The Vision? Fund
In 2000, Mr. Son put $20 million into Alibaba, a stake that is now worth nearly $119 billion even after SoftBank sold off some of its shares three years ago. That windfall also helped pump up Mr. Son’s personal net worth to an estimated $20 billion.
Through his Japanese conglomerate SoftBank and a $100 billion investment fund, The Vision Fund, Mr. Son has heaved big bets on many of the tech unicorns including Uber, WeWork and Slack. Since his early bet on Alibaba, which cemented his reputation as a farsighted investor, he has detailed a 300 year plan to make SoftBank a leader in artificial intelligence, robotics and other advanced technologies.
Wall Street has more of a "what have you done for me lately" mentality. So despite his win with Alibaba it has started running from companies backed by SoftBank and its Vision Fund. WeWork is in disarray after a botched IPO, Uber’s stock has fallen nearly 30% from its initial offering price in May, and shares in Slackare down more than 40% from its June IPO.
Mr. Son’s chosen start-ups may lack discipline because he lavished hundreds of millions or billions of dollars on them before they had even figured out what customers really wanted and how to turn a profit, said Bill Aulet, a professor at the Massachusetts Institute of Technology’s Sloan School of Management. “Hungry dogs hunt best,” he said.
“I’m hoping this is the tipping point that brings more sanity into the capital markets,” said Len Sherman, a former senior partner at Accenture who is now an adjunct professor at Columbia Business School.
If the stock market does value WeWork at $15 billion, SoftBank could be forced to take a $2 billion loss on its investment in the office-space business, according to analysts at Bernstein. The Vision Fund has made some great picks. It earned roughly $1.5 billion on its 2017 investment in Flipkart, when Walmart acquired that business last year. Despite missteps like WeWork, the fund might need only a few bets that pay off big to make up for losses elsewhere, said Tom Nicholas, a professor at Harvard Business School.
“You cannot think small,” Mr. Son told analysts in May 2017. With the prospect of what he called a “gold rush” in the tech industry, now was the time to “open up our mind, open up our heart and think big.”
Several of Mr. Son’s investments have been disappointments. , In 2013 Mr. Son paid $21.6 billion and took on billions in debt to buy Sprint. He envisioned SoftBank could help Sprint overtake Verizon and AT&T. His plan was to upgrade the company’s network to deliver better services and faster speeds, but he never followed through. Sprint has not only fallen further behind its bigger rivals, but also lost ground to T-Mobile, a smaller competitor.
“It’s been a terrible investment,” Mr. Moffett said.
After several previous attempts to combine Sprint with T-Mobile, Mr. Son finally got Sprint to agree to sell to T-Mobile last year. However the attorney generals of 18 states are seeking to block the combination.
That deal is crucial to Sprint’s survival, Mr. Moffett said. “There’s a very solid argument that Sprint’s equity is worthless if the merger doesn’t go through,” he said.
SoftBank is raising an estimated $108 billion for a second Vision Fund. In July SoftBank said it expected Apple, Microsoft and other companies to contribute to the new fund, but the most important investors in the first fund, Saudi Arabia and Abu Dhabi, are not rumored to be part of it. (Apple declined to comment on the fund, and a Microsoft spokesman said the company’s participation had not changed since the July announcement.)