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SoftBank plans to lend $20B to its CEO and employees amid volatile markets

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Re: SoftBank plans to lend $20B to its CEO and employees amid volatile markets

#41

Post by gnulinux »

rococode wrote: post #4

Tangentially related: Could someone explain to me why SoftBank often seems to be the only major company playing in the "traditional" VC space? We hear of the "SoftBank round", but not, for example, the "Microsoft round" or the "AT&T round". Relative to many companies, SoftBank is not so big. And the bigger companies do have VC-style subsidiaries set up (e.g. Microsoft's M12). But SoftBank seems to make the highest pr…

I work in a SoftBank invested company. SoftBank started investing in us when the company was already ~7 years old and had a pretty high market share, with established technology, big customers etc. So, SB investment is not necessarily an early stage investment. Unfortunately, I don't know if our case is pathological or the common case.

Re: SoftBank plans to lend $20B to its CEO and employees amid volatile markets

#42

Post by danvoell »

mushufasa wrote: post #9
nobrains wrote: post #3

Can someone explain the economical incentives behind this and how it helps SoftBank and the employees? I understand what they are doing but I don't understand how it will work to succeed.

5% for a loan is pretty good these days if it's low risk. With yields way down and now negative, it's hard for companies to make use of cash reserves. If SoftBank has cash, and they know that employees are making way above 5% returns on average ( cough Vision Fund), then it seems like a good investment. For example, 0) SoftBank loans extra cash to Masayoshi Son. 1) Masayoshi Son invests a portion in the next Vision f…

And if the Vision Fund doesn't generate profitable returns? How levered are the employees?

Re: SoftBank plans to lend $20B to its CEO and employees amid volatile markets

#43

Post by matt2000 »

Bad idea: Being dependent on a single company for your salary while also holding mostly that company's stock in your investment portfolio.

Worse idea: Also investing in that same company's highly risky VC fund.

Worst idea: Borrowing money to do so.

Re: SoftBank plans to lend $20B to its CEO and employees amid volatile markets

#44

Post by mrep »

5822130027 wrote: post #8

It's important to understand what SoftBank is, and why betting against them is a bad idea. Globally we are going through a period of deflation. Japanese Banks have been dealing with this problem for 30 years now. BOJ can print money ( yen ) and flood the world and the value of the yen would still go up ! The reason is there is a lot of latent demand for Japanese exports. When Softbank invests in lets say India, ( thr…

> Globally we are going through a period of deflation.

What? Pretty much every country has inflation [0].

> BOJ can print money ( yen ) and flood the world and the value of the yen would still go up !

That is definitely not true. If they were to print 518,755,944,000,000 Yen (2017 estimate for their gdp) and flood the market with it (say by giving every citizen an equal share as a lump sum a la helicopter money [1]) the value would certainly drop.

> From Softbank's perspective it's a win-win, they get to be owners of really important tech companies and at the same time Japanese companies see a demand surge for their products.

So you're saying Softbank doesn't actually care about their return on investments and is really in it to boost Japanese exports? Softbank is big but there's no way any secondary effects from their vision funds investments will return more money to them than the initial investments. Not only that, but your also effectively saying that they were able to swindle 40 billion dollars from the Saudis and I say swindle because the Saudis don't care 1 bit about Japanese exports and are 100% in it for the initial return on investment.

[0]: https://en.wikipedia.org/wiki/List_of_countries_by_inflation...

[1]: https://en.wikipedia.org/wiki/Helicopter_money

Re: SoftBank plans to lend $20B to its CEO and employees amid volatile markets

#45

Post by jacquesc »

tumetab1 wrote: post #31
bsaul wrote: post #28

Earlier quoted context omitted.

OP says SoftBank contributes for 38b to their own 100b fund directly, so i don’t think your explanation is correct... Plus they apparently did the same thing in their first fund a few years ago.

Correct, thanks for that note. It seems that SoftBank wants to fund directly 38b$ and indirectly 20b$ through employees. In the first fund SoftBank contribution seems to have been 28B$ in a total of 93$B. It seems that SoftBank is having a hard time getting the Saudi Arabia to invest again in the new fund. In the first one they put 45B$.

