Uber’s stock fell 5% in Thursday’s pre-market session after CNBC reported SoftBank will sell about a third of its stake in the ride-hailing firm.
SoftBank, one of Uber’s largest shareholders, plans to sell about 45 million of its 184 million shares, the report said. Any buyer is said to have a 30-day lockup period.
In January, the Japanese conglomerate sold 38 million Uber shares worth $2 billion.
Further shares were said to be offloaded in June, and SoftBank’s stake could stand at below 100 million shares with the latest transaction, according to a Financial Times report, which cited a person familiar with the matter.
China’s recent crackdown on rival ride-hailing app Didi has reportedly cost SoftBank, its largest shareholder, about $4 billion. It has also suffered losses related to the proposed initial public offering of Alibaba’s Ant Group, which was halted by regulators after Jack Ma publicly snubbed local banking rules.
But reports from Reuters and the FT say SoftBank’s decision to cut its Uber holding is unrelated to its stake in Didi, which went public on the US stock market in blockbuster IPO in late June. The tech conglomerate believed it was the right time to cash out and profit from its holding, a source told Reuters.
SoftBank has been an Uber investor since 2018, when it picked up a 16% stake in the firm through an entity called SB Cayman 2 Ltd. In a filing as recent as March 31, Uber refers to SoftBank as a “large shareholder.”
Softbank’s $100 billion Vision Fund has been hit hard by China’s regulatory crackdown on the tech sector, with the value of its holdings sliding $11 billion since July, compared to a $1.1 billion gain in the April-to-June quarter, according to data seen by the FT.
SoftBank didn’t immediately respond to Insider’s request for comment.
Uber’s stock, down 9% so far this year, had risen slightly a week ago after announcing its $2.25 billion acquisition of logistics tech company Transplace from TPG Capital.
Didi Global’s shares are fallen 37% since its first day of trading.
From humble beginnings, Jeff Sine built a career as an unorthodox banker who offered unvarnished advice and tamed unruly transactions for business moguls like Masayoshi Son and Rupert Murdoch. He defied the odds and built merchant bank The Raine Group into an investing empire in its own right.
Insider spoke with 10 people who have worked with Sine throughout his career, including senior bankers and clients. They explained how Sine became one of the world’s most influential dealmakers, the origins of his relationships with Masa and other key clients, and how he built a billion-dollar business.
I’ve lost a lot of other people’s money. The most stressful times in my life have been when people believed in me and invested tens (if not hundreds) of millions in my company or idea, only to see their capital go up in smoke. I’ve also made a lot of people a lot of money – but only in America would someone with my (lack of) pedigree be given this many swings at the plate.
To be a truly great investor or operator/CEO, you need to be a bit of a sociopath: You have to be able to sleep at night even as you lose other people’s hard-earned money or lay people off. Working with OPM (i.e., Other People’s Money) is often phrased as a positive, but the real luxury is to be in a position to lose your own capital. If things go wrong, it’s a private failure.
The willingness to risk capital on a captain and harpoons (the 19th century whaling sector was proto-venture capital) has always been a key ingredient in the secret sauce of the US economy. But the secret is out. While the US still produces the most unicorns, and the most mega-corporations, China is gaining … fast. Interestingly, despite the rhetoric re: China challenging US hegemony, it’s European innovation that has drowned in the rising red tide. But that’s another post.
We should celebrate billion-dollar successes, so long as they come at the risk of failure – the whaling captain and the entrepreneur earn their wealth in part thanks to their willingness to come home empty-handed, or not at all. However, there’s a new class of billionaire in America. Meet the MeWork generation, which makes their fortunes despite returning to harbor with less than they embarked with.
To help identify members of the MeWork generation (they can be any age), we’ve devised two metrics: the Daily Benjamin Burn™ (DBB) and the Earn-to-Burn Ratio™ (EBR). The first is how much money an executive lit on fire per day during their tenure. The second is the percentage of those lost Benjamins they siphoned off for themselves – think of it as a commission on destruction. In an efficient and fair (dangerous word) market, the EBR ratio would be zero. If we can measure someone’s burn in daily stacks of 100-dollar bills, they’ve created no value and should get no compensation. Spoiler: That’s not what happens.
Daily Benjamin Burn™
What does the DBB look like in practice? A lot like Quibi. That likely won’t mean anything to you, unless you’re one of the dozens and dozens of people who subscribed to the short-lived short video service. In 2018, Jeffrey Katzenberg and Meg Whitman raised $1.75 billion, launched a bad app with worse content, and shut it down six months later. Roku combed through the rubble and found $100 million, so Jeff and Meg immolated $1.65 billion in 750 days, or $2.2 million per day. If you stacked that $1.65 billion in 100-dollar bills, you’d have a pile over a mile high, about two Burj Khalifas, the world’s tallest building.
