SoftBank’s money-losing unicorns

[Bloomberg] [Fully Charged]( From [Bloomberg](   [FOLLOW US [Facebook Share]]( [Twitter Share]( [SUBSCRIBE [Subscribe]](  Hi all, it's Eric. “They’re very nice people,” WeWork Cos. Chief Executive Officer Adam Neumann said about the folks over at SoftBank Group Corp. I couldn’t help but feel like that was a pretty muted description of a firm that’s invested more than $10 billion in Neumann’s real estate company. The quip came as Neumann [explained to my colleague]( Ellen Huet why exactly SoftBank’s Masayoshi Son hadn’t forked over another $16 billion. SoftBank had apparently decided that was too much money to put in any one company, even for a firm known to cut ridiculously big checks. Now, admittedly, that one line might not encapsulate the entirety of Neumann’s view of his largest shareholder. But there’s a much firmer data point in Huet’s Bloomberg Businessweek cover story that helps to explain why Neumann doesn’t call his investors at SoftBank—which has two WeWork board seats—“very tough bosses” instead: Neumann still controls 65% of his company. He’s in charge and he doesn’t have to take orders from anybody. Neumann took majority control of WeWork two years before fellow startup founder Travis Kalanick was ousted from his company, Uber Technologies Inc. Kalanick tried to increase his power, adding board seats under his control when Saudi Arabia’s sovereign wealth fund invested in Uber. But it wasn’t enough to keep him in the job. In 2016, just as Kalanick was heading for the exits, SoftBank saw its opportunity and cut a deal to invest in Uber. Today, the firm is the company’s largest shareholder with more than a 16% equity stake. As part of the deal, the SoftBank Vision Fund took two board seats at Uber. But they were never filled. The U.S. government has yet to give the required OK for the foreign investor to hold board-level sway over Uber’s corporate decision-making. SoftBank may never get its board seats. I just want to point out how weird this is. SoftBank is already an outlier when it comes to writing huge checks at valuations that give others pause. But to invest billions with so little control is quite the strategy. Luckily for SoftBank, Uber has pretty good corporate governance today compared with many other Silicon Valley companies. It has a [one-share,](one-vote policy for its directors. Its board chair might be [overworked](, but at least he’s truly independent. (This isn’t to say SoftBank never throws its weight around. [Just ask Wag.)]( Yet if you read the news, you might expect that SoftBank will at any moment force its companies to stop lighting hundreds of millions of dollars on fire as they compete with each other. Just this week the Information [reported](, “SoftBank may feel pressure to ask the companies in its investment portfolio that compete with Uber to ramp down cash burn, said one major Uber shareholder.” Maybe. Or maybe not. Two of SoftBank’s biggest investments, Uber and WeWork, are in a class of their own when it comes to losing money. DoorDash Inc., another SoftBank bet, has been spending aggressively to take over the food delivery industry, competing with Uber in the process. SoftBank is also a major investor in Didi which is now competing with Uber in China. It turns out if you furnish startups with humongous sums of money, they tend to spend it. It might seem that investors believe that funding is being well spent. But in the case of SoftBank, the firm’s strategy seems to be to give companies money and let them operate—autonomously. —[Eric Newcomer](mailto:enewcomer@bloomberg.net)  And here’s what you need to know in global technology news Pinterest shares fell after the newly public company released a [revenue forecast that fell short]( of analysts' expectations. Nvidia, meanwhile, [is up]( as sales of graphics chips look set to improve.  Trump threatened to blacklist Huawei. [Analysts called it]( a “grave escalation” in the trade war with China.  Tesla updates car software [after cars catch on fire.](   Sponsored Content by [Darktrace]( As organizations embrace cloud services, the attack surface is increasing. Meanwhile, cloud-based threats are fast and unpredictable, often outpacing existing defenses. But cyber AI is changing the game. Thousands of companies use AI to detect and respond to advanced attackers in the cloud, before they do damage. [Learn what’s missing in cloud security and how cyber AI can help.](   You received this message because you are subscribed to the Bloomberg Technology newsletter Fully Charged. You can tell your friends to [sign up here](.  [Unsubscribe]( | [Bloomberg.com]( | [Contact Us]( Bloomberg L.P. 731 Lexington, New York, NY, 10022