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After WeWork, SoftBank’s Startup Bookkeeping Draws Scrutiny

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

#91

Post by phire »

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 normal accounting practice.

Not only is it legal, it's essentially legally required for companies to track the changes in the value of their assets.

It matters more in the downward direction, a company has to know when they are insolvent (owe more money than assets they hold) because they are required to file for bankruptcy. Value of an asset goes down, they need to update the books and make sure they don't have too much debt.

The only real issue, are the valuations accurate? If they're not, then it might be accounting fraud.

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

#92

Post by johneth »

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

Are you sure? I just Googled 'The Master Trust Bank of Japan Ltd.' (the only listed shareholder with 9.78% ownership) and it seems to be owned by Mitsubishi Trust Bank and a bunch of other banks, and nothing to do with the BoJ...

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

#93

Post by chance_state »

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…

There's a similar anecdote about WeWork, where as Masayoshi Son and Adam Neumann are leaving the WeWork offices in a car to see Masayoshi Son off to the airport, Masayoshi Son says "forget the $1B we talked about in there, find a way to spend $5B."

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

#94

Post by rossdavidh »

dmode wrote: post #37

I am wondering, if Saudis really wanted to flush $100bn down the drain, wouldn’t it have been better spent to uplift poverty and reduce hunger ? At least that will give them positive news coverage to offset all the bad news.

Presumably, they thought it would give them the money they weren't going to get by doing an Aramco IPO, since they didn't want the scrutiny that required.

I am wondering if there is any anger stirring in Saudi Arabia about how the west took their money and basically played with it, with no realistic opportunity of making a profit?

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

#95

Post by jimiray »

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 is my favorite comment in this thread. We keep pouring billions into ride sharing, scooters, co-working to prop up crap business models that have no path to profitability to benefit a few.

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

#96

Post by mathattack »

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.

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

#97

Post by hughpeters »

It's good for tech that the public market's response to WeWork has brought some well deserved scrutiny to SoftBank. Their investing behavior over the last several years has pushed up VC valuations to unhealthy levels and contributed to this "Unicorn or die" startup culture.

A high private valuation alone is not an accomplishment. While revenue growth, happy customers and a clear path to profitability are accomplishments worth celebrating. Hopefully after this SoftBank fiasco more startups and VCs will focus on fundamentals more than jaw dropping valuations.

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

#98

Post by [deleted] »

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…

[deleted]

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

#99

Post by kolbe »

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) 'socialized investing' is a better world than our current one. And I think you should at least have a well research model to base your concerns in before they "dominate your psyche."
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