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Sun Zhengyi in the storm

Masayoshi Son, who fell from the altar, may be more worthy of record than Masayoshi Son who is the “God of Investment”. The so-called “Godfather” type of figure in the venture capital world has experienced ups and downs in his life over the past three years. He runs the world’s largest venture capital fund, betting on technology companies around the world in an almost gambler fashion.

In VC circles, no one can compete with a behemoth with a huge amount of money. The “Most Powerful Investor in Silicon Valley” was a game-changer and faced backlash from the bust. Revolutionary, desire for control, idealism, speculator… These are not enough to describe him, and more people like to use the word “crazy” to summarize, including himself.

On the afternoon of May 12, 2022, Masayoshi Son, Chairman and President of SoftBank Group, announced the latest financial report of SoftBank Group in Tokyo, Japan: In fiscal year 2021, SoftBank Group will have a net loss of approximately RMB 90 billion, and its Vision Fund will have a net loss of approximately RMB 90 billion. RMB 140 billion.

This is SoftBank’s biggest loss to date in venture capital history.

At the earnings conference, Sun Zhengyi looked solemn. He said, “In this chaotic world, the method we should take is defense.”

He cited that the number of new crown infections in the world has exceeded 500 million, the prices of oil, natural gas and wheat have risen, the consumer price index has risen by 12%, the Federal Reserve has entered a cycle of raising interest rates, and the Nasdaq index, which is dominated by technology stocks, has fallen by 27%. Due to the new crown epidemic and the conflict between Russia and Ukraine, the world has begun to enter a “chaotic mode”. He said that he does like to attack in character, but now SoftBank needs to defend.

Masayoshi Son’s investments are all over the world, and he is building a business empire dedicated to the information revolution by investing. To a certain extent, SoftBank is also a vane of the prosperity and trough of technology companies.

According to research firm Carta, from the end of 2021 to the first quarter of 2022, the valuation of a group of high-growth startups will drop by an average of about 42%. And according to a survey by the website Layoffs.fyi, U.S. venture-backed startups have laid off more than 8,200 jobs since March 2022.

Start-up technology companies have begun to tighten their belts, and the stock prices of technology giants are also falling. Since 2022, Apple, Microsoft and Google parent company Alphabet have fallen by about 20%, Facebook parent company Meta and Amazon stock prices have fallen by more than 30%, and Netflix has fallen by 69% .

The Wall Street Journal quoted Mike Volpi of VC firm Index Ventures: “This is clearly not a temporary slowdown, this is a proper correction, the end of a cycle.”

SoftBank blamed the huge losses on falling share prices of publicly traded portfolio companies it holds. Amir Anwazad, a strategist at consultancy Asymmetric Advisors, pointed to a key reason for SoftBank’s losses in a report: “SoftBank’s entire business structure relies on a key assumption that the stock price keeps rising.” While in global technology stocks At the moment of the sell-off, SoftBank is exposing this “fundamental flaw”.

In the first quarter of 2022, the share price of Coupang, a South Korean e-commerce platform invested by Softbank, fell by more than 70% from its listing price; Didi Chuxing’s share price fell by more than 80% in the past six months; Southeast Asian travel giant Grab fell by 80%; Alibaba’s share price fell by more than 50%. %; U.S. food delivery company Doordash fell 48%.

Since 2021, Chinese concept stocks have experienced an unprecedented crisis, and domestic technology stocks have also continued to fall, with most companies’ share prices halved. According to the financial report, the top three losses of the Vision Fund’s first phase came from Didi Chuxing, American shared office companies WeWork, and Grab. The top three losses in the second phase of the Vision Fund came from WeWork, Jingdong Logistics and Dingdong Maicai.

Economist and financial commentator Yu Fenghui told “Southern People Weekly”: “SoftBank’s losses are based on the combined effects of multiple factors such as the global epidemic, geopolitical emergencies, and tightening regulations in various countries.”

