Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

After WeWork, SoftBank’s Startup Bookkeeping Draws Scrutiny

bloomberg.com

Post reply on HN
Print view View original

81–90 of 157 posts

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

#81

Post by somebodythere »

onlyrealcuzzo wrote: post #58
nabla9 wrote: post #18

Earlier quoted context omitted.

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

Isn't SoftBank able to get negative yielding loans (essentially paid to borrow money) from the BoJ also? And doesn't the BoJ own a signficant portion of SoftBank stock? The Japanese economy sounds like a dystopian Capitalist hellhole to me. I'm hoping I'm just wrong about everything, and it's actually fine.

The BoJ owns 9.78% of Softbank. https://group.softbank/en/corp/irinfo/stock/ownership/

Softbank cannot borrow directly from the BoJ because it is not an actual bank. However, they recently issued bonds at a 1.38% rate: https://economictimes.indiatimes.com/markets/bonds/gone-in-1...

Welcome to NIRP.

Thankfully, Softbank's internal exposure to the Vision Fund is quite limited. Also, they have a sizeable liquid stake in Alibaba worth $100 billion they can unwind if they start needing cash. I don't think retail SoftBank investors are in imminent danger, but I do think the BoJ eating up so much liquidity in sovs is pretty crazy.

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

#82

Post by ghaff »

reaperducer wrote: post #54
papito wrote: post #17

Earlier quoted context omitted.

Thankfully the regulations saved the public before WeWork could enter the stock exchanges. As long as it stays this way, I really don't care if Saudi Arabia sinks billions of dollars into a turkey like I will sink my teeth into one tonight.

The risk is that suddenly all tech investors will want to know what's going on with all of the companies they invested in, and demand actual returns and not pixie dust and double talk. Can you imagine if the SV bubble was held to the same expectations as real world companies? Half of the Bay Area would curl up and blow away overnight.

How big is the frothy part of the SV tech (and tech adjacent) landscape relative to the tech landscape as a whole though--much less relative to the total Bay Area economy?

It looks to me as if companies that seem to have no credible business plan are already starting to be punished. I don't doubt that scrutiny will probably increase further and people should probably think harder about joining startups that don't seem to have a path to profitability.

But I expect something like a major downturn in ad tech would have a much greater impact than some will-never-be-profitable startups circling the drain.

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

#84

Post by ghaff »

CPLX wrote: post #63
claudeganon wrote: post #15

Earlier quoted context omitted.

I think that you’re correct and what is happening is that, in our era of extreme inequality, pyramid schemes are being forced farther up the food chain. It used to be that you could make a pretty penny soaking the lower classes directly with things like MLMs. But as their wealth was hollowed out by globalization and the Great Recession, you have to shift your predation upward to things like their pension funds, sover…

Don’t forget “cryptocurrency”

Arguably crypto was more about FOMO. End result doesn't look much different of course.

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

#85

Post by OnlineGladiator »

Barrin92 wrote: post #73
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…

Agreed, and I also found it extremely hilarious that Softbank styled itself as the "300-year company", but their biggest investments are ridesharing companies, a real estate subleasing company, several eCommerce stores and so on. I mean, if you're going all-in on the future where is the biotech, pharmacology and the robots? It's not just softbank that to me looks fishy, the entire industry looks like it has drunk its…

> I mean, if you're going all-in on the future where is the biotech, pharmacology and the robots?

The Vision Fund has invested billions into robotics companies. Cruise is making self-driving cars. Nuro is making autonomous delivery bots. Zume is supposedly automating pizza (I say supposedly because they do have a robot for making pizza, but their valuation is almost entirely "justified" by a patent to cook food in a moving vehicle - yes really).

Granted, I think the way they invested in these companies still has all of the financial shenanigans of their investments and they really aren't long-term plays - but they are putting more money into robotics than just about anyone. That said, I don't think it's going to bear fruit.

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

#86

Post by Animats »

dpflan wrote: post #47
dpflan wrote: post #29

Earlier quoted context omitted.

This is an interesting point. Do you have data / references? I’m very curious about this. I’ll search on my own too.