Eating my own Benjamins
In 2008, I raised $600 million from a hedge fund, became the largest shareholder in the New York Times Company, and ran an activist campaign against the Gray Lady. They put me on the Board, where I ranted about the evils of Google, advocated for the divestiture of non-core assets, envisioned sunlit uplands of subscription revenue and … lit Benjamins on fire. During my 24-month tour of duty watching the Great Recession kick ad-supported media in the groin, I managed to turn $600 million into $350 million, for a DBB of about $350,000. The stack of Benjamins I lost would have reached only to the top of 30 Rockefeller Plaza. Only. Jesus …
I. Want. To. Throw. Up.
Jeff, Meg, and I all made an old-school mistake. We failed to find a greater fool (e.g., the public markets, gullible board members, Softbank) to secure a mega payout for our Bonfires of the Benjamins. I was paid approximately $500,000 in board fees and a retainer from the fund; I speculate that Jeff and Meg pocketed more (their compensation remains private). But none of us took home millions.
That brings us to the Earn-to-Burn Ratio™ and the hall of fame for broken compensation.
EBR hall of fame
In 2012, Yahoo replaced its CEO with an executive from Google: Marissa Mayer. But the new CEO made a series of poor decisions, including canceling the company’s telecommuting policy while working from home herself and paying $1.1 billion for a porn site, Tumblr. (Note: Six years later, Yahoo sold Tumblr for $3 million.)
When Mayer took over, Yahoo (not including a 20% ownership stake in Alibaba) was valued at $14.4 billion. In July 2016 the company sold itself to Verizon for $4.5 billion, and Mayer was gone. That’s $9.9 billion turned to ash in four years (or 13.5 Burj Khalifas), for a DBB of $6.8 million. Mayer’s compensation began with a $30 million signing bonus and went up from there, totaling an estimated $365 million, giving her a $250,000-per-day commission for destroying $7 million per day of other people’s money. That’s an EBR of 3.7%. Shocking, sure, but not the gold standard.
Adam Neumann founded WeWork in 2010, but he didn’t start burning Benjamins at epic scale until Softbank began shoveling billions into the WeWork furnace in August 2017. By the time Neumann was fired in September 2019, Softbank had invested $10.3 billion; a few months later it wrote off $9.2 billion of that. That’s a $13.1 million DBB on Softbank’s money alone, or like flying a decade-old Gulfstream G450 (I browse planes at night – pathetic) into a mountain … every day. Impressive, but only half the story. Neumann’s compensation for this value destruction was complicated by his ouster and a subsequent lawsuit, but we estimate he made off with around $1.02 billion, most of it coming out of Softbank’s deep pockets. That’s $1.5 million per day during those two years: an EBR of 11.1%.
Joining Mayer and Neumann on the podium is Randall Stephenson, who ran AT&T from 2007 to 2020, when his chief lieutenant, John Stankey, took over. If you owned AT&T stock in 2007, you’ve collected $26 per share in dividends since, but you’ve also watched the share price drop from $39 to $29, for an aggregate annual return of 2.5%. This was a period when S&P 500 companies as a whole returned 9.8% a year – much of it on the back of AT&T’s own mobile and data networks – and AT&T’s competitor Verizon returned 7.9% to its shareholders.
How did Stephenson manage this? Among other mistakes, AT&T spent $67 billion to buy DirecTV (a pending massive write-off), blew $4 billion when it failed to acquire T-Mobile, and spent another $108 billion to buy WarnerMedia, which Stankey just sold to Discovery. To his (partial) credit, Stankey may have managed to net out the Warner deal as a wash.
So while Stephenson didn’t destroy capital outright, he was a poor steward. Had AT&T eked out even a 4% return from 2007 to today, it would have made an additional $50 billion for shareholders. That’s an implied DBB of $10 million. How did the Board respond to Stephenson’s 13-year-long sideways run at the iconic firm? His total comp was at least $250 million, including a $64 million pension as a parting gift. That’s an EBR of “only” 0.5%, but still a huge payout in the face of mediocre performance.
In April 2014, toward the end of Steve Ballmer’s controversial run as CEO, Microsoft closed the $7.2 billion purchase of 1999’s leading mobile handset maker, Nokia. Just 15 months later, Ballmer was gone, and the company wrote off $10 billion for the failed acquisition – the deal was so bad it ended up costing Microsoft more than it paid, mostly due to severance for laid-off Nokia employees. That’s an incredible $22.2 million per day, the highest DBB we could find. (Ballmer only made $1.65 million his last year at the company, so a minimal EBR.)
Burning Benjamins doesn’t just happen in the US. In 1998, Daimler-Benz acquired Chrysler for $35 billion in the largest industrial merger ever at the time. After nine years of culture clash and billions in losses, Daimler unloaded 80% of Chrysler to a private equity firm for $7.4 billion, valuing the company at $9.25 billion. That equates to an impressive $7.8 million DBB.
