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

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

#101

Post by WikipediasBad » Thu, Nov 28, 2019, 8:15 PM UTC

Alex3917 wrote: post #48

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…

> 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 to create paper gains that don't reflect reality. Is this uncommon? E.g. I don't have any inside info…

You're not completely off base, in fact, you are 100% on the money (no pun intended). This was such an obvious situation to everyone even remotely paying attention that you'd have to be living under a rock to not see what was actually going on.

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

#102

Post by empath75 » Thu, Nov 28, 2019, 8:18 PM UTC

fogetti wrote: post #100

> "They pump up valuations to get higher returns to look good to investors" says Eric Schiffer Seriously??? Who, even with half a brain could not understand that that's how venture capital works by definition???

In theory it works by actually building valuable companies, not by running pump and dump schemes.

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

#103

Post by empath75 » Thu, Nov 28, 2019, 8:20 PM UTC

zby wrote: post #88

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 ma…

So one guy thinks it’s fine. Everybody, it’s okay.

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

#104

Post by fogetti » Thu, Nov 28, 2019, 8:24 PM UTC

kolbe wrote: post #99

zackmorris wrote: post #90

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-t…

This sounds mildly interesting, but you make a lot of grand claims and support none of them. I would love to read about your concerns more deeply in a longform, where all these ideas can actually be related to one another, and with support for your claims based in data and real world examples. I would suggest you do this for your own mental health, because it's not at all clear to me why the world of (let's call it)…

Well then maybe you should do the same thing first to set an example? Because what the OP describes is actually pretty much real. I would suggest you to check out Guy Standing and his research first.

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

#105

Post by fogetti » Thu, Nov 28, 2019, 8:28 PM UTC

rchaud wrote: post #62

JumpCrisscross wrote: post #33

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.

I agree, seeing those numbers repeated over and over was bad, but as it wasn't a public company, the only information available was from the horse's mouth. Usually stories did mention their mounting losses and relatively small revenue, once that info became available.

But isn't that how valuation works works by definition? Why is this model of financing under scrutiny only now???? Blows my mind...

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

#106

Post by pkaye » Thu, Nov 28, 2019, 8:31 PM UTC

OnlineGladiator wrote: post #85

Barrin92 wrote: post #73

Earlier quoted context omitted.

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…

> patent to cook food in a moving vehicle

Also known as a food truck.

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

#107

Post by OnlineGladiator » Thu, Nov 28, 2019, 8:45 PM UTC

pkaye wrote: post #106

OnlineGladiator wrote: post #85

Earlier quoted context omitted.

> 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…

> patent to cook food in a moving vehicle Also known as a food truck.

It's a little more nuanced than that. If you didn't happen to be an expert on both robots and restaurants (as you can imagine, this is an extremely niche group) you would actually think it is an innovative solution. In fact, before the Vision Fund even existed, I was surprised how many investors were looking into this exact space (food trucks for pizza that cook the food during delivery). However, once you dig into the details, it quickly unravels into another valuation-inflating scheme for Softbank.

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

#108

Post by paggle » Thu, Nov 28, 2019, 8:54 PM UTC

pkaye wrote: post #106

OnlineGladiator wrote: post #85

Earlier quoted context omitted.

> 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…

> patent to cook food in a moving vehicle Also known as a food truck.

Not really. One of the characteristics of American car culture is that the land that your car occupies as it travels, or makes short deliveries, is not charged “rent.” So unlike a food truck or restaurant, where you need to pay rent for setting up the thing, if you cook and deliver food from a moving vehicle your land costs, which are some of the biggest costs of a restaurant, can be just misappropriated from the public.

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

#109

Post by domnomnom » Thu, Nov 28, 2019, 8:55 PM UTC

kolbe wrote: post #99

zackmorris wrote: post #90

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-t…

This sounds mildly interesting, but you make a lot of grand claims and support none of them. I would love to read about your concerns more deeply in a longform, where all these ideas can actually be related to one another, and with support for your claims based in data and real world examples. I would suggest you do this for your own mental health, because it's not at all clear to me why the world of (let's call it)…

Yeah dude I’ll get right on that research paper you’d obviously like to see and skip spending time with my family on thanksgiving.

(That’s what you’re essentially suggesting isn’t it?)

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

#110

Post by tenpies » Thu, Nov 28, 2019, 8:58 PM UTC

mathattack wrote: post #96

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…

The Saudi government was the major investor. He pays them back with positive PR. It becomes tricky when he mixes Vision Fund business with SoftBank business.

And if you're the Saudi government, your biggest concern is probably not Softbank, the Vision Fund, or WeWork - it's the Aramco IPO.

The valuation range for that was comical with it being anywhere from slightly under $1 Trillion USD to $2 Trillion USD depending on who you ask. I mean you can use WeWorks as a scale for that sort of spread.