Bloomberg Businessweek - USA (2019-12-23)

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incaptivity.Thefollowingyear,binSalmanwasimpli-

catedbytheCIAandtheUnitedNationsintheassassi-

nationanddismembermentofa U.S.-basedjournalist

fortheWashingtonPost, JamalKhashoggi.(BinSalman

hasdeniedtheaccusations.)

Sonignoredthecontroversy,otherthananacknowl-

edgmentatthestartofhisNovember 2018 earningspre-

sentation.Inotherpublicappearances,hestucktohis

usualshtick,whichistomakegrandioseprognoses.

He’sa bigproponentofthesingularity,themythological

crossovereventwhenartificialintelligenceovertakes

humanintelligence.“Everyindustrythatmankindcre-

atedwillberedefined,”heproclaimedina 2017speech.

FewinSiliconValleytakeFuturistMasaseriously.(A

PowerPointpresentationforhiscompany’s300-year

planincludeda robotpassinga cartoonhearttoa human

withthewords“InformationRevolution- Happinessfor

everyone.”)Andyeteveryone,it seems,hasbeenhappy

totakeSoftBank’smoney.

In 2017 theVisionFundmademorethan$21.2billion

ininvestmentsin 19 companies,includingcommitting

$4.4billiontoWeCo.,theparentofWeWork.Outsiders

wereskepticalofSon’soutsizecapital.“Theonlyother

timewesawthatkindofmoneycomeintothetechindus-

trywas1999,2000,andthatendedbadly,”saysSteven

Kaplan,co-founderoftheentrepreneurshipprogramat

theUniversityofChicagoBoothSchoolofBusiness.

ThestrategythatSonandhisall-malephalanxof

managingpartnersfollowedseemedlessaboutany

specifictechnologythanaboutplacinglargebetson

thebuzzieststartups:WeWork($10.7billion),Uber

($7.7billion),on-demandpizzamakerZume($375mil-

lion),anddog-walkingappWag($300million).They

investedina fewhardcoreartificialintelligencecompa-

nies,too.Portfoliocompaniesexpandedquickly,often

haphazardly,leadingtoa collectionthatincludedhigh-

profiledisappointmentsandtheconspicuousdisaster

atWeWork.SoftBank’sstarry-eyedinvestorsconvinced

themselvesthatWeWork’soutrageousoperatinglosses

andtheerraticbehaviorofco-founderAdamNeumann

didn’tmatter—untilpotentialpublic-marketinvestors

remindedthemthat,actually,theydid.

AndtheVisionFund’sproblemsdon’tstopwithsome

badbets.Currentandformeremployeesofthefundand

SoftBankdescribeanenvironmentofsycophancytoward

Son,internecinepoliticalrivalries,harassment,compli-

anceissues,andanabnormallyhightoleranceforrisk—

allwrappedina casingofgeneralweirdness.

R

aisedinJapanbya middle-classKoreanfamily,

Sonmadea fortuneinvestingintechnologyin

the1990s.HebrieflysurpassedBillGatesasthe

world’swealthiestperson,lostalmosteverythinginthe

dot-comcrash,thenwonit allback.In 2000 heinvested

$20millionintheChinesee-commercecompanyAlibaba

GroupHoldingLtd.;hisstakeisnowworthmorethan

$130billion.Hismostlysuccessfultrackrecordledhimto

announcethe$100billionVisionFundin2016.

Sonlikestosaythatthefundreflectshisbeliefthat

startupclusters can patternthemselvesaftergun-

senryaku, theJapanesetermdescribingthecooperative

behaviorofmigratingbirds.Severalportfoliocompa-

nies,includingMapbox(digitalmapping)andFungible

(dataservices),describepartnershipswithanothercom-

pany,ARM(chipmaking),thatwouldhavetakenmuch

longertoforgewithoutSoftBank’snudging.DoorDashis

deployingtechnologyfromGMCruise(autonomousvehi-

cles)asit testsself-drivingcarsforfooddelivery.Fanatics

(sportsapparel)is workingwithSouthKorea’sCoupang

(e-commerce)asit expandsintothatcountry.Katerra

(modularconstruction)recentlystrucka dealtobuilda

headquartersforIndia’sPaytm(payments).

ButtherealstrategybehindtheVisionFundseems

toinvolveanotherMasaprinciple:Bigmoneymeansbig

No one “wants to pick a fight with a crazy guy”

The SoftBank Effect

Didi

$60b

40 b

20 b

0 b

2010 2019

One97

60

40

20

0

2010 2019

60

40

20

0

Grab

2010 2019

60

40

20

0

DoorDash

2010 2019

60

40

20

0

Oyo

2010 2019

60

40

20

0

WeWork

2010 2019

60

40

20

0

OlaCabs

2010 2019

Valuation* of startups backed by the Vision Fund ◼SoftBank becomes an investor