Softbank $24 Billion down the drain

this video was brought to you by the slight bean agency get the design team behind slide bean to redo your slides go to slidebean.com agency and get 50 off on your first project the legend goes that masayorshi's son wanted to fund the ideas of the future so he created a 30 billion dollar fund that's right 30 billion but just before he met with potential investors he fiddled with the slides and changed the amount the fund wouldn't be 30 billion it would be a hundred billion the investors laughed it out and he didn't lives too short to think small he said and nothing about this journey to become one of the world's most prominent billionaires has been small this company's softbank is a giant in multiple industries with aggressive investment and fast expansion but also controversy and very costly mistakes we are going to talk about softbank in this episode of company forensics the origins when masayoshi's son arrived in the u.s his english was limited but his dreams were big after reading about microchips he felt computers were the future and created his company's softbank in 1981 he began importing pc software from japan and then ventured into the publishing business with pc magazines by 1990s softbank corporation japan became softband corp and now brought services from the us to japan sun created yet another company south bank holdings incorporated to look for investment opportunities and by 1994 he had his eyes on large-scale acquisitions and it didn't take long they're one of their first acquisitions sift davis some discovered none other than yahoo and decided to invest in it and launch yahoo japan which would become a giant umbrella for other internet businesses having evolved into a holding company in 2000 softbank invested in another potential giant alibaba the alliance would include business partnerships joint ventures and investments and by that year sun was briefly the world's richest man only to have 93 of softbank's wealth disappear after the dot-com bubble burst which left him about eight billion dollars so he was still okay softbank then aims to also become a telecom giant by investing in fixed line communications in 2004 and buying vodafone kk in 2006. such moves allowed them to be the exclusive iphone representative in japan which gave them substantial presence and even more buying power and they continued to use that buying power in 2013 softbank purchased sprint nextel one of the us's biggest phone carriers now one of the biggest companies in the world softbank didn't stop the spending spree on their son's vision for the future softbank invested in computers and robotics and even came up with a 300 year plan for the company and it was that attitude that set sun apart i mean how do you take such a vision seriously well sun backed his words with actions that's when he created the famous 100 billion vision fund and the vision fund was a reflection of softbank's attitude its investment is so aggressive the minimum per round is 100 million dollars and softbank's intentions are clear for the japan times sunset this won't be a typical fund most of our investments will range between 20 and 40 making us the largest shareholder and board member in a position to discuss strategy with the founders translated this means control but some have considered sun's investment methods are too risky big risks big payoffs sometimes the vision fund is 100 billion dollars some plans to resupply the hundred billion dollars every two or three years let's put this into perspective according to the national venture capital association the us's entire u.s venture capital industry was 75.3 billion in 2016. and here are some examples of softbank's crazy investments 9.3 billion dollars in uber 2.3 billion dollars in gm cruise and 5.5 billion dollars in dd in 2017 software purchased boston dynamics to further venture into robotics and area sun is sure will grow in the future and there was no sign of stopping sun has repeatedly said i believe the next big bang is going to be even bigger to be ready for that so with one of the most massive funds in the world and the future at grasp it seems the right is perfect but then we get into wework it was an all-out investment in a way only softbank can do in november 2018 softbank invested three billion dollars and another 2 billion in 2019 which skyrocketed weworks valuation from 20 to 47 billion dollars red flags waved all around and they should have at least but the world celebrated weworks valuation and mind you this wasn't the only investment softband made on wework they had invested another 4.4 billion dollars in 2017 and with the final cash injection softbank was basically in control but the hype was short lived from a failed ipo to chaotic management within wework check out our video about it and the current health crisis weworks value plummeted but this is a teaser i can't tell you yet these past two years wework has been a seesaw ride of promises failures mistakes and a very peculiar ceo and even though sun still believes wework will eventually make money he has admitted that the 9 billion bet was a mistake why a mistake well the latest reports value we work at get this 2.9 billion dollars when just last year it was 47 shaking up the world they can say whatever they want i just want