There is a particular kind of silence that follows public failure in the investment world. It’s more like the sound of people reevaluating what they believed to be true about someone than the quiet of defeat. That’s the silence that settled around Masayoshi Son somewhere in the autumn of 2019, when SoftBank reported its first quarterly loss in 14 years and the numbers on WeWork told a story too ugly to spin.
Son had pushed WeWork’s valuation to $47 billion in early 2019, overriding objections from his own lieutenants, handing founder Adam Neumann billions from both SoftBank and the Vision Fund. The bet was enormous and, as it turned out, deeply personal. Son later acknowledged that he had “fallen in love” with WeWork, a statement that, looking back, reveals more than it should about how investment choices were made within one of the most influential tech funds in the world.
SoftBank was left holding the bag when WeWork’s IPO failed in September 2019 due to investors’ rejection of the company’s growing losses and chaotic governance. It spent more than $10 billion bailing out the company, installed its own operating chief as executive chairman, watched Neumann walk away with over a billion dollars, and then recorded a $8.2 billion combined loss on its WeWork position. That November, Son stood in front of investors at a press conference and quietly remarked, “My investment judgment was poor in many ways and I am reflecting deeply on that.” It was an incredible moment to witness for a man who is renowned for his unbridled confidence.
The scale of the damage went beyond WeWork. For the July–September 2019 quarter alone, SoftBank’s $100 billion vehicle for transforming the global tech landscape, the Vision Fund, reported an operating loss of $8.9 billion. Uber was falling. Slack was dropping. Wag, a dog-walking business that had received $300 million from SoftBank, was discreetly considering a sale. To his credit, Son acknowledged that there would probably be “similar problems surfacing” throughout the portfolio and specifically mentioned that one during the conference call. It was an uncommon degree of openness. It was frightening as well.
It wasn’t just the money that caused the WeWork collapse to be so devastating. It was what it implied about the money’s underlying judgment. Son had long attributed his choices to something akin to instinct, comparing his sense of timing to the Force in Star Wars and pointing to the sparkle in a founder’s eyes. Alibaba, one of venture capital’s most well-known early bets, benefited greatly from that. However, Aswath Damodaran, a professor of finance at NYU’s Stern School, stated unequivocally that people’s perceptions of success are subjective. “The fact that they were successful might’ve made them a little too convinced that they knew more than everybody else,” he said. It’s a valid observation, and anyone who was close to Son during the Vision Fund’s most active years would likely find it unsettling.
By the time WeWork filed for bankruptcy in November 2023, the losses had grown to an estimated $11.5 billion in equity and another $2.2 billion in debt still outstanding. The Vision Fund had recorded a staggering $32 billion loss in the prior year. SoftBank agreed to a restructuring deal that cut more than $3 billion of WeWork’s debt. The business would carry on, at least for the time being, attempting to establish itself in a commercial real estate market that had been altered by the pandemic years. Even after being dismantled and reorganized, it’s still unclear if that company will ever look like what Son had envisioned.
Observing all of this from a distance gives me the impression that Son’s story has nothing to do with WeWork. One symptom was WeWork. What happens to a style of investing based on conviction and scale when that conviction proves to be misplaced is the deeper question, the one that lingers. Through its Vision Funds, SoftBank invested more than $140 billion in hundreds of startups, forcing them to expand faster than their fundamentals could sustain, raising valuations, and writing checks that were larger than the founders had even asked. The plan was audacious. It was partially successful. Clearly, some of it didn’t.
Son is still here. He continues to manage SoftBank, discuss the future, and place wagers. However, the period characterized by the Vision Fund’s early swagger, when Son appeared to many observers to be functioning on a different plane from regular investors, appears to be truly over. It’s more difficult to read what follows. In the business world, recovery is typically quieter and slower than the failure that preceded it. And Son’s journey back, if there is one, will probably resemble a drawn-out, meticulous process of demonstrating that the judgment is sound once more rather than a comeback tale.
That is always the most difficult thing to demonstrate in the field of finance.