Do you think they're still trying to get more Saudi money after the Jamal Khashoggi government sponsored murder? VCs need to be smart about their LPs. Idealistic startup founders / employees (the one's VCs tend to invest in) don't want to take blood money for their company.

Re: SoftBank plans to lend $20B to its CEO and employees amid volatile markets

#46

Post by onlyrealcuzzo »

selimthegrim wrote: post #39
5822130027 wrote: post #32

Earlier quoted context omitted.

If you want a full comprehensive understanding of what is going on I highly recommend : - https://www.amazon.com/Princes-Yen-Central-Bankers-Transform... There is a huge overlap here with MMT ( Modern Monetary Theory ), but the book was published way before MMT become more widely read. Richard studies what happened in Japan from an economic history prespective. ( I will do a dis-service to the whole topic trying to e…

How is this any different from the Japanese real estate buying sprees of the 1980s?

"This time is different."

Re: SoftBank plans to lend $20B to its CEO and employees amid volatile markets

#47

Post by JumpCrisscross »

jacquesc wrote: post #45
tumetab1 wrote: post #31

Earlier quoted context omitted.

Correct, thanks for that note. It seems that SoftBank wants to fund directly 38b$ and indirectly 20b$ through employees. In the first fund SoftBank contribution seems to have been 28B$ in a total of 93$B. It seems that SoftBank is having a hard time getting the Saudi Arabia to invest again in the new fund. In the first one they put 45B$.

Do you think they're still trying to get more Saudi money after the Jamal Khashoggi government sponsored murder? VCs need to be smart about their LPs. Idealistic startup founders / employees (the one's VCs tend to invest in) don't want to take blood money for their company.

> Do you think they're still trying to get more Saudi money after the Jamal Khashoggi government sponsored murder?

Yes. There has been zero backlash against SoftBank or Saudi-backed VCs from companies or consumers.

Re: SoftBank plans to lend $20B to its CEO and employees amid volatile markets

#48

Post by [deleted] »

cthalupa wrote: post #36
mcthrowaway123z wrote: post #10

Sure we'll pay you, but the only place you can shop is the company store.

No. There's no requirement they invest the loans in the Vision Fund. Nor is there a requirement to take out the loan. We already see something similar at law firms - partnership in a firm means literally buying into it, and one of the perks you receive at many law firms is the ability to take out a loan at favorable rates, particularly to help with said buying in.

[deleted]

Re: SoftBank plans to lend $20B to its CEO and employees amid volatile markets

#49

Post by corodra »

lowdose wrote: post #40
navigatesol wrote: post #38

Earlier quoted context omitted.

> Japan specifically could print unimaginable amount of money and use it to create whatever technology they want. And they're not doing this because...? We are living in truly dangerous times if people actually buy into this nonsense.

You are completely right. This sounds like a fringe academic theory from someone without skin in the game.

Fringe academic theory is being generous. This is more someone watched that ten minute cartoon YouTube video on "how centralized banks really work" and now think they're economic experts.

Re: SoftBank plans to lend $20B to its CEO and employees amid volatile markets

#50

Post by C1sc0cat »

mushufasa wrote: post #22
hollerith wrote: post #20

Earlier quoted context omitted.

>Because you can't just take corporate cash and invest it in a private equity fund. Fiduciary duty requires low risk products, and liquidity. I call bullshit. Specifically, what you wrote is not remotely true under US law or under Japanese law. A company's managers have very broad leeway to spend the company's cash however they like. In fact, if the cash, treasuries, corporate paper, etc, of a company starts to pile…

can't as in "that asset class does not meet the risk and liquidity requirements for cash management in general" not can't as in "de-facto illegal." dereliction of fiduciary duty is illegal, of course the circumstances matter. I think you are conflating capex + investments with overall cash management. They already invest a lot in the vision fund. This is a way for them to route more money into the vision fund on top…

A company that held ALL its cash in a back account would be failing its share holders.

I think maybe you misunderstand what "fiduciary duty" means here.

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