing more money than anyone in modern history. https://arstechnica.com/information-technology/2012/10/how-sprints-new-boss-lost-70-billion-of-his-own-cash-and-still-stayed-rich/ https://arstechnica.com/information-technology/2012/10/how-s... He made lots of investments but made all his money on Alibaba. In my opinion, he's actually a below average investor, and that bar is pretty fucking low. And it really shows when you look at how horribly the Vision Fund is performing. He got lucky once and has cultivated a personality around it, and people were dumb enough to believe him. He's not the brilliant investor that Warren Buffet is, he's the talented con man that Adam Neumann is. Maybe that's why he was happy to give him so much money.

N1H1L 6y ago
SoftBank is also Oyo's biggest investor, and get ready to hear about the billions they will lose there too.
- gordon_freeman 6y ago
  I had absolutely worst experience at Oyo. I had an overnight flight from Delhi to SFO and went there to get a few hours of sleep but ended up shouting frequently at their unprofessional staff for making too much noise. I could not get any sleep and thought I could have been better served by just reaching the airport early instead of staying at Oyo. Just adding my feedback here to illustrate that they have absolutely no oversight to maintain the quality standards at the hotels being booked by them.
  - mkagenius 6y ago
    Ritesh Agarwal the CEO of Oyo, is a bigger con-artist(1) than his fellow Neuman. Now if you indulge me, I propose that he will attribute his failure to Covid-19 and be forgiven unlike his fellow Neuman who didn't had that luck. Oh and an intereting fact, Sequoia just sold all its shares in Oyo, a few months back with a good ROI. Sequoia does make money even with con-artist founders. They are good. 1. https://www.livemint.com/Companies/7CN7u5d4i3bfYgBAZLdLpM/Will-the-real-Ritesh-Agarwal-please-stand-up.html https://www.livemint.com/Companies/7CN7u5d4i3bfYgBAZLdLpM/Wi...
    - robbiep 6y ago
      Already happening right? https://www.google.com.au/amp/s/www.bloomberg.com/amp/news/articles/2020-04-12/son-s-2-billion-guarantee-at-risk-as-virus-hits-softbank-star https://www.google.com.au/amp/s/www.bloomberg.com/amp/news/a...
    - geodel 6y ago
      One difference is at least now US media is calling Neuman what he is. Where as Ritesh dude is still an Indian hero as per local media.
adventured 6y ago
He got lucky in a big way twice. The reason he was able to lose more money than anyone in history, is because the first time he got lucky like that was with Yahoo when a relatively small investment became worth tens of billions of dollars. He failed to sell though and Yahoo of course didn't have a sustainable position (unlike Alibaba). The epic boom in his Yahoo position is what initially made him famous during the dotcom bubble. It started the mythology of Masayoshi as a finder of those types of investments.
- sharadov 6y ago
  Masayoshi Son seems like someone who started believing like Midas, that anything he touches would turn to gold. I heard the guy speak, and he seemed full of himself. And he's taken Saudi money, I would not want to be in his shoes to say the least.
  - wolco 6y ago
    He is still way better off than your average hs commentor. It will be easy to pivot into anything.. flower shop.. ebay jeans store the sky is the limit.
  - chmod775 6y ago
    > Masayoshi Son seems like someone who started believing like Midas, that anything he touches would turn to gold. It is so incredibly common in the investment world to mistake extreme luck for skill and cling to flawed methodologies as if they were gospel because they worked once by chance. Your typical investment "strategies" are hardly better than someone bringing his lucky shoes to a gambling den.
- hkmurakami 6y ago
  Do you mean yahoo japan? They’re a separate company from Yahoo, and still very profitable and a 11 figure item on their balance sheet.
  - adventured 6y ago
    > Do you mean yahoo japan? No. Yahoo US was once worth ~$125 billion ($200b today) and Masayoshi's SoftBank owned 28% of it during the peak bubble days of 1999-2000. [1] Yahoo was a very big deal at the time, it was briefly an Internet juggernaut. That's a key reason why he was so rich during the dotcom bubble. That single position propelled his image and made him famous. To put into perspective how relatively massive SoftBank's Yahoo position was considered to be at the time in the tech world (and more broadly): if you go back to early 1995, it's a sum comparable to what Microsoft was worth ($30-$35b), and more than Intel was worth. The notion that a tech company could be more valuable than the old industrial giants like GM was still a rather confounding premise. [1] https://www.forbes.com/forbes/1999/0705/6401146a.html https://www.forbes.com/forbes/1999/0705/6401146a.html

siruncledrew 6y ago

It's true Adam Neumann is a con - being a con, though, is not industry specific. Elizabeth Holmes is a con and investors still wasted their money on Theranos, which was more moonshot-esque emerging technology than some office buildings. Every industry has snake oil salespeople, and the Vision Fund should have put in more due diligence with their choices.

lotsofpulp 6y ago
I think the VCs that invested the money into Neumann and Holmes are also snake oil salespeople, hoping to to dump it off on the public markets during frothy times. Is anyone supposed to believe that the smartest people educated at the finest institutions in the world don't know how to do basic due diligence before throwing their money at businesses that don't scale, yet valuing them as if they do?
- searchableguy 6y ago
  Or that wealth is not an indicator of anything and some stupid people are rich because of a fragile broken system which doesn't reward based on meritocratic standards always.
- sjtindell 6y ago
  In my opinion very few of the smartest, most successful businesspeople attribute their success to anything they learned at an institution. There are essentially no traditional institutions that can teach you how to be a great entrepreneur, identify those people, or help them be successful.
  - wolco 6y ago
    A good entrepreneur knows how to navigate a downturn. A successful entrepreneur gets lucky (or puts themselves in better positions) and isn't afraid to gamble.
    - OnuRC 6y ago

