Silicon Valley can’t keep up with the pace of Sun Justice?
In 2017, Sun Zhengyi turned to Neumann and asked, “Who will win in a battle? Is it a smart person or a madman?”
Neuman replied: “Maniac.”
Sun Justice continues to look at Neumann and says, “You are right, but you and Miguel are not crazy enough.”
After two years, Neumann became the “madman” in Sun’s mouth, but he was also ousted. At the end of September, before WeWork fell to the market, the public opinion aimed at the founder who was once considered a genius by Silicon Valley, and he was dug up for more details. He once squandered the company’s $60 million in funds to buy the private jet G650, and also likes to smoke marijuana while flying.
Similarly, Sun’s justice, which guides Neumann’s “madness”, is also caught in the whirlpool of public opinion. Now market analysts are starting to calculate that his Softbank Group may lose more than $5 billion in the third quarter. But what made him worse was not just a loss, but Silicon Valley’s doubts about the vision fund and the softbank investment model.
Someone in the industry called Softbank’s radical strategy “Softbank Syndrome”, saying the company made “founders and venture capitalists a hostage of their money.”
Sun Zheng’s “three sins”
The main reasons for the suspension of WeWork’s listing are two: First, the secondary market investors do not pay for their excessive listing valuation, so WeWork has repeatedly lowered the target valuation of the IPO; second, Neumann A fatal listing prospectus was issued. In this prospectus, the meaning of “WeWork is me, I am WeWork” is revealed everywhere.
What’s even more ridiculous is that he is still making arrangements for his own affairs. “If Neumann accidentally died, his wife will designate the next CEO.”
These two reasons are not related to Sun Zhengyi and Softbank.
Neuman has always been “an entrepreneur who considers having 100 buildings when he has three buildings.” Sun Zheng’s support drives him even more crazy. In Sun Zheng’s view, Neumann is like a young self who is eager to self and willing to advance at the fastest speed. He is willing to help. However, with the expansion of WeWork, Neumann became crazy and arrogant, which led to the extremely individualistic prospectus.
As for WeWork’s overvalued valuation, this is almost the usual method of investing in the Softbank Vision Fund.
Where the technology companies that won the “Sun Zhengyi Wheel”, their valuations are better than the originalFirst increase several times. For example, the valuation of India’s OYO Hotels has been pushed up to about $5 billion, a 13-fold increase from the initial investment of Softbank in 2015, while WeWork’s valuation in 2018 is $20 billion, up to $47 billion by 2019.
Now the secondary market does not buy it, and WeWork, which is listed on the market, just confirms the outsiders’ doubts about Sun’s justice. They believe that Sun’s over-investment strategy has spawned young startups in batches, giving these companies far more investment than they deserve. Or far greater than the amount they need, which raises the company’s valuation and leads to a technology bubble. This is “one sin.”
On this basis, the strength of the “Sun Zhengyi Wheel” indirectly caused a certain degree of unfair competition among startup companies. Before getting the investment of Sun Zhengyi, the founder had to worry that he would throw a large amount of money to the competitors, so he bowed to it at the corresponding price. Furthermore, once individual companies get the investment of the vision fund, their rapid expansion and valuation will bring great survival pressure to the startups in the same industry that have not received Sun Zhengyi Investment, which may stimulate vicious competition.
This is “two sins.”
At the same time, this strength also affects the venture capital market. Sun Zhengyi’s investment strategy has always been a lead investment or even a single vote. Once he sees the project, he will give three or four times the price of the other party’s asking price, which directly blocks the entry of other institutions.
This also angers venture capitalists who have long been immersed in Silicon Valley. No one likes to compete with a behemoth that seems to have unlimited funds. Moreover, stimulated by soft silver, these venture capitales have accelerated the follow-up of other head-creating enterprises, and it is likely to further increase the technology bubble. This is “three sins.”
Uber and WeWork are frustrated now, and Silicon Valley has immediately set off a criticism of Sun Justice.
Silicon Valley can’t keep up with the pace of Sun Zhengyi?
Sun Zheng’s investment style is simply a word: fast.
When he chats with entrepreneurs, what he wants to know most is how fast the company can develop. Sam Zaid, CEO of the car sharing platform Getaround, remembers that Sun Zhengyi once asked him: “How can we help you expand the company by 100 times?” In the end, Sun Zhengyi invested 300 million US dollars in August 2018. Similarly, the number of WeWork stores has more than doubled in the 15 months since Softbank first invested.
