After WeWork, SoftBank’s Startup Bookkeeping Draws Scrutiny • Hacker News Board

Re: After WeWork, SoftBank’s Startup Bookkeeping Draws Scrutiny

#31

Post by AlexandrB » Thu, Nov 28, 2019, 4:42 PM UTC

brown9-2 wrote: post #26

TaylorSwift wrote: post #19

Earlier quoted context omitted.

I want to point out that a lot of these valuations are signed off by well-known accounting firms, valuation firms, and consulting firms. If it's really one big conspiracy to prop up valuations via recent financing, loans, or market comparables, then wouldn't one of these parties call it out (well, inherently a lot of these are paid by organizations to do their valuations, so true independence is a question here). Add…

Have you forgotten about the housing bubble and crash of 2007/2008 already?

Exactly. As long as everyone keeps getting paid no one has any incentive to stop the gravy train.

Re: After WeWork, SoftBank’s Startup Bookkeeping Draws Scrutiny

#32

Post by ppf » Thu, Nov 28, 2019, 4:42 PM UTC

thetruthwillout wrote: post #4

alexnewman wrote: post #2

Easy dumb money like SoftBank is the greatest enemy of innovation and progress. Just take a look at the first deck. Companies like Uber, Softbank, WeWork all having trouble with funding is an important step in our economy

On the other hand, you can think of dumb money like SoftBank as desparate money and the jobs it creates as workfare in everything but name. Lots of people who would otherwise not get the chance, are getting paid and stuffing their resumes working for these places. These doomed companies are essentially allowing investors to pay for the training of employees who will be adding value to the not-doomed companies that wi…

>allowing investors to pay for the training of employees who will be adding value

Putting on my most cynical hat, what value is there in flashy web frameworks and marketing hacks?

Re: After WeWork, SoftBank’s Startup Bookkeeping Draws Scrutiny

#33

Post by JumpCrisscross » Thu, Nov 28, 2019, 4:46 PM UTC

The press’s thoughtless repetition of headline valuations didn’t help.

Even in this article, WeWork’s $7.8bn expected valuation is quoted unadorned. It’s a number that was derived by the same people and processes as the $47bn, yet one is ridiculed and the other presented as fact.

Re: After WeWork, SoftBank’s Startup Bookkeeping Draws Scrutiny

#34

Post by chewz » Thu, Nov 28, 2019, 4:48 PM UTC

bvda wrote: post #7

Is there a non-paywalled version?

Funny but this is word for word following Bloomberg.

https://economictimes.indiatimes.com/small-biz/startups/news...

Re: After WeWork, SoftBank’s Startup Bookkeeping Draws Scrutiny

#35

Post by AlexandrB » Thu, Nov 28, 2019, 4:49 PM UTC

thetruthwillout wrote: post #4

alexnewman wrote: post #2

Easy dumb money like SoftBank is the greatest enemy of innovation and progress. Just take a look at the first deck. Companies like Uber, Softbank, WeWork all having trouble with funding is an important step in our economy

On the other hand, you can think of dumb money like SoftBank as desparate money and the jobs it creates as workfare in everything but name. Lots of people who would otherwise not get the chance, are getting paid and stuffing their resumes working for these places. These doomed companies are essentially allowing investors to pay for the training of employees who will be adding value to the not-doomed companies that wi…

Then it would be better to put the dumb money to work fixing/improving infrastructure or doing something else useful. As it stands, some of this looks like one great, big broken window parable[1].

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

Re: After WeWork, SoftBank’s Startup Bookkeeping Draws Scrutiny

#36

Post by hef19898 » Thu, Nov 28, 2019, 4:49 PM UTC

FBISurveillance wrote: post #5

carrozo wrote: post #3

When SoftBank buys shares in a startup and then invests again at a higher valuation, Son says he has made a profit. That is legal under accounting standards, but SoftBank receives no money. The only change is that SoftBank has boosted the value of its original stake from, say, $1 billion to $2 billion by raising the value of the startup. In SoftBank’s income statements and return calculations, at least some of the ad…

Never gets old: https://signalvnoise.com/posts/1941-press-release-37signals-...

Honestly, for the first third or so I wasn't sure if it was satire or not...

Re: After WeWork, SoftBank’s Startup Bookkeeping Draws Scrutiny

#37

Post by dmode » Thu, Nov 28, 2019, 4:53 PM UTC

I am wondering, if Saudis really wanted to flush $100bn down the drain, wouldn’t it have been better spent to uplift poverty and reduce hunger ? At least that will give them positive news coverage to offset all the bad news.

Re: After WeWork, SoftBank’s Startup Bookkeeping Draws Scrutiny

#38

Post by rapsey » Thu, Nov 28, 2019, 4:55 PM UTC

nabla9 wrote: post #18

Traster wrote: post #8

The more I hear about this the more it looks like this entire scheme has turned into a pyramid scheme. Pouring more money into investments to try and boost the valuation. Using previous investments to invest and boost the value of new investments, guaranteeing massive loans in order to get others to invest at huge valuations. It just looks more and more like laundering money through all sorts of different mechanisms…

SoftBank bonds account for half of the bonds sold to Japanese retail investors. Ordinary Japanese savers are going to bet burned if SoftBank collapses.

How much of that is savers and how much the japanese central bank? From what I know they are the ones doing the buying.

Re: After WeWork, SoftBank’s Startup Bookkeeping Draws Scrutiny

#39

Post by code4tee » Thu, Nov 28, 2019, 4:57 PM UTC

There are a lot of VC backed companies that are likely very upside down. You know the types with tons of money raised with very little revenue and little to no profit and an unclear vision on how the entity becomes a real business with a solid profit steam that justifies its valuation. The old model of “it doesn’t matter because we’ll always be able to offload this thing to others and cash out” is dead now.

What we’re seeing unfolding now in the market isn’t a bubble per say but it is the market asserting that revenue matters. Profit matters. Real business plans based on reality matter. Ultimately that’s a very good thing for the innovation industry but things are going to get real ugly for these upside down companies.

Re: After WeWork, SoftBank’s Startup Bookkeeping Draws Scrutiny

#40

Post by mrkstu » Thu, Nov 28, 2019, 4:58 PM UTC

CalChris wrote: post #14

thetruthwillout wrote: post #4

Earlier quoted context omitted.

On the other hand, you can think of dumb money like SoftBank as desparate money and the jobs it creates as workfare in everything but name. Lots of people who would otherwise not get the chance, are getting paid and stuffing their resumes working for these places. These doomed companies are essentially allowing investors to pay for the training of employees who will be adding value to the not-doomed companies that wi…

Workfare. I agree it provides employment but it also bids up salaries. Moreover, anti-unicorns like WeWork make it more difficult for real startups motivated by survival and profit.

Considering past conspiracies to restrain information workers salaries, this may just be restoring some of the missed natural growth. The FAANG companies aren't having any problems keeping up with the Softbank funded companies.