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Comment by spaceman_2020 | Hacker News Reader

spaceman_2020

> But if completed, it would represent a huge discount on the company’s valuation when investors led by an arm of SoftBank Group Corp.

Why is it that SoftBank somehow always manages to buy the top?

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I've thought about this too and I think it's because their strategy is structurally flawed. Their focus is on new/newish tech companies, but they don't make $3 million investments. They want to make $3 billion investments.

But when you're buying stakes that size in companies that aren't yet mature, you're almost necessarily going to be chronically overpaying. There just aren't many 4 year old companies that actually have real upside when you're buying in at a $100b or $200b valuation.

When you're making investments that big, you've got to go back to value investing like Warren Buffett or the Norwegian Sovereign Fund. That's the only place to sustainably put billions to work. And you'll have to accept the 8% annual returns that come with it.

If you have that kind of money and you want to invest in newish tech, then you have to accept the fact that your investments will move the market and make that work in your favor. Retail can buy a share here and there but you cannot. So how to make it work in your favor? Ask yourself "who can make productive use of this much money? who needs this much money to even be viable?" And it will be really capital intensive moon-shot type stuff. Self driving cars for instance, but that might already be overcrowded now. AGI in general too, that's kind of a more uncertain bet. Europe needs a shitton of energy investment now, both for geopolitical reasons but also to charge all the electric cars they will start buying soon. Building those nukes or solar+batteries can easily absorb hundreds of billions of dollars. Then there is medicine and biotech but that might take a lot of savvy to capture the value you create by spending on r&d. But like nanobots and brain coprocessors and immortality and stuff that is something we will eventually build and it's not that out of reach. Might wanna figure out some intermediary profitable goals. In summary take a long hard look at what Musk is doing. Except maybe his twitter persona.

Edit: Might wanna take a look at Gosplan too. After all a sufficiently rich investor is indistinguishable from a plan economy planning committee.

Musk is a textbook fraudster who is pioneering fake ideas, especially going to Mars. The maths provided by SpaceX for the Starship just do not translate into good astrophysics.

He over-promises and under-delivers, but there is an actual product. He isn't the kind of fraudster that mails you a bag of bricks.

I met Masa personally a couple times, and used to know several people in his inner circle.

The reason why Softbank buys at the top is because they do not have good internal filters to judge technology. "Masa invests in cr*p," one of them said.

They want the prestige of investing in the best tech companies, and to them, that often translates as "the most overvalued startups with the most media attention."

Their LPs know even less about tech than they do, so who's going to stop them?

For these reasons, Softbank is incapable of making contrarian bets on undervalued companies, and always puts money behind the startups that have already raised too much, too soon.

SoftBank will end up being the reverse Berkshire Hathaway:

Started (accidently) with a lot of money, consistently investing at the top, or in failed hype-projects, in things they didn't understand and end up mostly being negative signalling

My thought exactly. If it were possible to short private companies I would just look for whenever SoftBank leads a round at a nutso valuation.

lol plenty of frothy public cos you could have shorted down 80-90% since beginning of the year don’t need to find private ones…

Exuberance + deep pockets. When you are unconstrained, it is easy to be less judicious about investments.

I very much enjoyed Matt Levine's take on how exuberant Masayoshi Son is.

https://www.bloomberg.com/opinion/newsletters/2019-10-23/mon...

But deep pockets would suggest that you have more.momey to spend on negotiations. A one billion investment justifies spending a million on the negotiations.

how does it still exist and have money left after so many huge failures

It mad wild, wild money through a massive single investment: Alibaba.

Its been searching for the next Alibaba since.

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