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SoftBank: It's different this time

By EBGuy follow EBGuy   2019 Dec 19, 12:31pm 2,674 views   23 comments   watch   nsfw   quote   share    

SoftBank managed to combine two of the industries of the last bubble, real estate and tech, in a couple of their investments. Compass real estate has followed the grow by any means necessary mantra to become the third largest real estate brokerage company in the US (while still losing money). Their main innovation seems to be high tech signs; they are trying to make real estate transactions paperless as well. Softbank has invested heavily in WeWork and has been forced to take over the business in an attempt to right the sinking ship. I'm not sure they'll be able to bail fast enough, or innovate themselves out of the whole they've dug with electronic subleases for people and organizations that don't have an office space.
Other highlights include holding a gun to Uber's head to force them to take late round investments. SoftBank (SFTBF), the Japanese conglomerate, has reached a deal to invest more than $7 billion in Uber for a 15% stake in the ride-hailing startup, according to sources familiar with the deal. The vast majority of that investment comes from SoftBank buying up shares held by existing Uber shareholders, including employees and earlier investors. SoftBank on Thursday completed a tender offer to buy those shares at a discounted valuation of $48 billion, according to sources.SoftBank is also investing $1.25 billion in new capital in Uber at its most recent $70 billion valuation. As CNNMoney has previously reported, this latter investment was contingent on SoftBank getting enough Uber insiders to sell for it to gain a stake of at least 14%. Uber's current market cap is hoveing around $50 billion. SoftBank has major investments in all the rideshare players; it's not clear if any of them are profitable. The Saudi's appear reluctant to give SoftBank any more investment capital for their Vision II Fund. My gut says SoftBank is going to be one of the bagholders once this bubble pops. YMMV.
1   EBGuy   ignore (1)   2019 Dec 19, 12:38pm     ↓ dislike (0)   quote   flag      

Here's where Masayoshi Son played hardball in 2017: SoftBank Threatens to Invest in Uber’s Arch Rival.
2   EBGuy   ignore (1)   2019 Dec 19, 2:06pm     ↓ dislike (0)   quote   flag      

Yikes! I wonder who gets stuck with this? Pension funds?!
NEW YORK (Reuters) - Shared workplace operator WeWork said on Tuesday it has arranged a $1.75 billion letter of credit with Goldman Sachs that is in the process of being syndicated and whose funds are expected to be available in January.
3   Eman   ignore (0)   2019 Dec 19, 3:44pm     ↓ dislike (1)   quote   flag      

If it weren’t for Alibaba, Masayoshi Son would have been bankrupted. His $20M investment in Alibaba yielded a $50B return.

This time around, he’s playing with OPM to the tune of $100B. Interestingly, he was counting on WeWork to be his next Alibaba. We all know how that went down. His $300M investment in Wag just went sideways too. We’ll find out if the king will make it out alive this time or not once this tech boom is done. Only time will tell.
4   EBGuy   ignore (1)   2019 Dec 19, 6:40pm     ↓ dislike (0)   quote   flag      

This just keeps getting better. I had never heard of Wag...
That said, if you are asking why the fuck does a dog-walking startup need $300 million after raising $60 million or more to walk dogs, know you aren’t alone.
5   EBGuy   ignore (1)   2019 Dec 20, 11:36am     ↓ dislike (0)   quote   flag      

Ykes, I missed this part of the Wag story that unfolded two weeks ago...
SoftBank is selling Wag stake back to company: WSJ
(Reuters) - SoftBank Group Corp’s Vision Fund has agreed to sell its nearly 50% stake in Wag Labs Inc back to the dog-walking startup, the Wall Street Journal reported on Monday citing people familiar with the matter...
Wag, which earlier this year laid off several dozen employees, is letting go a significant amount of the remainder of its workforce, the report said.
6   EBGuy   ignore (1)   2020 Jan 7, 3:08pm     ↓ dislike (0)   quote   flag      

This is a good summary of the shakedowns that I referred to above. From Bloomberg:
Over the past three years, Son has deployed his giant war chest aggressively, threatening to back a startup’s rival if founders refuse his money, or investing in competitors and forcing them to merge. These unsavory tactics only became more bothersome when much-hyped SoftBank-backed IPOs started failing. Now we’re coming to realize that Son is less a technology guru than a die-hard capitalist, reinventing the 19th-century business model by squeezing workers for a bit of extra profit.
Take a look at the Vision Fund’s portfolio. Rather than investing in hard tech such as AI or chip design, a whopping 40% has been funneled into transportation and logistics companies such as Uber and its ride-hailing clones around the world.
7   EBGuy   ignore (1)   2020 Jan 8, 5:03pm     ↓ dislike (0)   quote   flag      