to do it my way that has been sun's answer when vc funds call his tactics too aggressive looking to control all the companies under the vision fund but according to experts the problem is about the size business professor stephen kaplan explained per the economic times a 100 billion dollar fund is mind-boggling there's too much capital now so bringing in more capital doesn't make any sense we have seen this story before investment floods into business ideas like driverless cars and robotics the price then spikes and everybody wants a piece of the pie until it all collapses like the dot com bubble and it's not soft banks investments hover around the 100 million dollar mark that's the starting point and most investments are 500 million dollar to a few billions in exchange for up to 40 of the company softbank has shown no signs of slowing down with colossal funding rounds the company's rampant attitude has forced other vcs to have up to their game in the starter world it seems the softbank way is the only way and when we look at sun's life we understand he's always aimed to be the biggest name in the business when he started his company it had only two part-time employees a minuscule company but sun already built a 50-year plan for it and had told the pair of lonely laborers that within five years he'd have 75 million dollars in sales thinking their boss was crazy they quit and he didn't but such visions have faced some grave adversity mirrored in controversy such a massive enterprise will always be in the public eye especially when one of the most prominent investors is knee deep in controversy the saudi arabian kingdom was vital in creating the vision fund back in 2017 with initial funding of 45 of the 100 billion dollars and this was the same kingdom tied to the controversial disappearance of saudi american journalist jamal khashoggi at the saudi arabian consulate in 2018 accusations of murder erupted and political chaos ensued softbank's shares plunged after international pressure on saudi arabia intensified many big names in the business world pulled out of an investment conference in saudi arabia just weeks after the murder but it took softbank up to the last minute to pull out of the conference maintaining a low profile throughout the crisis masayoshi-san spoke to the press in november and quietly refer to the fund's integrity as the there may be some impact and reiterated their relationship with the kingdom as horrible as this event was we cannot turn our backs on the saudi people as we work to help them in their continued efforts to reform and modernize their society well yeah saudi arabia gave them 45 billion of course they just can't walk away from that chaotic recent times these past months have shaken softbank the wework fiasco uber and oneweb not performing well and the health crisis by the first quarter of 2020 southbank reported 24 billion dollars in losses out of which 17 were due to the vision fund and news within the company wasn't positive sun reported he expected 15 of the 88 companies in the vision fund to go bankrupt but he quickly downplayed the situation highlighting that softbank would direct cash originally destined for those failed projects towards other more profitable investments meanwhile the company announced buyback schemes that would help them reduce debt plus the health crisis certainly didn't help who would use businesses like uber wework and many of their other investments media jumped at the flailing prey softbank's monopoly of the investment world and unethical practices to beat out the competition had come back to bite them the company was crashing theodore karasik a financial advisor considered that softbank was a bad investment for everyone in the way it was conceived and executed so is this the end well no just months later softbank clawed its way back how well some of its investments paid off take uber while some people weren't sharing rides they were undoubtedly using the delivery service ubereats which spiked uber's stock 11 in the second quarter which raised the value of other companies like dd and other softbank's investments then there are investments on pharma and insurance which have seen an increase in stock value especially in this critical times plus the federal reserve and the bank of japan have begun buying debt which aided the oscillating company as per the new york times by the beginning of august southbank declared a 12 billion net profit in the second trimester softbank has shaken up the investment world and has lost billions of dollars in the process but when one of those gambles pays off they are riding high so as long as it keeps up with this game the world will have to follow so what do you think about this softbank craziness which of their companies is your favorite let us know in the comments and we'll see you next week [Music] you

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Keywords: slidebean, caya slidebean, company forensics, caya, startups, softbank, softbank ceo, vision fund, softbank stock, softbank vision fund, softbank company, masayoshi son, wework softbank, caya ceo, what is softbank, softbank investment, vision fund softbank, softbank group, softbank news, softbank history, softbank story

Id: _aE5rexfIqI

Length: 10min 36sec (636 seconds)

Published: Tue Oct 06 2020