Masa Son (of God) and the valley of coronavirus

Just when you thought Masayoshi Son's megalomania had reached its zenith, the Japanese billionaire goes and likens himself to Jesus. He was also misunderstood, the SoftBank CEO reportedly said this week, after investors squared up to him like a cohort of Roman soldiers about his spurious claims to be a miracle worker. Now look at Christ, with his 2.5 billion followers, Son (of God) seemed to imply.

That's all true, Masa, but Jesus, unlike you, didn't rack up an $18 billion loss on dodgy bets. And making a lucrative return for the Saudi royal family or other Vision Fund investors lacks the popular appeal of turning water into wine or raising someone from the dead. That the SoftBank CEO, in a spare part of his addled brain, entertains thoughts of a Sonist cult is surely a reason for investors to flee.

More came during one of the most bizarre exchanges ever witnessed between a CEO and analysts. SoftBank's earnings updates usually have a Sermon-on-the-Mount quality, as Son preaches to the crowd about the "singularity," the idea that artificial intelligence will eventually turn us into slaves. This one featured a lengthy discourse about unicorns – $1 billion startups – falling into the "valley of coronavirus." There was even a slide image of a real valley into which actual unicorns had plunged, although it looked more like someone had dug a trench in a hill, perhaps for one of SoftBank's fiber-optic cables. On the other side, one unicorn had mysteriously sprouted wings and flown out of the duct.

Source: SoftBank.
Source: SoftBank.

"Our unicorns are facing serious challenges against the background of coronavirus outbreak, but I believe that some of them will fly over the valley of coronavirus and go beyond and fly high," intoned Son, according to a Seeking Alpha transcript. You couldn't make this stuff up even if you had ingested lethal quantities of the strongest hallucinogen known to man.

The pandemic, of course, takes much of the blame for epic losses on companies such as Uber, developer of the world-famous ride-hailing app, and WeWork, a real estate business masquerading as some kind of technology firm. But long before the valley of coronavirus there was the sewer of foul-smelling investments. WeWork needed a $9.5 billion bailout last year, when corona was still just a brand of Mexican lager. Uber lost $8.5 billion in its last fiscal year.

Throughout all of this, Son has dismissed sales and profits as unimportant measures of business success. Shareholder value, a made-up metric defined as the equity value of holdings minus interest-bearing net debt, is all that really counts, he tells his audience. On that basis, it was 23 trillion Japanese yen ($213.6 billion) at the end of last year. Rising debts have now wiped JPY1.4 trillion ($13 billion) off that figure. "It was not like a 30% decline," pleaded Son.

The upshot, though, is that investments will no longer be channeled into the original $100 billion Vision Fund. Like the movie sequel you've always dreaded, a Vision Fund 2 will appear without the marketing fanfare that accompanied the original spectacle. SoftBank will fund that alone, for the time being, because the performance of the original was "not that great," Son told analysts in response to questions.

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SoftBank may have much further to sink. Even if some of its unicorns can magically sprout wings and escape the valley of coronavirus, Son estimates that 15 of the 88 Vision Fund companies may go bankrupt. His hope is that another 15 will enjoy success and save his reputation as a canny investor. Right now, that is wearing very thin and seems to rest largely on the $20 million investment he made 20 years ago in a little-known Chinese company called Alibaba. Today, the ecommerce giant is valued at roughly $564 billion.

More recently, Son has appeared to have a deficit of business acumen to match SoftBank's losses. In an attempt to revive its balance sheet, SoftBank was today reported to be eyeing the sale of a 5% stake in its Japanese wireless business. This followed news it was trying to flog a part of its stake in the new-look T-Mobile US, after that operator's recently concluded merger with SoftBank-controlled Sprint.

Son's main attraction these days is as an entertainment rival to Elon Musk, the Tesla CEO who smokes weed on podcasts, named his child after an algebraic formula and vents on Twitter with Trumpian flair. After comparing himself to Jesus, Son has set Musk a very high bar.

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— Iain Morris, International Editor, Light Reading

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