SoftBank Group CEO Masayoshi Son says he is “embarrassed and flustered” by his track record after the valuations of WeWork and Uber plunge, in an interview with Nikkei Business magazine on Monday morning.
“The results still have a long way to go and that makes me embarrassed and impatient,” said Son. “I used to envy the scale of the markets in the U.S. and China, but now you see red-hot growth companies coming out of small markets like in Southeast Asia. There is just no excuse for entrepreneurs in Japan, myself included.”
A lot of Son’s embarrassment is centered around his $100 billion Vision Fund where he ignored valuation metrics of WeWork and Uber, and invested into these technology unicorns at ultra-high valuations, only to find out, that in 2019, he overpaid for those investments.
We recently said, as the proverbial tide goes out, Son has been caught swimming naked.
SoftBank/Vision Fund plowed nearly $10 billion into WeWork, investing some of that capital at a $47 billion valuation in 1Q19. But since WeWork’s IPO was shelved, the startup is now only worth $10-12 billion.
Uber is another failure for Son’s Vision Fund, since the initial listing, the company has lost almost 37% of market capitalization.
It’s apparent that Son’s aggressive risk-taking in technology companies left him overlooking valuation metrics in the last several years.
Another terrible judgment call on Son’s part was the announcement of a $5.5 billion share buyback program of SoftBank Group’s shares, earlier this year. The billionaire investor decided to buyback company stock because valuations of WeWork and other investments saw significant valuation increases.
And last Friday, we said Son is having tremendous difficulty attracting investors to Vision Fund 2 amid new developments that Vision Fund could see significant writedowns in the quarters ahead after WeWork and Uber valuation implosions.
If macroeconomic headwinds continue to mount in the global economy, technology unicorn valuations will reset further.
As we’ve highlighted in the last several weeks, the global IPO and M&A markets are starting to falter — this will further stress Vision Fund as their ability to cash out of technology unicorns are coming to an end for the year.
We even reported last week that veteran venture capitalists called an emergency meeting of the technology unicorns in Silicon Valley to advise them on the turbulent times ahead.
And of course, Son is “embarrassed,” who wouldn’t be, when you’re caught swimming naked as the tide goes out.Look @ Pitch