Oh my, it just keeps getting worse. Softbank invested $375 million in a robot pizza business. Send in the unicorns...
SoftBank-backed Zume is laying off 360 employees, representing about half its staff, and shuttering its robotic pizza-making and delivery business.
8   Eman   ignore (0)   2020 Jan 8, 11:31pm     ↓ dislike (0)   quote   flag      

EBGuy says
Oh my, it just keeps getting worse. Softbank invested $375 million in a robot pizza business. Send in the unicorns...
SoftBank-backed Zume is laying off 360 employees, representing about half its staff, and shuttering its robotic pizza-making and delivery business.

“Life is too short to make small bets” - Masayoshi Son.
9   HeadSet   ignore (2)   2020 Jan 9, 6:33am     ↓ dislike (0)   quote   flag      

A robot that bakes a pizza and comes to your house and shoves it up your ass! Imagine the efficiencies it captures removing the need to actually eat pizza!.

How crass and inefficient. One should just get a 3D printer installed in the stomach. Please keep up.
10   EBGuy   ignore (1)   2020 Jan 10, 7:43pm     ↓ dislike (0)   quote   flag      

The fun never stops....
Car-rental startup Getaround plans to lay off roughly 150 employees, or about a quarter of its staff, in a bid to reduce rising costs, people familiar with the matter said. Getaround’s chief executive told The Information that the cuts mostly will involve employees handling day-to-day interactions between car owners and renters.
Getaround joins multiple companies backed by SoftBank’s Vision Fund, the world’s largest tech investor, that have made significant staff cuts recently, as pressure grows for these businesses to demonstrate that they have a path to profitability (see chart). SoftBank, which injected $300 million into Getaround in 2018, is the company’s largest single investor.
11   clambo   ignore (5)   2020 Jan 10, 11:21pm     ↓ dislike (0)   quote   flag      

It's happened before; guys who made money in an investment want to repeat their luck; unfortunately sometimes lightning doesn't strike twice.

Son and his ilk are abundant; there is a lot of money floating around looking for somewhere to go.

I have a friend in Texas; she found a guy who made millions with a start up; now he is investing in her idea for an app which she hopes to charge users to own.

She has done this before; she made a website and it never did anything.

She started a "angel funding" type of group which finds rich "angel" (read; suckers) investors in Texas.

It's funny; she was always telling me how cool WeWork was and how she used their facilities; she also loves Uber.

She doesn't save any money, never buys a SEP-IRA or anything else; she thinks she's going to get rich when one of her apps hits it out of the ballpark.

"Rotsa ruck"
13   EBGuy   ignore (1)   2020 Feb 24, 12:00pm     ↓ dislike (0)   quote   flag      

As the startup boom deflates, a reckoning is coming for Silicon Valley
The retreats are being led by companies that were backed by SoftBank, the Japanese conglomerate with a $100 billion Vision Fund for investing in startups. SoftBank bet big on companies like Uber and WeWork, as well as Colombian delivery startup Rappi and Indian hospitality startup Oyo. All have undergone layoffs in recent months.
“You can’t build on top of something that’s not strong,” said Seth Besmertnik, chief executive of Conductor, a marketing business that WeWork acquired in 2018, which he and others recently bought back.
This month, SoftBank reported that its Vision Fund and other investments led to a $2 billion operating loss in the last quarter of 2019. In a statement, it said some of its startups had acted “quickly and responsibly to make some difficult decisions to better position themselves for long-term success.”
14   EBGuy   ignore (1)   2020 Mar 24, 3:45pm     ↓ dislike (0)   quote   flag      

E-man says
If it weren’t for Alibaba, Masayoshi Son would have been bankrupted.

Looks like Softbank is selling some of its Alibaba stake to raise some cash.

SoftBank Rally Continues as Company Reportedly Plans to Sell $14 Billion of Alibaba Stake

SoftBank (ticker: 9984.Japan) said it plans to buy back up to $18 billion in stock, in addition to a previously announced $4.8 billion repurchase program. The company intends to use the rest of the proceeds of the expected asset sales—about $23 billion—to pay down debt. .
15   EBGuy   ignore (1)   2021 Apr 1, 2:53pm     ↓ dislike (0)   quote   flag      

No profit? No problem.
Compass priced its IPO at $18 a share, at the low end of its reduced range. The company raised $480 million dollars after sharply downsizing is offering on Wednesday.
The company describes itself as an "end-to-end platform that empowers our residential real estate agents to deliver exceptional service to seller and buyer clients" according to its S-1 filing. It was founded in 2012 by Ori Allon and Robert Reffkin.
Compass has 19,385 agents on its platform as of December 31, 2020, covering 46 markets across the United States.
"In 2020, Compass agents assisted home sellers and buyers to transact approximately $152 billion in residential real estate – or 4% of the U.S. market – up more than fourfold from $34 billion in 2018," according to the company.
Revenue in 2019 and 2020 was $2.4 billion and $3.7 billion, respectively, representing a year-over-year increase of 56%. Net losses were $388.0 million and $270.2 million in 2019 and 2020, respectively.

