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Masayoshi Son, SoftBank, and the $100B Blitz on Sand Hill Road

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Re: Masayoshi Son, SoftBank, and the $100B Blitz on Sand Hill Road

#41

Post by adventured »

mrhackerpoland wrote: post #35
adventured wrote: post #34

Earlier quoted context omitted.

I'm a fan of Masayoshi Son's audacity. However, the outlandish premise floated in the article (raising $100b funds every few years) is all premised on the back of the freak Alibaba return being repeatable over and over again. That's not going to happen, there's one China and its boom phase is mostly over. The last China-like outcome, was a century prior to that (the US). I watched Masayoshi Son make the same mistake…

There is India around the corner with Japan having excellent ties with it. Next Alibaba will be in India and Mayoshi probably knows it.

That's definitely not a sure thing. For example here are the GDP comparisons between China and India going back to 1975.

GDP, five year increments

India $100b (1975) | $190b | $236b | $326b | $366b | $474b | $834b | $1.68t | $2.1t (2015)

China $163b (1975) | $191b | $309b | $360b | $734b | $1.2t | $2.3t | $6.1t | $11t (2015)

They started out in close proximity, were identical by 1980, and they ended up 35 years later with a 5x difference between them. Why? Poor choices that India made along the way. The point being, the sort of growth China has seen is not automatic, it isn't a given at all that India will make the right choices that lead to it becoming another economic superpower. It may make the right choices. China was only able to generate that expansion through very aggressive focus on traditional industry and manufacturing. India isn't following anything like the path that China did, I don't see where they're going to generate the extraordinary foreign investment that China did by using old-style manufacturing as a magnet for capital that they could then reinvest into domestic expansion. To say nothing of the fact that that style of industrial empire and manufacturing is disappearing, and that disappearance is going to accelerate with leaps in automation that are happening now. It's being discussed as an advancement trap for developing nations, where the ladder of advancement gets wiped out for developing nations by AI, robotics, etc (eliminating jobs that otherwise could employ hundreds of millions of people in places like India and China).

Re: Masayoshi Son, SoftBank, and the $100B Blitz on Sand Hill Road

#42

Post by vezycash »

deafcalculus wrote: post #40
sumedh wrote: post #33

Earlier quoted context omitted.

> Walmart could've started out on their own. They could have and it would have taken years to build a brandname or they could buy an established player and get the brandname from day one. Walmart went with the other option. That is how big companies operate, nothing to do with India. Is Google a fool to buy youtube when they had Google Video?

Fair point. I'd argue that youtube has way higher network effects than an ecommerce shop and that Google paid a comparatively smaller 1B$ for a richer global market than the 16B$ that Walmart paid to grab a bite of the Indian market, especially with the political risk involved. I'll also wager that Walmart could've spent a lot less by getting exclusive deals on new smartphones along with deep discounts to quickly gra…

1. Time and cost of building and growing a new e-commerce platform, especially for a giant like Walmart is non-trivial. I bet the requirement design alone would take a year to be approved.

2. Big companies often fail in new and unfamiliar markets.

3. Consider acquisition price inflation. If YouTube was created in this period, its selling price would be near $20B just like WhatsApp.

Re: Masayoshi Son, SoftBank, and the $100B Blitz on Sand Hill Road

#43

Post by baybal2 »

Current leader of Saudi Arabia is not a smart man, this is the only reason Son managed to coax them into this.

Remember, the true nature of that fund is floating right under ones nose - it is a nation scale LBO scheme, backed by enormous amount of debt.

They look to buy few other monopoly businesses that they hope will be making money with the same ease as oil, but, obviously, that's not possible.

A very naive assumption on their behalf.

Re: Masayoshi Son, SoftBank, and the $100B Blitz on Sand Hill Road

#44

Post by enahs-sf »

You could do a lot of interesting things with a fund of that size. It also changes the landscape of late stage and growth companies because they can now potentially raise at valuations that allow them to utterly dominate their competition. This has always been the dream for entrepreneurs: figure out product market fit, then raise insane amounts of money to pour on growth. If you’re a couple orders of magnitude away from your next closest competitor, it’s going to be tough for them to compete.

