
SoftBank Gives Startups Billions of Reasons to Hold Off IPOs - dsr12
https://www.wsj.com/articles/softbank-gives-startups-billions-of-reasons-to-hold-off-ipos-1539442801
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xivzgrev
Anyone who takes Softbank money probably didn't do their due dilligence on
what they are like as an investor. I worked at one such company.

It sounds good - they come in and offer a huge investment at a high valuation,
higher than anyone else. About time someone recognizes how valuable your
company actually is!

So you take it. You make an announcement, everyone oos and aahs over your new
valuation. Talent flocks to you, fuck yea. Things are going great!

Fast forward some time. You need some more investment to go chase opp X. Or
maybe you burned thru cash, who knows. So you start fundraising. investors
look at your numbers and say...umm...you've shown some good growth but we dont
agree with Softbank's valuation. We will invest in a downround, or come back
when you've posted even more growth.

Crap. You need money NOW not later. You did NOT realize that high valuation
was a double edged sword. And a downround is totally out of question.

Also working with them is...challenging. Gotta love those 8am calls (latest
they can do Tokyo time). They ask for metrics that kind of make sense but are
different than how you run things so it is a complete waste of time. On the
phone they are oh so polite, but you're never sure what they're actually
thinking.

You're asking yourself why you took their money again? They have had zero
strategic impact (they're a Japanese telco) and now it's making fundraising
more difficult.

Fun times. If I see a company take SB money I assume they are declining (or
soon will) or greedy / short sighted. Or there is the rare actual strategic
benefit sure. But most times there is none.

So why did we work take the money? Sounds like they wanted to avoid going
public. But I wonder if they did their homework on this one.

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DoreenMichele
_but you 're never sure what they're actually thinking._

You remind me of an anecdote about an American working in Asia. They were
constantly frustrated with communication difficulties. One day, they felt they
finally were on the same page with a coworker and they said "We are thinking
along parallel lines." to express this. Coworker agrees.

Later, the problems came back. They referred back to that conversation. Their
Asian coworker says "Yes. Parallel lines never meet."

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mocae
As someone who lives in Germany for quite some time, believe me, Americans are
a problem here too. Smile in your face and drown you in over-politeness while
stabbing you in the back.

Gotta love the straight German way.

~~~
DoreenMichele
For the record, it was an anecdote about people from different cultures not
understanding each other. It was not intended to be a criticism of Asians. It
absolutely wasn't intended to _blame_ Asians for the misunderstanding.

~~~
jameskegel
You don’t have to do this here. Nobody assumed you were saying something with
malicious intent.

~~~
DoreenMichele
It is the routine norm with social issues to look to pin the blame on one
party. That seems to be the default mental model for any social problem.

It is usually not the best explanation and it actively causes all kinds of
problems. I like to give push back against this common assumption wherever
possible.

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takanori
It would seem that softbanks backing by the Saudi brutal regime should give
Silicon Valley idealistic founders moment of pause before accepting their
investment.

WeWork founders banned meat from their office meals can they really accept to
be owned by this fund?

Once the SoftBank money stops flowing does the chamath described Ponzi scheme
stop causing the whole thing Venture backed growth story to unravel?

[https://www.businessinsider.com/softbank-talks-
invest-15-bil...](https://www.businessinsider.com/softbank-talks-
invest-15-billion-to-20-billion-wework-2018-10)

[https://m.youtube.com/watch?v=RwRZtZQoLtQ](https://m.youtube.com/watch?v=RwRZtZQoLtQ)

~~~
dmix
I watched the whole Chamath talk you linked and I'm not sure I'm entirely
convinced. Every couple of years there is a guy like him yelling that this is
all a big ponzi scheme about to collapse.

But Softbank is a poor example given how the invest almost entirely in late
stage companies, mostly with real profitable business models, who would
otherwise easily find plenty of funding in traditional less risky capital
markets (who don't share the same critique but push the same never-ending
growth pressure and often far worse backroom financial trickery).

This is very distinct from the dotcom boom... or you know acutal Ponzi
schemes... which were entities which raised countless millions on zero-value
organizations. He's probably right in some ways but lost me in his
exaggerated/radical positioning which he seems fond of.

~~~
cududa
Chalmath only started talking this way once investors and employees fled his
fund.

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josephjrobison
Anyone think that SoftBank seems to be investing a dangerously large amount of
money in these startups, which could be a big risk if there's multiple
failures? Or is it all good if it's private money?

~~~
shry4ns
I think it's setting a very dangerous precedent. A lot of startups may be
overvalued because of these massive investments

~~~
anonymous5133
IMO, It is quite obvious there is a bubble in tech forming. I look at some of
these companies and don't even know how they can justify the current investor
expectations. I see people justify amazon's high valuation by saying stuff
like "well if they get x % of WORLD retail sales...". It just shows the lack
of depth in understanding that these people have. I am sure there is similar
overly optimistic views occurring in the VC space as well.

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throwaway_trust
This is not right. I'm a founder of Series C startup/venture and I'd be
inclined to take money from SB only if numbers are looking shaky. Going public
creates a strong brand value, and liquidity for all the employees (not just
VCs and founders). Not to mention, makes recruiting easy due to perception of
"this company made it". While there is lot of scrutiny, I think it's worth it
if your numbers are somewhat good (no need to be great as public markets have
shown to be forgiving tech companies if you have bright growth prospects or
you can paint a great futuristic story).

~~~
the_watcher
> and liquidity for all the employees (not just VCs and founders)

As mentioned in the article, SoftBank often buys employee shares, giving them
liquidity without needing an IPO.

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noddy1w
Great that the gains of american innovation are accruing to mysogynist oil
sheiks

~~~
dmix
At least the Saudis are now diversifying into western markets with their
capital. Which they are quickly learning comes with some social and moral
constraints that have been largely invisible in the diplomatic/political
world.

The finance and tech world doesn't need to compromise for some vague fragile
security arrangement in the middle east. But regardless money is money and it
will find an immoral taker at some point. The best we can do is keep the
pressure on companies to hold their investors accountable.

That said, I'm not a fan of bringing the fanatical political tribalism, which
is very popular in the US at the moment, into the tech/business world.

~~~
maxxxxx
"The finance and tech world doesn't need to compromise for some vague fragile
security arrangement in the middle east. "

Once they have investors from there aren't they pretty much beholden to them?

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neurotech1
Non-Paywall: [http://archive.is/YPSte](http://archive.is/YPSte)

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ericintheloft2
Off topic, but how does this work? How can the crawlers bypass the paywall?

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eru
They explicitly allow eg the Google crawler. Not sure about others.

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ericintheloft2
Oh ok! Thx for explanation

