One guy who has no problem with the OpenAI leadership exodus: Masayoshi Son

SoftBank is back, making a $500 million splash with its OpenAI investment.

10/1/24 2:18PM

Last Thursday, I wondered whether or not a wave of resignations from key OpenAI executives over the last year, including three last week, would cause investors to hesitate as they considered writing new checks to OpenAI at a $150 billion valuation. At least one investor wasn’t concerned: Masayoshi Son, the founder and CEO of Japanese investing group SoftBank.

The Information reported that SoftBank’s Vision Fund has agreed to invest $500 million in OpenAI’s latest funding round, valuing the company at $150 billion, joining Thrive Capital, which has agreed to invest “more than $1 billion,” as well as Microsoft and other backers.

Son has had an… interesting journey investing in technology companies, to say the least.

Son briefly became the richest man in the world in the late 1990s after betting heavily on tech during the dot-com bubble, but when the bubble burst, he gained the distinction of having lost more money than any other person in history as SoftBank’s stock collapsed 99%. However, Son turned an initial $20 million bet (SoftBank eventually invested a total of $53 million) on Jack Ma’s Alibaba in 2000 into a $72 billion gain by the time the company exited its position in 2023, and in 2020, its 25% stake in Alibaba was worth more than SoftBank’s own market capitalization.

In 2022, SoftBank’s Vision Fund posted a $27.4 billion loss, largely due to poorly-timed investments in different tech companies, such as WeWork, at nosebleed valuations, and in November of that year, Son personally owed his company $4.7 billion. BUT, as with Alibaba, one outsized position saved his portfolio. Softbank acquired British semiconductor company Arm Holdings for $31.4 billion in 2016 and took it public at $51 per share for a $54 billion valuation in 2023, after European regulators blocked an Nvidia acquisition.

Arm is now trading at $138 per share, or a $145 billion market capitalization, thanks to AI tailwinds, and SoftBank still hasn’t sold its 90% stake, which is now worth approximately $130 billion.

Basically the story of SoftBank, over the last 25+ years, has been boom, bust, boom, bust, boom, with Son going all-in on hot markets at sky-high valuations, suffering multi-billion dollar losses when the market turns, and proceeding to make it all back on one well-timed investment. I’m not saying that OpenAI is his 2024 “lose it all” moment, especially considering that he is “only” investing $500 million, and, yes, OpenAI is predicting that its revenue will jump from an estimated $3.7 billion in 2024 to $11.6 billion in 2025 (though let’s not talk about its profitability). But I do think it’s fitting that, while key OpenAI employees are resigning in droves, Apple just pulled out of the funding round, and OpenAI is being valued at the same level as Goldman Sachs, Son is the one new investor ready to lay his money on the line.

Never change, Masayoshi Son.

Matt Phillips

29m

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