Compass losing money, gaining market share
Compass has also lost money each of the past three years, including a $388 million net loss in 2019. In all, it’s lost $1.1 billion as of Dec. 31, 2020...
Founded in 2012 in New York, Compass boasts 19,000 agents and has raised roughly $1.5 billion from investors, including Masa Son’s SoftBank Group. SoftBank’s Vision Fund holds nearly 35% of Class A shares
16   Zak   ignore (0)   2021 Apr 1, 3:55pm     ↓ dislike (0)   quote   flag      

They say that if you invest in 10 startups, you should expect 8 to fail, 1 to break even, and 1 to make 20x profit over some number of years. This means you are only expecting to make about 2x overall return on investment over some number of years. If that number of years is less than 8, you are beating the market where returns create a doubling about every 8 years.

Now.. if you are off one year, you're only getting a .1 x return of your capital. But if you are ON one year, you might get 100x . Point of the story? Use other people's money and take a cut . This is why its a vision fund(saudi money), and not a Masayoshi fund.
17   EBGuy   ignore (1)   2021 Apr 1, 5:53pm     ↓ dislike (0)   quote   flag      

WeWork discloses $3.2 billion loss in 2020 as it seeks SPAC deal - source
(Reuters) -WeWork lost $3.2 billion last year, the office-sharing startup disclosed in a presentation shown to prospective investors as part of a pitch for $1 billion in investment and a stock market listing, a person familiar with the matter told Reuters.
The company’s losses narrowed from $3.5 billion in 2019 and it plans to go public at a valuation of $9 billion including debt through a merger with a special purpose acquisition company (SPAC), according to a person directly briefed on the presentation that was sent out to existing and potential new investors.
18   clambo   ignore (5)   2021 Apr 1, 7:47pm     ↓ dislike (0)   quote   flag      

I’m still amazed at WeWork; just listening to the snake oil salesman founder for a minute I knew it was bullshit.
19   Patrick   ignore (1)   2021 Apr 1, 7:49pm     ↓ dislike (0)   quote   flag      

WeWork is a real estate company that offers co-working spaces for rent. Their M.O. is the most common of all real estate business models. They lease property from landowners, transform it to create a community feel, and sublease it by the day or month to startups, freelancers, companies and corporations in need of working space.

So they rent wholesale and then sublet space retail.

I suppose it could work, but then why wouldn't the actual property owners do it?
20   FuckCCP89   ignore (5)   2021 Apr 1, 8:12pm     ↓ dislike (0)   quote   flag      

Patrick says
I suppose it could work, but then why wouldn't the actual property owners do it?

Because apparently it doesn't.
21   HunterTits   ignore (4)   2021 Apr 2, 1:16pm     ↓ dislike (0)   quote   flag      

Patrick says
So they rent wholesale and then sublet space retail.

I suppose it could work, but then why wouldn't the actual property owners do it?

Why when they can let thw WeWork idiots take the fall?

WeWork has been an absolute disaster.
22   EBGuy   ignore (1)   2021 Apr 7, 2:53pm     ↓ dislike (0)   quote   flag      

This looks like fun...
'Is this some kind of cult?': Hulu documentary depicts WeWork as the Fyre Fest of tech
Casual followers of the WeWork saga might be surprised to learn that the company’s aspirations extended beyond just co-working. Driven by guidance from SoftBank founder Masayoshi Son that a crazy man always beats a smart man in a fight, Neumann subscribed to the principle of ruthless growth and expansion....
Losing hundreds of thousands on video shoots may seem like a disaster, but the loss was nothing in the grand scheme of WeWork’s burn rate, which at its height amounted to $100 million a week.

My only solace is that they are burning repatriated House of Saud oil money,...
23   Patrick   ignore (1)   2021 Apr 7, 5:33pm     ↓ dislike (0)   quote   flag      

EBGuy says
My only solace is that they are burning repatriated House of Saud oil money,...

Lol, good.

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