Softbank's Problem: Vision, Not Money

Venture investors still aren't sure what to make of SoftBank's $100 billion Vision Fund. Depending on who you ask, they're either rooting for it, or gleeful that it's struggling with WeWork and Uber. https://t.co/6he6pTkBej

— Matt Turner (@_bmturner_) September 13, 2019

100 billion dollars is a lot of money, but it is not too much money for all the innovation that needs to happen, that will happen, with or without the Softbank Vision Fund. So where did the Vision Fund go wrong?

Masa by now has the wrong vantage point.

A tech startup can fail every step of the way. It can fail post-IPO.

But veterans (and give him credit, he has a Steve Jobs-like aura ... he has a stellar record) like Masa learn to become cautious and careless at the same time. Cases in point: Uber and WeWork.

It is hard to spot Uber and WeWork in their early rounds. But by the time they become unicorns, you think, okay, I missed out when it grew from one million to one billion in market value, but now I got it. If I can hop on now, I will still likely see a 100X growth to my investment, when 10X is considered excellent.

But then things go topsyturvy. Elon Musk wants to eat Uber alive. WeWork starts crumbling down right before your eyes post-IPO.

Both are sound companies. Both shifted the paradigm.

Masa picked Alibaba when Alibaba was really young. He has to go to those roots. Maybe it is hard to do. But there are enough early stage companies in the world today that will easily absorb 100B, or whatever is left of it after Uber and WeWork, two dud investments of Masa.

Softbank's Problem: Vision, Not Money https://t.co/gOleWxeAzw @SoftBank @SoftBank_Group @SBREurope @SB_Robotics @Uber @WeWork

— Paramendra Kumar Bhagat (@paramendra) September 13, 2019

Microfinance Is A Huge Business

English: ESAF Microfinance Geographical Coverage in India (Photo credit: Wikipedia)

I don't think of microfinance as charity. I think of it as big business, like a hundred billion dollar business. How many companies in the world are past $100 billion in market value? Exactly. 

China grew at double digit rates for close to three decades, no recession, nothing. That is magical. Well, America could not do that because, when you are America, you grow by inventing the industries of tomorrow. And that is hard to do. But when you are China in 1980, you are not having to do that. You grow at double digit rates because all you are having to do is catch-up. And India is about to realize that. I hope Africa is next after India. As in, Africa also starts growing at double digit rates by 2020. Political leadership is key. 

People who avail of microfinance are like China in 1980. Only these are individuals and families, not countries. They can do well as business entities. Investing in them is smart. 

I am super interested in this sector. Entrepreneurs are my favorite people. I'd like to service a ton of them. Entrepreneurs at the low end stand to transform this world like few others. 

Done right this is about getting the Aam Aadmi (the common "man") in the rich countries to contribute a few hundred to a few thousand dollars as investments and touching lives a few hundred dollars at a time at the other end. 

A for profit company is not a bad idea. A for profit company with strong social boundaries. The goal has to be to keep the interest rate as low as possible. But the for profit part is it has to have the efficiency of a well run corporation. 

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