How do these corporate money losers compare to the largest and longest-running Ponzi scheme in history? Bernie Madoff ran his fake fund for nearly 30 years, costing investors an estimated $19 billion. The date his fraud began is disputed, but assuming it was 1980, that’s a DBB of just under $2 million per day. A massive, decadelong legal project has repaid most of these losses through fines and settlements, and Madoff died in prison, but only after a multi-decade run paid for by the destruction of thousands of people’s economic security.
Growing up, I loved to watch my dad pack for business trips. He smelled of Aqua Velva and draped his Izod sweaters over a Ram Golf bag. He’d iron the mammoth collar of his Pierre Cardin shirts, fold them around a piece of wax paper, and lay them into his Hartmann luggage like newborns. It was ceremonial, just as when he’d wear his kilt. Elegant yet masculine. During one of these pre-business-trip ceremonies, when I was about eight, my mom walked in. I looked at my dad’s stuff and asked, “How come dad is so rich, and we’re so poor?”
My dad loves this story and laughs out loud when he tells it. But it wasn’t funny. He’s been married – and divorced – four times. There was some financial stress, there was incompatibility. But the real fissure was that there were two Americas … under one roof.
Whether we’re executives, parents, or citizens, we need to ask ourselves: Have our interests diverged from those of the people who matter most to us and society? Do our spouses, children, neighbors, employees, and countrymen win and lose in reasonable harmony? Are we part of a family, part of a nation? Or have we become the MeWork generation?
Billionaire SoftBank founder Masayoshi Son has joined growing calls to cancel the Tokyo Olympics as Japan struggles with a new coronavirus surge and many parts of the country remain under a state of emergency.
“Currently more than 80% of people want the Olympics to be postponed or canceled. Who and on what authority is it being forced through?” Son wrote on Twitter in Japanese on Saturday.
The day after his first tweet, the billionaire investor wrote: “There’s talk of a huge penalty (if the Games are canceled), but if 100,000 people from 200 countries descend on vaccine-laggard Japan and the mutant variant spreads, I think we could lose a lot more: Lives, the burden of subsidies if a state of emergency is called, a fall in gross domestic product, and the public’s patience.”
It’s still unclear just how many people will be at the Tokyo Olympics, where about 11,000 athletes are expected to compete. In March, the Japanese government decided to ban foreign spectators from attending the Games due to the emergence of new COVID-19 variants. As for local fans, the organizing committee has not announced how many spectators will be allowed to attend the Games, though it previously said it was considering capping capacity at 50%. Son did not immediately reply to Insider’s request for clarification on the 100,000 number mentioned in his tweet.
Son’s remarks came after International Olympic Committee Vice President John Coates said at an online news conference on Friday that the Games would “absolutely” go ahead even if Japan were under a state of emergency.
Invitae stock surged as much as 7% on Monday after a report out of the Wall Street Journal said Softbank plans to lead a $1.2 billion investment in the San Francisco-based genetic testing company.
The investment will come in the form of convertible debt and allow Invitae to expand its current genetic testing operations, per WSJ.
The convertible debt notes have an initial conversion price of $43.18 per share. Invitae shares closed at $39.19 on Friday.
The Inviate stake is the second sizeable investment from Softbank into a medical sciences company in the past few months.
The Japanese conglomerate also invested $900 million into the convertible debt of Pacific Biosciences, a next-generation DNA-sequencing systems firm, back in February.
Invitae announced plans to acquire the genomics company Genosity on Monday as well. The genetic testing company plans to use Genosity’s holdings to enhance its personalized oncology offerings.
Under the terms of the deal, Invitae will spend $200 million on the acquisition, consisting of approximately $120 million in cash and $80 million in Invitae shares. The deal is expected to close in the second quarter.
Softbank is the second big name to come out in support of Invitae.
In a CNBC interview in March, Cathie Wood of Ark Invest said Invitae “is probably one of the most important companies in the genomic revolution.”
Wood argued Inviate is “investing aggressively to be the leader in the diagnostics testing space” and that a “move towards personalized testing is going to give a few companies the lion’s share of the market.”
Despite the recent support from big names like Wood and Softbank, Invitae continues to struggle with profitability. The company turned in revenues of roughly $280 million in 2020 while posting a $602 million net loss, according to the annual 10-K SEC filing.
Invitae traded up 5.62%, at $41.36 per share, as of 10:56 a.m. ET on Monday.
The documentary, which is available now on Hulu, brought many of aspects WeWork’s cult-like work environment – including mandatory, alcohol-fueled employee retreats – to life, and juxtaposed CEO Adam Neumann’s lofty promises with his irresponsible spending.
