Can someone knowledgeable explain SoftBank? Is it partly a Japanese sovereign fund...I've become less and less interested in its investments as it seems to simply act like a giant government money channel with questionable investments that don't seem to make sense from a typical VC/PE perspective. Ie is its ultimate goal not merely profit?
SoftBank was founded by Masayoshi Son. It was originally a tech company that resold software (imagine Steam but for desktop apps), but very quickly it morphed into something like a PE firm that would do continual leveraged buyouts of existing firms. They've bought companies that run conferences, tech magazines, one of their more formative M & A deals was to buy the Japanese Vodafone arm. Many of these deals actually went pretty poorly, with Masayoshi overpaying for the firms he bought and then being saddled with very large debts to repay the loans. Masa was wiped out and faced bankruptcy multiple times.
Later on the would move away from leveraged buyouts and start investing in startups more similar to how a VC firm would in the US. He notably invested early in Yahoo and Alibaba.
The company is not a sovereign fund - it's really run at the behest of it's founder. If you want to read more about the story, there was recently a great biography that chronicled the story: Gambling Man (https://www.amazon.com/Gambling-Man-Greatest-Disruptor-Masay...)
> old power in Japan) has been spending the money on recently
Investing in SoftBank.
MUFG, the Custody Bank, and Master Trust all have significant ownership stakes in SoftBank, and most Japanese conglomerates like NTT, NEC, etc tend to work closely with SoftBank on strategic deals
Yes, Ethnically Korean, his grandparents were immigrants. As for cultural differences, I think you could credit his extensive time spent living in the US as much as the immigrant Korean culture.
Japan has a weird split between Japanese nationals, Korean special residents, and actual foreigners (including "normal" Korean immigrants).
It's a whole can of worm I'll only leave here for any else to open, but Son Masayoshi was born in Japan from parents who might have formerly been Japanese (Korea was a Japanese colony) depending on the circumstances.
Many people in similar cases are basically undistinguishable from regular Japanese nationals culturally speaking.
It's an investment company that primarily specializes in Telecom and telecom adjacent industries (eg. Internet companies, Energy, Space Tech, Hardware).
Most people on HN have only heard of SoftBank's Vision Fund, but that's basically an autonomous organization within SoftBank staffed with Deustche Bank alumni who left in droves in 2017-2020.
> Ie is its ultimate goal not merely profit?
Yes. Their goal is profit.
> I've become less and less interested in its investments as it seems to simply act like a giant government money channel with questionable investments that don't seem to make sense from a typical VC/PE perspective
This investment is part of their strategy for 6G and IIoT, which is synergistic with their telecom focus.
There has been work over the past 4-5 years to become the leader for creating the standards for 6G, and SoftBank is trying to position themselves to be that player.
But it's so big (maybe biggest in the world), so its reach and influence is immense. And as a result, it has raised money from nations and other enormous entities.
Run by Masa who many consider an oracle because his placed massive bets years before other people and those bets have paid of big.
> Run by Masa who many consider an oracle because his placed massive bets years before other people and those bets have paid of big.
I'm not sure how many folks these days would consider him an "oracle". He clearly did fabulously well with some early Internet investments, but he also was famous for folly after folly of overpriced investments in the 2010s (the Softbank "Vision Funds").
I'd be curious if there is a simple accounting list of Softbank's major investments ranked from biggest winners to biggest losers. I guess it pretty much highlights the dynamics of the VC business model - you only need a few giant winners to offset the boatload of losers. In Softbank's case, I'm guessing their biggest winners are Yahoo Japan (which was the dominate site in Japan for a long time, and long after the US Yahoo fell into irrelevance) and Alibaba, which saw their early $20 million investment balloon into billions.
But did Softbank have any winners from their 2010s spending spree (along the time where they shoveled good money after bad into WeWork)?
They've made close to $100B on ARM (which they acquired in 2016). This dwarfs the $14B they lost on WeWork. Of course WeWork gets far more attention because it's a such an entertaining story.
The Vision Fund lost on tons more companies than just WeWork though. But your overall point is correct - there were a couple outsized winners (also just found another article that they made a huge gain on DoorDash) that I'm guessing took care of the majority of their losses.
VCs are indeed partly about giant winners offsetting the losers. But according to Taleb, the main part is to convince other people to put money in your fund and get rich from the management fees. So from that perspective, VC is mostly about pretending your fund does well and getting people to buy in. That's probably why VCs love to buy companies in overhyped industries.
Arguably this is classic VC maths, bet on many companies and the few that succeed will succeed enough that the rest don't matter.
YC does the same thing at the very early stage, A16Z and Sequoia do the same at later stages, and arguably Softbank made their money doing the same thing at a later stage again, although all the lines are a little blurred.