In August 2021, Sun Zhengyi publicly introduced that 23% of the Vision Fund’s investment is in China. In 2022, he talked about SoftBank’s layout in various regions of the world, emphasizing that the fund does not depend on a specific region and the investment is relatively balanced. He also said that SoftBank’s new investment in China will be more cautious and will conduct stricter due diligence, but that does not mean zero investment.

As a venture capitalist who experienced the dotcom bubble in 2000, the scene before him may seem somewhat familiar to Son.

In November 1995, SoftBank invested $2 million in Yahoo. At that time, Yahoo had just been established for less than a year with a team of only a dozen people. The following year, SoftBank made an additional $100 million investment and acquired a 33% stake in Yahoo. Two months later, Yahoo went public and sold only 2% of its shares, and SoftBank cashed out $400 million.

At the end of 1999, at the peak of the Internet bubble, due to the success of Yahoo, Sun Zhengyi surpassed Bill Gates and became the world’s richest man for three days. Subsequently, the Internet bubble burst, and the stock prices of SoftBank-invested companies, including Yahoo, plummeted. SoftBank’s stock price fell by more than 90%, and Sun Zhengyi’s net assets evaporated by about 70 billion US dollars.

When launching the Vision Fund, Masayoshi Son declared: “There are good times and bad times, but SoftBank is always there.”

In September 2016, Son was given 10 minutes to meet with Saudi Crown Prince Mohammed bin Salman. In the face of the crown prince, Sun Zhengyi’s opening remarks were: “Your Excellency, you have rarely come to Japan once. It would be a pity to go back empty-handed. I want to give you 1 trillion US dollars.”

In Salman’s surprise, Sun Zhengyi told his crazy idea of ​​raising a $100 billion investment fund. He hoped that the Saudi crown prince could contribute to it. In his eyes, this country eager to get rid of oil dependence is in need of a “The Big Deal”. Masayoshi Son continued, “In the 20th century, God gave you the best gift – oil. But in the 21st century, if I can ask God to give me a gift like that, I hope it is a crystal ball that can see the future. ”

Three months later, Sun Zhengyi flew to the capital of Saudi Arabia, and the two sides held talks for 45 minutes. The Saudi crown prince decided to invest 45 billion US dollars to become the largest LP (Limited Partner, which can be simply understood as the investor) of the fund. The Japanese journalist Takashi Sugimoto, who has been with SoftBank for a long time, recorded the above details in the book “The Biography of Son Masayoshi”.

At a time when the global venture capital industry was investing just over $70 billion a year, the idea of ​​creating a $100 billion fund sounded wild.

Sonny did it. The first phase of the Vision Fund finally raised $98 billion, and according to Bloomberg statistics, the Vision Fund is equivalent to 4 Silver Lake Capital and 15 Sequoia Capital in terms of volume. In addition to the $28 billion invested by SoftBank itself, LPs also include Abu Dhabi Sovereign Fund, Apple, Qualcomm, Foxconn, etc.

“If money wasn’t an issue, what would you do?” This is a phrase he often asks entrepreneurs before deciding to invest. He allowed himself to be the first to realize this premise. With this extraordinary-sized fund, he has the ability to recruit leading technology startups all over the world.

Robert Refkin, co-founder and CEO of real estate brokerage platform Compass, once recalled that Masayoshi Son told him: “The ambition of an entrepreneur is the only ceiling to a company’s potential.” He cares less about profit margins and more about the company’s how fast it develops.

Sam Zaid, CEO of car-sharing platform GetAround, was also asked by Son: “How can we make you 100 times bigger?”

He mentioned many times that smart people can’t beat lunatics, and his investment methodology: trust intuition and rely on intuition. He goes into venture capital like an entrepreneur. When the Internet bubble burst in 2000 and SoftBank hit rock bottom, he also invested $20 million in Alibaba and acquired a 34% stake. Michael Ronin, who has worked with Masayoshi Son for 20 years, commented on him, “You never I have seen such fearless people.”