Here are 4 of the most surprising details revealed in the film that highlight how much of a cult WeWork resembled. WeWork was not immediately available for comment.
WeWork summer festivals would start serving alcohol at 4 a.m. and there would be open bars in every 50-yard radius.
Don Lewis, one of at least ten lawyers at WeWork, described the company’s environment as “legitimately the craziest work experience you’ll ever have in your life.”
Every year, WeWork hosted an annual “Summer Camp” employee retreat. Lewis said the Summer Camp started serving alcohol at 4 a.m. and had open bars set up every 50 yards. Scenes from inside the retreat showed raves of hundreds of young people dancing to techno music and pouring beer on top of each other.
“If you wanted to drink ’til the end of time, you could drink ’til the end of time,” Lewis said laughing.
WeWork insiders said Neumann, his wife Rebekah, and other executives would give back-to-back speeches for hours during the day, and at night they would party. Ashton Kutcher and Rick Ross appeared on the summer camp stage in the movie.
WeLive designer Quinton Kerns said he tried to get out of the summer camp one year but was told they were mandatory. Lewis said the company used tracking bracelets to make sure all employees were in attendance.
A WeLive commune designer said he “designed everything to hold the weight of two people” because every person living there was young and single
Launched in 2016, WeLive was a co-living, micro-apartment space that charged $1,375 a month for a room that was “200 square-feet on a good day,” former WeLive member August Urbish said in the documentary.
Urbish said he got a text from a friend that allowed him to rent a space in WeLive after completing an essay on why he would make a good candidate. Once Urbish arrived, he said he noticed most residents were young and single.
WeLive designer Kerns said the crew had designed everything for “the weight of two people,” suggesting the single millennials were having sex regularly.
“Everybody was single,” Kerns said. “We actually had a saying that everything had to be designed to hold the weight of two people.”
Later in the movie, Urbish said he alienated his friends outside of WeLive because of all the time he spent in the commune.
“Every time a friend outside of the We community would come over, they would only come over only that one time because they would walk out with this strange impression of what it is,” he said. “Pretty quickly, I had alienated most of my friends outside of the building.”
WeWork had dozens of C-level managers called ‘C-We-Os’ that new employees were expected to familiarize themselves with. One employee joked that is was so they could ‘bow down’ to the execs in the office.
Former WeWork product manager Joanna Strange said employee orientation meetings occurred every Monday and featured a presentation about the “mythology of WeWork.” Strange, who called the videos “propaganda,” said new employees would loudly chant “WE-WORK” at the end of the video so that the whole office could hear.
Strange said orientation videos had many slides that introduced new employees to everyone at the C-level, who WeWork referred to as “C-We-Os.”
Lewis described “C-We-Os” as “mini-CEOs” in different regions who went on skiing trips and race car driving excursions, which were presented during the orientation videos.
“The C-We-Os are people who just want to talk about their awesomeness, they had that very much in common with Adam,” Strange said. “It was almost like you needed to know who was at the top so when they came past you could bow down to them.”
Lewis added there were no minorities in the WeWork C-suite: “There wasn’t proper diversity at WeWork, period, hard stop.”
One manager bragged to colleagues over email about how many people on his team he fired: “Ha bitches I cut more than 7% of my team!”
In 2016, Strange said she was working both her job and her manager’s job to the point where he gave her his passwords. Strange said she used the passwords to log onto her manager’s accounts to do his work for him at times.
Strange said one day she found an email in her manager’s inbox with a list of people he will fire that included her. She said it appeared each manager had to cut 7% of their employees because WeWork was losing money.
Strange said her manager bragged about firing more than 7% of his workers, and that he wrote “Ha bitches I cut more than 7% of my team.”
The Japanese investing conglomerate SoftBank, which has holdings in household names like Apple, Amazon, Tesla, Uber, DoorDash, and Sprint, is under investigation by the Securities and Exchange Commission, Vice News reported Wednesday.
The agency’s acknowledgment of its investigation follows reporting by the Financial Times last year that revealed SB Northstar, which is controlled by SoftBank CEO Masayoshi Son, as the “Nasdaq whale” behind secretive, risky multibillion-dollar bets on tech stocks during last summer’s market rally.
The SEC disclosed the investigation in response to a public records request from Think Computer Foundation founder Aaron Greenspan, according to the legal transparency group PlainSite.
Greenspan had asked for “any investigative materials” about SoftBank or its web of companies “specifically relating to SoftBank’s trading of stocks and derivatives on those stocks,” according to PlainSite. After initially denying that it had any relevant records, the SEC responded to Greenspan’s appeal by saying that it had records, but couldn’t share them, because “the investigation from which you seek records is active and ongoing.”
SoftBank and the SEC did not respond to requests for comment on this story.