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SoftBank’s Epic Losses Reveal Masayoshi Son’s Broken Business Model

The bubble that the tech investor blamed for his company’s $23 billion loss last quarter—after an additional $19 billion earlier this year—is one that he helped create.

Masayoshi Son, chairman and chief executive officer of SoftBank Group Corp.

Masayoshi Son, chairman and chief executive officer of SoftBank Group Corp.

Photographer: Kiyoshi Ota/Bloomberg

In retrospect there were reasons to be skeptical of the Vision Fund, the attempt by the Japanese tech conglomerate SoftBank Group Corp. to push its way into the ranks of Silicon Valley’s top venture capitalists. Start with its founder, Masayoshi Son, who was famous chiefly for having lost more money than anyone in history. (Son’s net worth dropped by $70 billion in 2001 after a series of disastrous bets on dot-com startups went bad; he recovered, largely thanks to an early investment in China’s Alibaba Group Holding Ltd.)

There was SoftBank’s anchor investor, Saudi Crown Prince Mohammed bin Salman, who’s not known for any particular investing aptitude but who, according to US intelligence assessments, ordered the killing and dismemberment of a Washington Post columnist (he’s denied any involvement). Finally: the business model, which involved a particularly aggressive spin on monopoly capitalism. Son’s strategy depended on writing such large checks—to the likes of WeWork, Uber Technologies, and DoorDash—that his portfolio companies would be able to operate at a loss for years, theoretically giving them time to establish market dominance and long-term profits.