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SoftBank: It's different this time


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2019 Dec 19, 12:31pm   3,488 views  29 comments

by EBGuy   ➕follow (0)   💰tip   ignore  

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.

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1   EBGuy   2019 Dec 19, 12:38pm  

Here's where Masayoshi Son played hardball in 2017: SoftBank Threatens to Invest in Uber’s Arch Rival.
2   EBGuy   2019 Dec 19, 2:06pm  

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   2019 Dec 19, 3:44pm  

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   2019 Dec 19, 6:40pm  

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   2019 Dec 20, 11:36am  

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   2020 Jan 7, 3:08pm  

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   2020 Jan 8, 5:03pm  

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   2020 Jan 8, 11:31pm  

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   2020 Jan 9, 6:33am  

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   2020 Jan 10, 7:43pm  

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   2020 Jan 10, 11:21pm  

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   2020 Feb 24, 12:00pm  

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   2020 Mar 24, 3:45pm  

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   2021 Apr 1, 2:53pm  

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   2021 Apr 1, 3:55pm  

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   2021 Apr 1, 5:53pm  

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   2021 Apr 1, 7:47pm  

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

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   RWSGFY   2021 Apr 1, 8:12pm  

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


Because apparently it doesn't.
21   EBGuy   2021 Apr 7, 2:53pm  

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,...
22   Patrick   2021 Apr 7, 5:33pm  

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





Lol, good.
23   EBGuy   2021 Sep 20, 2:57pm  

Posting here as well to continue to track the Sons of Softbank...
If Compass hopes to reach profitability, it will face pressure to stop lavishing its agents with incentives. In a widely circulated investor note, David Trainer, an analyst at New Constructs, wrote that “Currently, the company looks more like a traditional brokerage with flashy marketing, whose only advantage is a virtually unlimited ability to burn cash” and added “SoftBank needs this IPO more than investors do.”
24   EBGuy   2022 May 10, 9:08pm  

SoftBank Faces Record Loss as Masayoshi Son’s Bets Tumble Again
The world’s largest tech fund is estimated to have lost about $18.6 billion on its public portfolio alone during the quarter ended Mar. 31, even greater than the record $18.3 billion drop marked in the fiscal second quarter, according to Kirk Boodry, an analyst at Redex Research who publishes on SmartKarma. That would mean a loss for the Vision Fund unit of about $10 billion, accounting for SoftBank’s stake in each fund, Boodry estimates.
It’s a drastic reversal from a year ago when Son took the stage in Tokyo to announce SoftBank had earned more money in a single quarter than any Japanese company in history.
25   EBGuy   2022 Aug 9, 2:21pm  

‘I am quite embarrassed and remorseful’: SoftBank CEO plans widespread cost cuts as tech investments suffer, leading to a $23 billion loss
Japanese conglomerate and tech investing powerhouse SoftBank revealed on Monday that it lost $23 billion between April and June, the most significant quarterly loss in the company’s history.
CEO Masayoshi Son's multibillion-dollar investment spree over the past few years has turned into a nightmare for SoftBank in 2022 as rising interest rates and recession fears decimated tech shares and venture capital investments.
“When we were turning out big profits, I became somewhat delirious, and looking back at myself now, I am quite embarrassed and remorseful,” the CEO admitted at a press conference on Monday.
Son added that he will be making big changes at the company’s tech-focused venture capital funds, called Vision Funds, over the coming months, looking to be “more selective in making investments,” because “the market and the world is in confusion.”
26   EBGuy   2022 Aug 15, 2:09pm  

A bunch of rich VCs break it down...

e91: SoftBank's $21B+ Vision Fund loss, signals of a bubble, macro picture, Trump raided by FBI

It should be noted that WeWork gets a dishonorable mention in the podcast. Guess who's coming back...

Adam Neumann's new company gets big check from Andreessen Horowitz
Adam Neumann is back.
The founder of WeWork, whose spectacular rise and fall has been chronicled in books, documentaries and a scripted television series, has a new venture — and a surprising backer. Neumann is starting a new company called Flow, focused on the residential real estate market, the DealBook newsletter reports. Notably, it has the financial support of Andreessen Horowitz, the prominent Silicon Valley venture capital firm that was an early investor in everything from Facebook to Airbnb. Andreessen Horowitz is considered royalty among early stage investors, so its backing is a powerful sign of support, and perhaps a rebuke to Neumann’s critics, who have described his leadership of WeWork as a cautionary tale of corporate hubris. The firm’s investment in Flow is about $350 million, according to three people briefed on the deal, valuing the company at more than $1 billion before it even opens its doors. The investment is the largest individual check Andreessen Horowitz has ever written in a round of funding to a company...
“It’s often underappreciated that only one person has fundamentally redesigned the office experience and led a paradigm-changing global company in the process: Adam Neumann,” Andreessen wrote in a note posted on his firm’s website Monday, explaining his rationale for investing in the company.

At its height, WeWork was valued at some $47 billion. After a botched public offering and tales of mismanagement, it imploded spectacularly. Neumann was ousted from WeWork in 2019, but he walked away with hundreds of millions of dollars. Today, WeWork has a market value of about $4 billion.
Andreessen wrote that “we love seeing repeat-founders build on past successes by growing from lessons learned.” For Neumann, he added, “the successes and lessons are plenty.”
27   EBGuy   2022 Sep 2, 8:01pm  

Beleaguered women's co-working space The Wing shuts down all of its locations OVERNIGHT - with members finding out via EMAIL - after battling the pandemic, allegations of racism, and the departure of its founding CEO
Members paid upwards of $250 a month for access to all clubhouses and their facilities, including lactation rooms, phone booths named after feminist icons, and workspaces heated to the female-friendly temperature of 72 degrees.
They were granted access to exclusive events such as intimate talks with Hillary Clinton, Alexandria Ocasio Cortez, and Jennifer Lawrence.
The Wing also offered chartered busses to feminist rallies, classes such as 'Prenup 101,' and community discussions with titles like 'F**k Harvey Weinstein.'
Within three years, the company had a total of 11 locations and had raised more than $100 million in investments, including $28 million from WeWork.
28   EBGuy   2022 Nov 11, 9:29pm  

SoftBank Is Said to Expect About $100 Million Loss on FTX Stake
SoftBank Group Corp. invested just under $100 million in the crypto exchange FTX.com and anticipates writing down the entire value of the stake, according to a person familiar with the matter.
The Japanese company’s exposure to FTX has been the subject of much debate in recent days after co-founder Sam Bankman-Fried warned that without a cash injection the company would need to file for bankruptcy.
29   EBGuy   2023 Jun 6, 12:44pm  

SoftBank’s Onetime Pizza-Robot Darling Shuts Down
Zume, which raised $375 million from SoftBank to automate pizza-making with robots before switching to developing sustainable packaging, has shut down.
The company is insolvent and has retained restructuring firm Sherwood Partners to liquidate the assets for the benefit of the creditors, an alternative to bankruptcy, according to Martin Pichinson, Sherwood Partners’ cofounder. It ceased operations late last month, according to a person with direct knowledge.

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