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

131–140 of 157 posts

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

#131

Post by lowdose »

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…

That "300 year" was double speak like Mark Zuckerberg says "Social Media".

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

#132

Post by rokhayakebe »

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…

I feel you, but bankers do not owe lone developers anything. If you want to see something exist in this world, you need to figure a way to make it happen. There have been many new technologies that have been brought into this world by people with close to nothing. In fact, not having the funding (initially) may be a good first test. If you really think it should exist, then it is on you to find the time to make it happen.

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

#133

Post by ShroudedNight »

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)…

Maybe I'm missing something, but this article that was well-received yesterday seems surprisingly apt:

https://americanaffairsjournal.org/2019/11/the-real-class-wa...

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

#134

Post by joshu »

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…

this is why venture funds leading consecutive up-priced rounds is rare. their LPs do not like them to price their own shares and would prefer if there was external validation.

(when you see the previous lead do another round it can be at the same valuation which isn’t quite the same thing)

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

#135

Post by whatok »

Animats wrote: post #86
dpflan wrote: post #47

Earlier quoted context omitted.

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?

Issuance should be roughly equal to holdings for retail investors in Japan as the market for those only exist because JGBs pay nothing.

I think if both of those went under it looks extremely bad but SoftBank Group gets a dividend from the SoftBank Corp (telecom) that has enough dependable operating income that should be good for servicing debt. Additionally, SoftBank Group is still trading at a discount to its BABA stake + everything else.

There definitely is an increasing chance of a perfect storm where multiple bad things happen that could quickly evaporate this whole thing:

- China gets worse domestically with or without trade war ratcheting up and BABA is collateral damage

- S/TMUS merger fails from domestic regulatory pressure (just had TX and NV AGs settle but other states are not on board still)

- UBER, WEWORK, and others (Oyo?) get dragged and there are some feedback loops on other portfolio companies

- Funding pressures. There was an article on FT about domestic banks being skeptical on lending more to SOFTBK. Stuff like that becomes a self-fulfilling prophecy after a while and can quickly spiral out of control. That said, SOFTBK has something like 20bn cash on hand so that should only really become a problem if there's prolonged weakness.

- Vision Fund 2 more than likely not going to be able to raise its envisioned amount. Obviously no one wants to touch this right now. I think there's definitely been internal discussions on how some of this $ would be used to bail out VF1 portfolio companies through acquisitions. Additionally, if I had to make a forecast, there's not enough companies out there right now that could absorb $100bn of VC money and be able to profitably exit.

I think the biggest problem going on right now is that all of these companies were built upon endlessly flowing capital and business models were based on that. Now that everyone is focused on "profitability", I'm not sure if you can easily pivot some of these business models without completely imploding businesses. None of these companies have created anything that consumers cannot live without. VC-subsidized luxuries brought to the masses can have a very fleeting existence; people got around before UBER. If any of these companies ever try to raise prices in an attempt to display profitability, they could be in a rude awakening for ECON101 price elasticity/inelasticity lesson.

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

#136

Post by whatok »

somebodythere wrote: post #81
onlyrealcuzzo wrote: post #58

Earlier quoted context omitted.

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…

The BoJ does not own 9.78% of SOFTBK; the Master Trust Bank of Japan does. Here is their website:

https://www.mastertrust.co.jp/

I don't know much about them but from a brief look they look comparable to BNY Mellon.

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

#137

Post by Danieru »

thkim wrote: post #21
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…

Could it be that Vision Fund is a grand scheme to vacuum global liquidity, especially from the Middle East? In the absence of war these days, Weapons of Financial Mass Destruction might exactly be what is needed.

Sadly for such a scheme the Vision Fund is structured with the Saudi money backed by the SoftBank stake. Thus loses and mis-spending will fall on the shoulders of SoftBank Group shareholders before they eat into Saudi's portion.

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

#138

Post by syndacks »

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…

Sounds like a (nice) summary of this zinger: https://news.ycombinator.com/item?id=21635896

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

#139

Post by brightrooms »

Akababa wrote: post #89

> 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 m…

Sounds like Son is trying to get rid of money? Reminds me of Brewster's Millions ( excellent film - can't go wrong with Pryor and Candy ). Maybe Son has to get rid of $100 billion to get $1 trillion?

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

#140

Post by trump2024 »

valleycynical wrote: post #127
Alex3917 wrote: post #48

Earlier quoted context omitted.

> 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…

Same thing happened with Sam Altman and Loopt. A Sequoia VC who put money into Loopt pulled strings to get Green Dot to acquire it, allowing Altman and his supporters (chiefly PG) to claim it to be a success: > https://news.ycombinator.com/item?id=3684357 Altman went on to become YC President, and has publicly toyed with the idea of running for Governor. Graham has even insinuated that Altman should be PotUS

Graham is the same dude who "realized" Microsoft is irrelevant. Don't take him seriously.
Post reply on HN