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The End of SoftBank’s Reign
In a year that’s been all about comeuppances, the bankroller for Uber and WeWork is overdue.
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SoftBank’s Era of Dominance
The Buy/Sell/Hold Analysis
Over the past year, I’ve written about the “Daredevil Unicorns”: tech startups notable for both their outsized valuation and their attitude. In Silicon Valley, it’s assumed you’re going to tromp on turf where you don’t belong — that’s how old ways get disrupted. But it’s another matter when your whole schtick is to inflict ruin and sickness on the little guys. I’m thinking of Uber’s early joy in breaking down the taxi businesses across the globe or Juul’s marketing of flavored nicotine products to teens.
The thing is, you can’t even aspire to become a Daredevil unless someone lets you. Those someones are usually venture capitalists and private equity firms that fork over the cash, even paying a higher valuation if a would-be unicorn happens to have daredevil qualities. Think of it as a kind of Daredevil premium.
The biggest Daredevil enabler of them all is SoftBank, the Japanese manager of the $100 billion Vision Fund. SoftBank founder Masayoshi Son’s signature act is to swoop down on an existing Daredevil Unicorn, lay a few billion dollars on it, inflate its valuation, and thus pump up its own stock price. One private equity hand called SoftBank’s practices “unicorn porn.” So it was that Uber’s valuation swelled to $68 billion and WeWork’s to $47 billion before both fell precipitously.
In recent days, it’s become clear that the era of SoftBank’s dominance is coming to an end. Wall Street’s new demand for actual profits has coupled with Covid-19 and the economic downturn to seriously…