This investment strategy is in the middle of the founder, and they are full of praise for Sun Zhengyi and Softbank. Uber CEO Dara Cosrosahi said, “It’s just like Sun Zheng’s people can accelerate. The development of our world.”
But Silicon Valley is experiencing a new phase of rapid expansion. Investors are questioning the prevalence of Internet entrepreneurship and the search for a profit model, and are worried about betting on the past 10 years. Whether a bull market growth company is really the best idea, especially in the face of the economic downturn.
The rise of this counter-trend is exactly the opposite of Sun Zheng’s investment strategy. Today, WeWork’s listing suspension and Uber’s decline in market value have highlighted the contradictions and conflicts, and will also affect other startups invested by Softbank.
Sun Justice and the “disharmony” of the entire Silicon Valley are also represented by the founders. In the past few years, as the valuation of start-ups has risen, the worship of founders in Silicon Valley has also grown. However, since last year, more and more media have begun to criticize the founder worship. They think that the emergence of entrepreneurial myths and founder worship does not seem to explain the development of prosperity, but to cover up the decline of the industry. Uber and WeWork have successively appeared in the event of the founding of the company, which confirms this statement.
The days when Silicon Valley investors are friendly to founders are changing. They seem to be tired of arrogant, arrogant founders, and this is in conflict with Sun’s investment philosophy.
Sun Justice has always been “changing the world” as the core of the vision fund investment, which seems to have affected the founders. According to Fisher, one of his most trusted advisers, “I have seen many young founders who came to see Sun Zhengyi. They often feel very upset. But in the end, they will talk to him about their dreams.”
It may be based on the consensus of the dream, Sun Zheng is generally more tolerant of the founder of maverick, and Neumann is the most direct example. His ambition attracted the attention of Sun Justice, who provided him with a lot of cash and helped him to push WeWork to grow to “a scale ten times larger than originally planned.” In Sun Zheng’s view, WeWork is his next Alibaba.
But now, he has to personally expel Neumann.
Silicon Valley is inseparable from Sun Justice and Softbank
Although Sun Zhengyi and Softbank’s investment model are being questioned by other investors in Silicon Valley, this does not seem to hinder the founders’ enthusiasm for the “Sun Zhengyi Wheel”.
Bradley Tusk is one of Uber’s first investors, and he witnessed Karanic being driven out of his company. He said: There are enough examples of problem behaviors to prove that it is reasonable to remove Neumann. I believe that if the conditions are right and the valuation is correct, most founders will not hesitate to accept the funds of Softbank.
This stems from Softbank’s strong position in the Silicon Valley investment market.
According to data from the Wall Street Journal and the American Venture Capital Association,In 2017, the entire US venture capital industry invested a total of 84 billion US dollars, the highest investment since the Internet bubble burst in 2000. In the same year, Softbank invested more than $36 billion. In terms of fund strength, among the venture capital firms behind the Vision Fund, the top three funds add up to $12 billion, and the Vision Fund has now raised $100 billion.
Of course, Silicon Valley is inseparable from Sun Zhengyi not only because of its abundant funds, but when other venture capital institutions or private equity funds are increasingly biased towards the later financing round, Sun Zhengyi and Softbank are still favoring the early stage startups. Take on the key role of discovering new unicorns.
According to Pitchbook data from Silicon Valley investment authority, Silicon Valley became the second most active quarter of venture capital investment in the past 10 years in the first quarter of 2019, mainly due to the investment in the middle and late stage. The difference is the cautiousness of early investment. Compared with the 1,483 investment projects in the first quarter of 2015, there were only 828 projects in the first quarter of 2019.
In contrast, in March of this year, Softbank launched a $5 billion fund to invest in technology startups in Latin America. For example, invest $1 billion in Colombian startup Rappi, $150 million in application startup Loggi, and $250 million in rental platform Quinto Andar. There are also innovative companies in the cloud storage solutions Pliops, Mexico paid startups Clip, etc., most of which are focused on pre-development start-ups.
This shows that Sun Zhengyi is still one of the most powerful capital forces in the entire Silicon Valley, and Silicon Valley has to bear the negative impact of the softbank investment model.
But fortunately, Sun Zhengyi also began to learn to compromise. As US investment institutions and open market investors value the profitability and profitability schedule, he said that he will pay more attention to the profitability of start-ups, not just speed and business. story. This shift may also end the “destiny” of the founder from self-expansion to self-destruction.
But then I am afraid that it will be a subversion of Sun Zheng’s existing investment model, so the change will not happen overnight.
Koi Finance, deep fun and good luck, public number: jinlifin. This article is an original article and declined to retain any form of reprint of the author’s information.