For decades, Masayoshi Son has flaunted his wealth and power to make SoftBank one of the most prominent names in tech investing. However, following devastating losses from both WeWork and Bitcoin, it’s time to consider that Son might be remembered as one of history’s worst investors.
Son and SoftBank are currently raising more than $108 billion for Vision Fund II. This will be the biggest venture fund ever, beating the record of his Vision Fund I.
Son’s investments in early internet companies like Yahoo! and Alibaba are legendary. However, a closer look exposes a gambler who has almost certainly lost more money than you – or anyone you know – will ever see.
The WeWork fiasco has shed light on SoftBank’s bewildering valuation metrics. After investing in WeWork at valuations as high as $47 billion, WeWork now finds its portfolio darling potentially worth less than $10 billion.
It could have gone even lower had the company went public, which partially explains the decision to scrap its IPO plans.
Ultimately, SoftBank could have to write down its investment in WeWork.
WeWork is the lastest in a string of questionable investments from Masayoshi Son.
In the late 1990s, Son basked in the spotlight for his substantial investments in technology companies. At the time, he had invested in so many internet companies that the stock market’s tech-driven runup briefly made him the richest man in the world. Given the vast digital territory his portfolio companies controlled, he was said to own “25% of the internet.”
When the dotcom bubble burst, Masayoshi Son lost more than $70 billion of his own money. That’s almost as much as the $74 billion lost by Enron. It was bigger than the GDP figures of most countries. No one has ever single-handedly lost that kind of money.
In recent years, Son has had many other colossal failures as well. As the biggest investor in Uber, SoftBank pushed the company to claim a market valuation of more than $120 billion. Today, investors value the company at just $55 billion.
And, who will forget Masayoshi Son’s investment in Bitcoin?
While many retail investors made millions from Bitcoin, Son timed his investment dreadfully and took a $130 million bloodbath.
His big mistake was investing in Bitcoin in late 2017 when it reached its all-time high of almost $20,000.
To a large extent, Masayoshi Son’s investment in WeWork can be compared to the notorious Hunt brothers, who tried to corner the silver market in the 1980s. They accumulated virtually all silver in the market, causing the price per ounce to spike to an all-time high of $50.
Then it plunged, and the Hunt brothers filed for bankruptcy.
The WeWork saga also reflects poorly on the investors who trusted Son and SoftBank with billions of dollars to invest in technology companies. This is mostly because of the success of his early investment in Alibaba. It is also partly because of the image Son has cultivated in investing circles.
According to Dan Baker of Morningstar:
“He is extremely bullish and rarely mentions negatives. Investors are wary of what is not being talked about.”
Maybe WeWork will finally convince large investors to scrutinize SoftBank more carefully before they give the bank even more capital to waste.
Last modified: March 4, 2021 2:40 PM