Jack Ma once recalled this past: I wanted to talk for an hour, but it took Sun Zhengyi only 6 minutes to decide to invest. 14 years later, Alibaba went public, and Son’s stake was worth $50 billion. This is also SoftBank’s most talked about successful investment case.

In late 2016, Masayoshi Son and WeWork founder Neumann met in New York. Because the former rushed to meet Trump, who had just been elected president, Neumann had only a short time to convince Son. On the way to Trump Tower, Masayoshi Son decided to invest $4.4 billion in WeWork in 28 minutes.

Son’s approach to investing is aggressive. He typically offers multiples of the company’s financing valuation, threatening to switch to a competitor if the other party disagrees. In 2017, Didi has completed 16 rounds of financing and is not short of money, but Sun Zhengyi found Cheng Wei and only gave him two choices, “either accept my investment, or I will invest in your competitor.”

Before Didi’s listing, SoftBank invested about US$12 billion, accounting for half of the total investment, and obtained 20% of Didi’s shares, while Cheng Wei only had 7%.

On June 18, 2015 fee77d1c7ff2713a3a70ebc7ca240bcf1b1e1fb6f890fd944d02af178b6f185d, Chiba, Japan, Masayoshi Son (middle), Alibaba President Jack Ma (left), and Foxconn Technology President Terry Gou displayed the robot “Pepper”

On September 20, 2017, New York, USA, Masayoshi Son (right) communicated with Bill Gates (left) at the Bloomberg Global Business Forum. Figure/Visual China

Few can deny or stop Son.

Before intending to buy the semiconductor company ARM, Masayoshi Son called its CEO Segers and said he needed to see ARM Chairman Stuart Chambers immediately, while the latter was vacationing on a yacht off the coast of Turkey. Sun Zhengyi came to Turkey by private jet and sent a private jet and bodyguards to pick up Segers. Segers, who arrived in Turkey, said: “It’s a bit unbelievable to be true!”

The deal to acquire ARM was proposed abruptly and completed very quickly, with Masayoshi Son bidding $32 billion, 43% higher than ARM’s market value at the time.

Fast Company reporter Katrina Blue visited SoftBank. According to her description, Masayoshi Son’s huge bet has aroused the dissatisfaction of some venture capitalists. Before visiting SoftBank, a venture capital expert said that the Vision Fund is like a movie The “Marshmallow Baby” floating around in “Ghostbusters”, and then let her ask Masayoshi Son a question everyone wants to know: Who is the next investment target?

Ben Thompson, an independent observer of the US IT industry, commented that the Vision Fund is not a VC (venture capital) nor a hedge fund. It’s a whole new species.

Masayoshi Son’s Vision Fund has brought an almost crowding-out impact on the venture capital field. He invested at unreasonable prices and quickly raised the valuation of startups in a short period of time. Once Sun Zhengyi enters, it will be difficult for other investors to participate. And usually, the Vision Foundation will add a new round of investment at a higher price. The strategy of burning money for growth has been sustainable for a long time in the past, and the continuous capital investment is enough to make these companies in the market. Form an absolute leading scale.

Venture capital institutions began to follow suit, trying to establish their own super funds. Well-known venture capital funds, including Sequoia, have begun to raise their own super funds, but none of them have exceeded 10 billion US dollars.

But sometimes, when money isn’t an issue, it becomes an issue.

The American TV series WeCrashed and the book The Cult of We published by two Wall Street Journal reporters detail the fall of the once-star unicorn WeWork.

It’s a story that borders on absurd: Two careerists plan to turn a company that’s essentially a second-home business into a $10 trillion tech giant, more than any company in the world, and Neumann’s Become the world’s first trillionaire. But in the end, with the failure of the IPO, the company’s profit model was unclear, the market value was evaporated by 40 billion US dollars, and Neumann, who was immersed in personal enjoyment, was kicked out of the company.

