“I am ashamed of myself for being so elated by big profits in the past” are not exactly the words you want to hear from your CEO ahead of a make-or-break earnings report.
What happened: Japanese technology investor SoftBank reported a record loss of US$23 billion last quarter, after a spending spree that CEO Masayoshi Son described as delirious.
- “When we were turning out big profits, I became somewhat delirious, and looking back at myself now, I am quite embarrassed and remorseful,” he said.
In 2019, SoftBank lost ~$18 billion after big investments in its Saudi-backed Vision Fund business turned sour (see: WeWork, Uber). Still, by 2021, soaring valuations within its portfolio of technology companies encouraged another series of risky bet-taking.
- SoftBank channelled its new confidence into the self-funded Vision Fund 2, through which it poured billions into startups, including “buy now, pay later” company Klarna.
Although “now seems like the perfect time to invest,” according to Son, falling valuations for technology companies and a weak yen will force Softbank to start aggressively cutting costs.
Why it matters: Softbank’s performance reinforces how newly vulnerable high-growth technology companies are in an environment full of inflation, central bank policy responses and geopolitical tensions. The risks are still high, but the rewards are increasingly uncertain.