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The air in Tokyo is thin. On the screen, a number flashes in red that defies gravity. 1.9 trillion yen. That's 17.7 billion US gone. Evaporated in 12 months. It wasn't just a bad quarter. According to the Nikke, it was the largest annual loss in the history of corporate Japan. The man at the head of the table, Masayoshi's son, didn't apologize.
He compared himself to Jesus Christ. Misunderstood. He said the vision fund was marketed as the engine of the future. The balance sheet, however, resembled a crime scene. Two names weighed down the ledger. We work and Uber. Bets that were supposed to conquer the world were now bleeding cash. Shareholders panicked.
Soft Bank's market cap cratered. The unicorn hunter looked like the hunted. The Financial Times asked if the model was broken. Critics whispered a harsher phrase, "A Ponzi scheme of self-inflated valuations." Yet, Masa's pulse didn't spike. He looked at the red ink and saw a rounding error in a 300-year plan.
To understand the crash, you have to understand the climb. We have to go back to the crate. 1981, a cramped office in Fukuoka. Two part-time employees, one man standing on a tangerine crate. He told them, "In 5 years, we will have 10 billion yen in sales. We will be number one in the world." The math didn't add up.
Both employees quit the next morning. They thought he was insane. They missed the fine print. Masa wasn't building a company for a quarter. He drafted a business plan for 300 years. Fast forward to 1999, the dot boom. For a brief moment, Masayoshi's son threatened Bill Gates for the title of the world's richest man.
Then the bubble popped. Softbank stock plunged 99%. Masa lost $70 billion personally. Most CEOs would retire. Masa scraped together $20 million and looked at a Chinese English teacher named Jack Ma. He didn't look at the revenue. He looked at the eyes. He wrote the check to Alibaba. That 20 million became 60 billion.
It remains the most profitable venture capital bet in human history. The lesson wired into his brain was dangerous. Ignore the spreadsheet. Bet the house on the vision. 2016. Masa decides $60 billion isn't enough. He wants a war chest. He targets the Kingdom of Saudi Arabia. He meets Crown Prince Muhammad bin Salman.
He doesn't bring a slide deck. He brings a promise. Invest a hundred billion and I will give you a trillion. The meeting lasted 45 minutes. NBS signed a check for $45 billion. Masa later bragged that's $1 billion per minute. Combined with Apple and Qualcomm, the vision fund hit a hundred billion, larger than all other VC funds combined.
The strategy was blunt force by the number one player in every market, Uber in US, DD in China, Grab in Singapore. He didn't negotiate. He told founders, "Take my billion or I give it to your competitor and crush you." Profit was irrelevant. Growth was the only religion. Burn cash to acquire customers.
The blit scaling era had begun. Soft Bank poured 7.7 billion into Uber. They bought the secondary shares, effectively cashing out early investors. A wash in Saudi gold. Silicon Valley parties got louder. Leases got more expensive. Discipline vanished. Then came the wildest horse in the stable, Adam Newman, a charismatic man selling desk space as elevating the world's consciousness.
Masa tooured a wei work office for 12 minutes. He turned to Newman and said, "You aren't crazy enough." He scribbled a deal on a digital pad, $4.4 billion. Newman was told to go bigger, faster. By January 2019, SoftBank valued Weiwork at $47 billion. It was worth more than Ford Motors. But We Work was a landlord, not a tech company.
SoftBank was paying software multiples for brick and mortar. Meanwhile, in India, Oyo Rooms was expanding. Another Masa favorite, another unchecked cash burn. SoftBank even structured a $1 billion convertible bond for Wire Card, a German fintech that would later be revealed to be a total fraud. Internal investment committees raised red flags.
Masa overruled them. His gut was the algorithm. Soft Bank's own debt swelled to $ 160 billion. They were leveraging the leverage. August 2019, the music stopped. Weiiwork filed its S1 for an IPO. The world finally saw the books. The filing was a masterpiece of obfuscation. They invented a metric community adjusted EBITDA, profit before expenses.
Wall Street didn't buy the vision. They laughed. Analysts tore the prospectus apart page by page. In 6 weeks, the valuation collapsed from 47 billion to 10 billion. The IPO was dead on arrival. Soft Bank was trapped. To save the investment, MASA had to double down, a $9.5 billion rescue package. To oust Newman, SoftBank negotiated a package initially valued at $1.7 billion.
The captain, who steered the ship into the iceberg, was handed a golden lifeboat. Employees with worthless stock options watched their CEO walk away a billionaire. The vision looked like a scam. November 2019, SoftBank posts its first quarterly operating loss in 14 years. $6.5 billion lost. Masa bowed.
My judgment was poor. He told the cameras. I shut my eyes to many things. Sharks smelled blood. Activist investor Elliot Management bought a $2.5 billion stake. They demanded discipline. They demanded share buybacks. They wanted the gambling to stop and the shareholder value to return. Then nature intervened.
March 2020, the pandemic locked down the global economy. The portfolio was uniquely vulnerable. No one took Ubers. No one went to shared offices. Revenue went to zero. Soft bank shares fell 50% in 2 weeks. The market feared bankruptcy. The debt load looked fatal. Credit default swaps surged. Banks holding soft bank debt started checking the collateral.
Masa flipped a switch. Defense mode, he announced. The buyer became the seller. He announced a program to sell $41 billion in assets. Everything was on the block. He sold stakes in T-Mobile. He sold huge blocks of Alibaba. He cannibalized the winners to pay for the losers. He tried to sell the chip designer ARM to Nvidia for $40 billion.
Regulators eventually blocked it, but the desperation was clear. He used the cash to buy back his own stock. It worked. The share price stabilized. Then a lifeline. Door Dash went public in the food delivery boom. A massive paper gain that offset the Wei Work crater. By May 2021, the pendulum swung back.
SoftBank reported a $46 billion profit, the largest ever for a Japanese firm. But it was a mirage. Unrealized gains. Paper tigers created by a frothy tech market. 2022 brought the freeze. The Fed raised rates. Free money ended. High growth tech stocks were slaughtered. The paper gains burned. The Vision Fund posted a record $32 billion loss.
The roller coaster was going down again. Key lieutenants resigned. Marcelo Clarry, Rajie Misra. The inner circle was dissolving. The man who loved the spotlight went dark. No more earnings presentations. Just a CFO reading the grim numbers. November 2023, the saga ended. We work filed for chapter 11 bankruptcy.
The $47 billion valuation was zero. Soft bank's total loss on the deal estimated at 14 billion, a masterclass in capital destruction. Yet, the defense paid off. Soft Bank took arm public in 2023. The valuation soared past $60 billion. With the balance sheet repaired, Masa reemerged. The Tangerine Crate speech had a new topic, artificial intelligence.
He declared the vision fund was now in offense mode. The target, the singularity. He sold almost the entire Alibaba steak. The goose that laid the golden eggs was cooked to feed the AI ambition. Despite the arm win, the vision funds cumulative returns remain pedestrian compared to the S&P 500. Critics argue Masa is not an investor.
He's a gambler who hit the jackpot once with Alibaba and kept doubling down. But VC is governed by power loss. One winner pays for a thousand losers. Masa is just playing the game with higher stakes. The losses were historic. The ridicule was global. Yet, the lights in Tokyo were still on. We're only in year 45 of his 300year plan.
To Masa, we work was just a blip in the data set. The Soft Bank saga isn't just about one man. It's a monument to what happens when cheap money meets unlimited ego. As Masa himself admitted to shareholders, I am a gold medalist in making significant mistakes. But he still holds the chips and as long as the casino is open, Masa Yoshi will never leave the table.
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