SoftBank CEO ‘embarrassed and flustered’ by track record
The company is under pressure for its bets on loss-making businesses such as Uber and Slack
Tokyo — SoftBank Group founder and CEO Masayoshi Son is “embarrassed and flustered” by his track record, he told Nikkei Business magazine, as the Japanese company comes under pressure from some investors for its bets on loss-making businesses.
“When I look at the growth of US and Chinese companies, I feel strongly it’s not good enough,” Son said in an interview.
Son is spending most of his time on the group’s investing activities — centred on the $100bn Vision Fund — leaving the day-to-day running of core businesses such as telecoms operator SoftBank Corp to key lieutenants.
With portfolio company WeWork pulling its initial public offering and valuations at other key investments falling, SoftBank is struggling to attract investment to a second mammoth fund, Reuters reported last week.
Son touched on favourite themes in the interview, including the “extremely unsavoury” state of Japan and its “grass-eating” entrepreneurs — a Japanese phrase that makes a negative comparison with more aggressive meat eaters. By contrast “there is technological innovation in the US, China is growing mammoth and Southeast Asia is booming”, Son said.
Investor scepticism about the path to profitability for Vision Fund’s investments in money-losing start-ups such as Uber Technologies and Slack Technologies has led to a market sell-off, with SoftBank Group shares on Monday closing down 30% from their July peak.
“Companies like WeWork and Uber are criticised for being in the red, but in 10 years they’ll be making substantial profits,” Son said.
SoftBank and other investors led a revolt against WeWork co-founder Adam Neumann, who was criticised for his hard-partying ways and level of control over the company, culminating in his stepping down as CEO. “Recently I have been telling founders to ‘know your limit’,” Son said.
WeWork, into which SoftBank has poured more than $10bn, is considering slowing its expansion to try to rein in costs, sources told Reuters last month.
Another SoftBank-backed start-up trying to shore up its finances, India’s Oyo, is facing a backlash from hotel owners who complain of being blindsided by fee increases.
SoftBank’s performance is increasingly tied to the fortunes of these unproven start-ups, with the company likely to report chunky writedowns on many investments for the quarter ended September.
“I include myself when I say it is not the time for Japanese entrepreneurs to be making excuses,” Son said.