Cursory searching is revealing: - Softbank "now responsible for more than half of all corporate and financial debt issuance" in Japan [1] - Softbank's own bond data [2] - Seeking Alpha's review of SB's bond [3] [1] https://www.ft.com/content/24c4a8a8-7885-11e9-bbad-7c18c0ea0... [2] https://group.softbank/en/corp/irinfo/stock/bond/ [3] https://seekingalpha.com/article/4308627-forget-uber-wework-...

Issuance, not holdings? What fraction of outstanding debt in Japan?

If Uber and WeWork both go to zero, how big a hit is that?

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

#88

Post by zby »

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…

"We have talked about this strategy before, and actually reading the article mostly assuaged my concerns about SoftBank’s bookkeeping. In fact, SoftBank says that it doesn’t aggressively mark up its unicorn portfolio (and take accounting profits) every time it pumps in more money on its own. When it invests in later rounds alongside other investors, providing some external validation for the new valuation, it will mark up its stakes (but “only after taking into account future cash flows and public market proxies, as well as private market funding prices”). But, for instance, SoftBank and its associated Vision Fund “never took profits from WeWork by marking it all the way up to $47 billion,” since it was the only investor in at those levels; instead it marked WeWork at levels that other investors also paid." from Matt Levine newsletter

Journalists exaggerate as always - it is hard to get real info from mainstream press.

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

#89

Post by Akababa »

> In early 2018, the founders of Chinese artificial intelligence startup SenseTime Group Ltd. flew to Tokyo to see billionaire investor Masayoshi Son. As they entered the offices, Chief Executive Officer Xu Li was hoping to persuade the head of SoftBank Group to invest $200 million in his three-year-old startup.

> A third of the way into the presentation, Son interrupted to say he wanted to put in $1 billion. A few minutes later, Son suggested $2 billion. Turning to the roomful of SoftBank managers, Son said this was the kind of AI company he’d been looking for. “Why are you only telling me about them now?” he asked, according to one person in the room.

This sounds more like an episode of Dragon's Den than a firm responsible for billions of dollars of investors' money. Doesn't quite inspire confidence...

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

#90

Post by zackmorris »

I'm deeply concerned about the direction that the tech world is going. I had hoped that early successes like eBay and PayPal would lead to democratization and egalitarianism, but sadly that's not the case. Where I had hoped to see something like a gig economy where anyone could jump in and out of work when they needed money, and multiple sources of ~$100,000 funding for startups, today I see a doubling down on race-to-the-bottom competition and austerity.

There is less money available now for independent work than there was in the 80s and 90s because we have to work so hard at consulting just to survive. There have been few raises in any industry (the starting wage for an engineer in 2000 was $60,000 per year) but housing and medical costs are many times higher than they were. Millions (yes millions) of the brightest minds of a generation are underemployed in sweatshops, call centers and IT. Even working full time, it can take several years to even save $10,000. Much less reach a level of spirituality that allows one to rise above the waste of life that is the working world today, and build inventions that could substantially raise the quality of life for everyone. Work is now the opposite of progress, not its source.

Meanwhile banks give millions or even billions of dollars to corporations making nebulous claims about how to turn the most promising technologies into profitable returns. When a couple of people in a garage somewhere could do the same thing for 1/1,000 or 1/1,000,000 of the money. Imagining what tens of thousands of those teams with $100,000 could do in medicine, alternative energy, sustainability.. the list goes on and on.

Concerns like this are beginning to dominate my psyche to the point where I'm not sure I want to be in tech anymore. I have serious doubts about where all of this is going. Where are the examples of cooperation? Of steadily increasing personal wealth with simultaneous reduction in work (also known as real technology)? Where are the examples of tech billionaires making it and working to make that possible for all the rest who failed?

My greatest concern today is that speaking the truth is now viewed as being negative.

So just be mindful in these times and don't dwell too much on the truth. I think it's more useful to imagine a new truth that transcends the boundaries placed in front of us. That's how technology began.

Have a Happy Thanksgiving everyone!

Post reply on HN