Although it later went public with twists and turns, it was not satisfactory. At present, WeWork’s market value is about 3.7 billion US dollars, and Sun Zhengyi has invested more than 10 billion US dollars in the past.

In November 2019, Masayoshi Son bowed in apology at a press conference in Tokyo: “My judgment on these investments is incorrect in many ways, and I regret that.” Due to the impact of falling valuations such as WeWork, 2019 SoftBank lost about $12.6 billion in the fiscal year, and the Vision Fund lost $17.7 billion. At the time it was the biggest annual loss since going public in 1994.

Why did Sun Zhengyi fall for such a project? There have always been different opinions. Some people think he is looking for the next Alibaba, or that he has invested too much money and can only continue to bet with a gambler’s mentality.

The Cult of We says that a bubble is the result of a group of people who collectively pay for something more than its intrinsic value. Investors flocked, and they followed a compelling narrative. The combination of excess capital and fear of missing out is a frenzy. In a bubble, groups triumph over individuals, and optimism over skepticism.

Sun Zhengyi once predicted that AI will change people’s lives in the next 30 years, and used this as an important direction for investment, calling himself an “absolute believer in technology”.

In 2019, CNBC reporter David Faber asked when interviewing Masayoshi Son: “How does the shared office space WeWork use the power of artificial intelligence?” Masayoshi Son replied that he did not think it was just a shared office, a larger Its value lies in the offline community graph. “Just like Amazon recommends products based on your interests, recommending WeWork member meetings can also be done with the help of artificial intelligence, thereby increasing productivity and fun.”

Sun Zhengyi, who has fallen from the altar of investment, may be closer to himself. After a huge loss in 2019, in 2020, with the sharp rise in technology stocks and other factors, SoftBank’s net profit in fiscal 2020 was US$39 billion, surpassing Microsoft and becoming the third most profitable company in the world after Apple and Saudi Aramco. Masayoshi Son is back on the throne of Japan’s richest man. However, it immediately ushered in the biggest loss since its establishment.

In Yu Fenghui’s view, some projects invested by Softbank cannot be said to be a complete failure at least now, and the failure rate of VC investment itself is relatively high.

On May 16, 2022, JPMorgan Chase released its latest research report, which comprehensively looks at the leading companies in China’s Internet technology. The research report pointed out: China’s Internet industry is getting rid of various uncertainties and will be driven by short-term and long-term fundamental factors. , the stock prices of leading companies may rise more than expected in the future. “I believe that in the end it is necessary to ‘turn over’, because countries in the world, in the final analysis, have to rely on the most dynamic productivity, which is technological innovation.” Yu Fenghui said.

At the end of “Faith, Masayoshi Son Biography” written by Atsushi Inoue, Masayoshi Son said: “I am ranked third and die with hatred. I hate this outcome. I want to be number one and be far ahead.”

Masayoshi Son desires to be a legend. In an interview with CCTV’s “Dialogue” program in his early years, Sun Zhengyi said, “Money is not the purpose of my work in this industry. We are very excited to enter this revolutionary industry because it will change the whole world, which is very exciting. of.”

There is a portrait hanging in Sun Zhengyi’s office. The person in the painting is Ryoma Sakamoto, a Japanese reformer, who is an important figure in promoting the modernization of Japan. This is Sun Zhengyi’s spiritual idol from his youth until now, and even the logo of SoftBank Group is derived from the flag of the Sea Aid Team, a non-governmental organization in the late Edo period led by Sakamoto Ryoma. “Every morning, when I come to work, it reminds me to make a Ryoma-like decision,” he once said.

Reading Sima Ryutaro’s “Sakamoto Ryoma”, he was greatly impacted, “I suddenly realized that I can’t waste my life, my ambitions began to sprout at that time, to do great things, to do a career that can burn myself and do my best, and want to help more people, Millions and tens of millions of people. If someone asked me about my motto, etc., it would be this one: Aim high and stride life.”

Then he went to the United States alone to study, that year, he was 16 years old.

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