Animats 6y ago

Wag. Booking for dog walkers. Why did that ever get funded at a high level? $300 million in funding?

oh_sigh 6y ago
What does 10% off the top of the informal dog walking economy look like?
- dmix 6y ago
  May I draw you a upward line on a chart?
- vikramkr 6y ago
  in return for what? I'd also like to take 10% off the top of some industry - let's say off of lawn mowing. Cool, so now invest 300 million dollars into my lawnmowing app. What value is it providing? what's going to justify that 10% of the lawnmower market? I've got to go and create a few billion more dollars in value before I can skim off some of it and justify a 300 million dollar investment. I've got to grow the lawnmower market by 11% or create 11% more value before the players in the space would find it worth it to give me 10% of it. I don't know if it was clear how a dog walking startup was going to do that.
  - adrr 6y ago
    Reducing the friction of finding a lawn care company to maintain your lawn for the customer and for the lawn care company, reducing the friction of finding customers. 1-800-dentist is a good example in a non-technology driven scenario. They paired potential patients with dentists for a slice of the pie. There are whole industries that just connect customers with people selling things like real estate. Lawn mowing tech company's competitor is really other adverting platforms and mediums that lawn care companies use to acquire customers. Thats the pie they are eating. 1-800 dentists biggest competitor was the yellow pages in the phonebook.
    - 6y ago

duxup 6y ago

Biotech is a weird space for "tech" like ventures. Generally actual tech startups don't have a lot of patience. Biotech research as I understand it is naturally highly iterative and immediate payouts are rare.

goatinaboat 6y ago
Generally actual tech startups don't have a lot of patience. The tech that Silly Valley was originally built on was hardware with multi-year development cycles. “Tech” as a synonym for “ad supported website” is a very recent thing.
- creamyhorror 6y ago
  1998 is not that recent any more, to be honest. Though admittedly it wasn't called 'tech' back then, but "dot com". Still, it was the same thing: web service startups.
bsder 6y ago
> Generally actual tech startups don't have a lot of patience. This wasn't true in the pre-2000. It was only the DotCom(tm) era that spoiled VC's who all wanted hits within 36 months. The history of the valley was the history of slow investments. Semiconductors are money hungry and slow--yet VC's invested in them until about 2000. I would argue a lot of the lack of progress in tech is because all the VC money is chasing fast returns. I find Musk insufferable, but, credit where it is due, he put investment money into two VERY slow industries.
- ericd 6y ago
  Do you know if the standard 10 year fund life was different back then? If not, I'm curious how that interacted with their relatively slow investments. Maybe it's just that companies went public at a much earlier stage back then.
  - achillesheels 6y ago

ksj2114 6y ago

It certainly was not obvious to everyone that wework was going to flop.

anm89 6y ago
It was obvious to anyone that was looking as of about a year ago. It was so flagrantly obvious that it didn't even get the chance to make it to the public markets to flop, because it was clearly visibly a bad enough idea for everyone to run screaming before that was able to materialize.

rubber_duck 6y ago

I have one question related to this - when we are talking these astronomical figures (10s or 100s of billions) - is there actually enough room to create new investment opportunities in such field or would it just bid up the prices on the existing ones and possibly screw up the price/return ratio ? Biotech does not sound like computer programming - I can't turn my hobby project in to a product or train myself to enter the field in a relatively short amount of time ? Let's say you redirect a huge amount of money in to biotech startups - are there really that many opportunities waiting to be invested in ? The way I see it is best case scenario is you bid up the market price and drive interest in the industry - but that's going to lag years and there's no reward for the people going in ? On the other hand real-estate/financial speculation seems almost infinitely scalable in comparison.

hkmurakami 6y ago
Many biotech startups sell themselves for 8-9 figures before their drugs or therapies reach full market maturity, so that they transfer remaining risks to larger pharma companies. If we quantify the post acquisition capital spend by the big pharma then we can get a picture for what kind of follow on investment market is available.

lend000 6y ago

> It was obvious to everyone that WeWork was going to flop Always easy to say this so confidently in hindsight, but did you or anyone you know become a millionaire shorting WeWork after it went public? Wag, I get. But I was bullish on the idea of WeWork and the model until the founder's corruption and mismanagement started getting major attention.

zhoujianfu 6y ago
(Un)fortunately WeWork didn’t go public!
tozeur 6y ago
Precisely. Hindsight is very 20/20. Although about 5 years ago I visited their office as a student and was quite curious to hear they had a multi billion dollar valuation and only a handful of office spaces...
ineedasername 6y ago
You can't short a company that never went public. I think there were enough skeptics though that would have raked in a few million when it's valuation dropped from $40+ Billion to wherever it's at now. Of course now everyone claims to have seen it for what it was from the start.
- intuitionist 6y ago
  Someone—not me, probably not you, but someone—could have made money buying credit default swaps on WeWork debt.
  - ineedasername 6y ago
    Definitely not me. WeWork was barely on my radar as a thing until the last exorbitant round of funding, to which my reaction was, "seems high, but I don't know much about their market competition or growth prospects." Though it took very little time at all after that for it to look sketchy: CEO paying himself to sell his work product, as CEO, back to the company was a bit of a sign that mass value extraction and/or strip mining was taking place.

vladislav 6y ago

Seriously. The entire annual budget of the NSF if $7.8B. When throwing around that kind of money deep tech becomes a hedge.