Re: Masayoshi Son, SoftBank, and the $100B Blitz on Sand Hill Road

#45

Post by anomatopoeia »

adventured wrote: post #34
jbhatab wrote: post #4

"Son tells Bloomberg Businessweek that he plans to raise a new $100 billion fund every two or three years and will spend around $50 billion a year. For perspective, in 2016, the entire U.S. venture capital industry invested $75.3 billion, according to the National Venture Capital Association." This is an absurd statistic. If that's actually true, startups have a long and potentially exhilarating road ahead of them. I…

I'm a fan of Masayoshi Son's audacity. However, the outlandish premise floated in the article (raising $100b funds every few years) is all premised on the back of the freak Alibaba return being repeatable over and over again. That's not going to happen, there's one China and its boom phase is mostly over. The last China-like outcome, was a century prior to that (the US). I watched Masayoshi Son make the same mistake…

Yes this was and remains my thoughts since the fund was first announced - this whole thing very much echoes the previous strategy in certain respects.

Two key differences:

1. Stage of investment

Last go round Son was writing a vast number of (relatively) small checks in early stage companies before stumbling into late stage investments like Webvan. Standard VC stuff - playing the averages and buying a lot of lottery tickets. Alibaba was only $20MM investment as I recall

This time around he seems to be making massive investments in much later stage companies. What is the rosiest possible outcome for his $7BB Uber investment? and how does this compare to the alternatives for an investment of this size?

2. Makeup of the fund

This article touches on it but important to note that this is not a $100BB pile of equity from the partners. The fund is structured with a substantial debt component - ie the fund needs to pay out a coupon every year so very different structure than typical VC funds. I understand the reasoning behind this but things could get difficult in a hurry should the market take a big turn at the wrong time in the funds cycle.

Will be fascinating to follow

Re: Masayoshi Son, SoftBank, and the $100B Blitz on Sand Hill Road

#47

Post by happy-go-lucky »

jbhatab wrote: post #4

"Son tells Bloomberg Businessweek that he plans to raise a new $100 billion fund every two or three years and will spend around $50 billion a year. For perspective, in 2016, the entire U.S. venture capital industry invested $75.3 billion, according to the National Venture Capital Association." This is an absurd statistic. If that's actually true, startups have a long and potentially exhilarating road ahead of them. I…

I wonder if innovation, if any from startups, has any place in this landscape, especially when the atmosphere looks so aggressive! It makes me feel extremely belittled! Is it just money vs. innovation?

Re: Masayoshi Son, SoftBank, and the $100B Blitz on Sand Hill Road

#48

Post by rockinghigh »

adventured wrote: post #36
wp381640 wrote: post #24

Earlier quoted context omitted.

$34B is a lot in company scales but not a lot when it is the vast majority of a government budget used to sustain a very plush lifestyle for millions of people. Saudi has been running huge deficits and have had to dig into their reserves to the tune of hundreds of billions of dollars to sustain their spending. In the first five months of '15 they had to draw $65B from reserves just to meet costs[0] They've introduced…

Further to that point, Saudi Arabia's population is expanding very rapidly, putting immense strain on those limited resources (which have to be used to continually pacify the population). From 10m people in 1980, to 33m today.

That's only 3% growth per year.

Re: Masayoshi Son, SoftBank, and the $100B Blitz on Sand Hill Road

#49

Post by nojvek »

contingencies wrote: post #15
shanghaiaway wrote: post #12

Earlier quoted context omitted.

The technology isn't there. There will never be self driving cars.

If the world should blow itself up, the last audible voice would be that of an expert saying it can't be done. - Peter Ustinov, via http://github.com/globalcitizen/taoup

Cruise seems to operate like it has an unlimited reserve of money. They also have a bit of a broculture. They are hiring like wildfire.

All self driving tech is in its early days to call it “self - driving”. So it will be interesting to see how the future pans out.

May be you can indeed keep on throwing ridiculous amounts of money and something and make it work. May be not.

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