So who exactly came to the conclusion that they were worth >40B just a few weeks before? How does that math even hold up?
SoftBank to take control of WeWork: Sources
51–60 of 188 posts
Re: SoftBank to take control of WeWork: Sources
#52It's very difficult to see how SoftBank breaks even on this new deal. They're investing $5bn now, with the hope that it's worth more than that when they IPO, but several things have killed that idea. Firstly, their brand is tarnished. Secondly, the growth play will be gone by the time they IPO. Thirdly, the charismatic leader is gone, so the message of "Disrupting" and "We're a tech play' is gone. They've put $5bn in…
I took a look to see if Softbank was hiring any vetting-watchdogs to prevent this in the future. They had one open position. It required all applications to have an extensive history at a prestigous VC firm, i.e. they are looking for people from the in-group. I think a less-incestuous vetting strategy would give more honest results. Too bad, I think there's a lot of people on HN who would excel at this position despi…
I have no particular love for any of the big-name "prestigious" VCs, but ISTM they haven't had much influence at WeWork so far. Instead SoftBank just handed the keys to a crazy dude, with the thought that he would make it rain. Maybe it didn't rain hard enough, but the firm is still in business and now they've gotten rid of the crazy dude. Maybe SoftBank just sees this as a slightly more intense version of the traditional transition from founders to "professional" management? It seems likely to feature a great deal of the equity dilution that founders traditionally suffer...
Re: SoftBank to take control of WeWork: Sources
#53So who exactly came to the conclusion that they were worth >40B just a few weeks before? How does that math even hold up?
Simple, someone gave them money at that valuation (softbank). It doesn't mean the underlying value exists but it does give them that "valuation"
Re: SoftBank to take control of WeWork: Sources
#54This is your annual reminder that Masa Son once lost $70B
Right after making 70B?
I don't think this quip makes any sense. It's like the reverse of a gambler telling you how much they made without telling you how much they lost.
Edit: For clarity, I think if you want to ask how much he made/lost in the dotcom boom, you have to compare his worth before the boom to his worth after the crash. Not his worth at the peak of the boom to after the crash. If you think that's wrong I'm interested to hear why.
Re: SoftBank to take control of WeWork: Sources
#55Earlier quoted context omitted.
WeWork had so many excesses, like paying 100% commission to real estate agents. Softbank can cut out such nonsense, not just the tequila and private jets. Softbank also has full access to the company’s financials and will be in a position to restructure. It’s safe to say they are a lot better informed than we are.
> like paying 100% commission to real estate agents. Why did they do this?
To grow faster and disrupt the market. For a while it was more than a simple commission: it was 100% of the revenue for a whole year. They were also offering one-year free rent to new customers.
Source: https://outline.com/yCcgS5
Re: SoftBank to take control of WeWork: Sources
#56Re: SoftBank to take control of WeWork: Sources
#57Re: SoftBank to take control of WeWork: Sources
#58Wow, what a fall from grace. Weren't they valued at 72 billion earlier?
If you sell a pig to yourself for $72Bn, does that make it worth $72Bn?
It was valued at $20Bn in 2017 based on a $4.4Bn investment from SoftBank (where they were the sole investor). It was then valued at $45Bn in 2018 based on another $3Bn investment from SoftBank (when SoftBank was already the largest investor -- by far). Then, SoftBank made ANOTHER $1Bn investment later in 2018 "valuing" WeWork at $47Bn.
WeWork was ever valued at $72Bn. Maybe you're thinking of Uber.
Re: SoftBank to take control of WeWork: Sources
#59Serious question: given the monstrous scale of softbank, the not so great quality of many of its holdings, and it's ties into multiple world economies, could softbank be a systemic risk to the entire world economy? If Uber took a big write off at this point, not only would American and Japanese companies and Saudi Arabia take major losses but I would imagine big tech stocks in general would start to see a loss in con…
> could softbank be a systemic risk to the entire world economy?
No. The Vision Fund itself is nowhere near large enough to be systemically important, even given a complete loss of all principal.
Also, a lot (most?) of the the risk from SIFIs (https://en.wikipedia.org/wiki/List_of_systemically_important...) is that they're counterparties in tens of thousands to tens of millions of relationships, many of which assume the counterparty is completely reliable. That's not true here; all Softbank and Vision Fund shareholders understand their capital is at risk. Banks also almost inherently use leverage (https://en.wikipedia.org/wiki/Basel_III#Leverage_ratio) more heavily than most other industries.
The other possible results you mentioned are market mechanics. For example, a reversion to more historically-normal P/E ratios is not something that SIFI tries to prevent (or encourage).
Re: SoftBank to take control of WeWork: Sources
#60Earlier quoted context omitted.
Same could have been said for AirBnb, Boston Dynamics, SpaceX etc. Many of the best companies look like risky bets at the start.
How do you consider Boston Dynamics successful? They are continually sold to new owners because nobody knows how they can generate a profit. SpaceX likewise is also in a somewhat murky financial position, although I suspect they will come out doing great in the future. My limited understanding is they are avoiding an IPO because their financials are not up to snuff. AirBnB was heavily derisked before serious investor…
> My limited understanding is they are avoiding an IPO because their financials are not up to snuff.
My understanding is that they're avoiding an IPO because it would jeopardize SpaceX's mission of getting to Mars. When they're privately held, Musk can vet investors to be sure that they're aligned with SpaceX's mission, or ensure that they're powerless enough that they can't make problems if they're not (eg. no board seats). When they're publicly held, things like unveiling Starship when NASA is pissed about Crew Dragon not being ready yet is just inviting a shareholder lawsuit. Wall Street tends to take a dim view of long-term highly risky bets, and going to Mars with privately funded R&D is precisely that.