Early last year, Masayoshi Son told employees at an internal SoftBank work conference: The valuation of startups is still soaring, and your investment is not radical enough!
He asked the assistant to create a form dedicated to tracking potential investment targets who have not accepted their own money yet. According to the "Wall Street Journal ", he has further simplified the rules and processes of investment decisions internally.
Sun’s radicalism made some employees who still remember poor results in iconic cramming investments such as WeWork, and felt puzzled and panic.
More than a year later, Masayoshi Son once again without surprise: Due to the significant reduction in the valuation of SoftBank Vision Fund's investment targets, the fund size has evaporated seriously. SoftBank recorded a shocking loss of about US$24.5 billion in this quarter, setting the highest in the history of the group.
Masayoshi Son attributed the main reason to the uncertain environment and the depreciation of the yen, indicating that "the world is in great confusion."
, and he currently chooses two stop-loss ways: 1) no longer initiate new investments; 2) make every effort to reduce expenses, "We need to reduce costs, there is no place to avoid the impact."
Once upon a time, SoftBank used hundreds of billions of dollars of banknotes as a sledgehammer to bend the market rules of venture capital. However, today's SoftBank is facing a situation: not only the hammer is no longer useful, but even the hammer is almost impossible to afford.
SoftBank's investment logic complete bankruptcy
financial report documents show that SoftBank Group recorded about 3.2 trillion yen (the file is marked approximately US$24.5 billion) net loss, breaking the largest single-quarter loss record just set in the last quarter in just three months.
In fact, SoftBank Group's investment in other physical industries is quite good, and its losses are almost entirely due to the vision fund of investing in innovative and entrepreneurial companies.
In this fiscal quarter alone (April-June), the Vision Fund evaporated approximately US$23.1 billion, with the first and second phases accounting for about half each. Compared with the net loss of US$26.2 billion in the previous quarter, this quarter can only be said to be a little bit better.
A previous article in Silicon Star Man once mentioned : Masayoshi Son, who has tasted too many painful lessons of failure, seems to no longer believe in the cramming investment logic he once believed in. For example, last year, SoftBank took drastic participation in the investment of Klarna, a European buy-in and pay-in financial company, but was cheated because of the decline in Klarna's valuation.
result compared to the radicalization of the first issue, the second issue is not conservative, but it is just a radical approach. The total scale of the second phase of the vision fund is much smaller than that of the first phase, but it has made several times more investments than the first phase: Public information shows that as of the end of March this year, the second phase of the fund has made 252 investments, and the first phase has only made 94 investments today. In the Vision Fund disclosure documents, the list of the first issue is less than one page, but the second issue is two and a half pages...
Although the quantity is large, the investment amount is much smaller. public information shows that the total investment of Vision Fund this quarter is only about US$600 million, a fraction of US$20.6 billion in the same period last year...
So if SoftBank was eyeing a few ducks inflated water a few years ago, today's SoftBank is more like sprinkling water at a group of ducks.
However, even if you cast a wide net like the second phase, it will be difficult to catch a big fish like the first phase. Taking SoftBank’s listed investment targets selected in the disclosure documents as an example, can see that the first phase investment portfolio earns half of each profit and loss, and basically all the profits are completely withdrawn, while the second phase is basically losing, and it has not yet completely withdrawn:
In order to stop the loss, Masayoshi Son announced that he would completely stop the business expansion of the second phase fund, and he will focus on managing the investments he has made for the next period of time and will no longer initiate new investments.
——It can be said that all SoftBank’s investment logic has finally gone bankrupt this time.
As one of the most successful investment cases in SoftBank's investment department's history, Alibaba has made a lot of money for this Asian investment giant.SoftBank still holds its shares. However, just last week, the Financial Times reported that SoftBank took away about one-third of its Alibaba shares by selling prepaid forward contract this year, or about $22 billion.
So far, SoftBank has sold more than half of Alibaba's shares.
Of course, Alibaba's long-term growth prospects are still very impressive, which is why SoftBank has not completely cashed out - but today's SoftBank found that not only spending money in investment is useless, but even the money is almost not enough.
Tokugawa Ieyasu
At a time, SoftBank's investment department was proud of blowing bubbles and indeed enjoyed a striking record of six or seven years under the hands of Masayoshi Son. And yesterday, Masayoshi Son had to admit that the company had been blowing too big in valuation in the past.
With poor performance and investment strategies in bankruptcy, SoftBank and Masayoshi Son have completely lost their reputation in the financial investment circle. Even the executives who once worshiped Masayoshi Son and were extremely loyal to him, left the Asian investment king.
According to Bloomberg, two partners of Vision Fund, Yanni Pipilis and Munish Varma, announced their resignation at the end of July, which means that the number of top executives leaving Vision Fund in the past two years has exceeded ten:
SoftBank’s No. 2 person, Rajeev Misra, the direct boss of Vision Fund, also announced his withdrawal from SoftBank’s front-line work in July this year. Although he still retains his position as CEO of the first phase of the fund, Bloomberg reports that he will focus more on the new fund he has established. SoftBank Group's chief strategic officer, Katsuki Sago, who is considered a core figure in Japan's financial industry, resigned in March last year. Another legendary manager, Marcelo Claure, the chief operating officer who was arranged to "fight the fire" at WeWork, also announced his resignation this year - SoftBank could not even afford the $2 billion breakup fee he asked for...
There are rumors that he missed the problems of excellent companies such as ByteDance, Meituan , Xiaomi , and some SoftBank investment partners had previously been dissatisfied with Masayoshi Son. Such frequent talent loss reflects the serious performance and strategic problems of SoftBank's investment department and the distrust of executives in Masayoshi Son himself.
It is worth mentioning that on the first page of the financial report meeting presentation document, Masayoshi Son's team put out a very unique and profound painting, which cleverly allused to the dilemma faced by Masayoshi Son:
"Pink"
The character in this painting is Tokugawa Ieyasu, a well-known Japanese historical figure, depicting a famous event in the history of Warring States :
Ieyasu had great political ambitions, but at that time, he was a retainer under the Oda Nobunaga . He was eager to compete for his achievements and recklessly sent troops to provoke his opponent Takeda army, but he was defeated by Sanfanghara, and even his substitute was beheaded. Ieyasu fled back to his castle in a panic. When he calmed down, he found that his pants were very sticky and uncomfortable. It turned out that he was incontinent on the road because he was too scared...
But Ieyasu did not hide his embarrassment at that time, but simply found someone to draw his embarrassment at the time and put it in the bedroom, checking and remembering the lessons of recklessness at all times, so he left behind this famous painting "Fen Si".
borrowed this painting, Masayoshi Sun cleverly admitted that he was extremely embarrassed in the face of bad performance, tasted the taste of failure and learned an important lesson: "We lost 6 trillion yuan in half a year, and I also need to reflect deeply and remember this lesson at all times."
*Note: The cover image comes from Yoshio Tsunoda/AFLO Image, and the copyright belongs to the original author. If you do not agree to the use, please contact us as soon as possible and we will delete it immediately.
