WeWork bankruptcy cost SoftBank’s billionaire boss Masayoshi Son US$11.5 billion and his credibility

Masayoshi Son, a billionaire from Japan, has faced significant financial and reputational damage due to the bankruptcy of WeWork, a company he heavily invested in. Despite objections from his team, Son provided billions of dollars to WeWork's founder, Adam Neumann, from both his company, SoftBank Group Corp, and the Vision Fund. This investment inflated WeWork's valuation to an impressive $47 billion in early 2019. However, just months later, investors were deterred by the company's deep losses and conflicts of interest revealed in its initial public offering (IPO) filings. This led to a sharp decline in WeWork's value, costing SoftBank an estimated $11. 5 billion in equity losses and leaving $2. 2 billion in debt.

Son's reputation as a savvy investor, built on successful early investments in companies like Alibaba, took a hit due to WeWork's public decline and the Vision Fund's record loss of $32 billion last year. Aswath Damodaran, a professor at New York University's Stern School of Business, suggested that Son's past successes may have clouded his judgment. He noted that before WeWork's downfall, SoftBank was perceived as a careful, clever, and visionary organization under Son's leadership. However, their success may have led to overconfidence, setting the stage for their eventual fall.

In 2017, Son established SoftBank's Vision Fund, aiming to be the world's largest technology investor. He invested over $140 billion into hundreds of start-ups, often offering more money than requested, which drew criticism from Silicon Valley rivals. Son attributed his decisions to gut instinct, but this reliance on intuition may have made him dismissive of red flags and opposition from his advisers. Despite WeWork's struggles, Son continued to support the company, even providing a $9. 5 billion rescue package after its failed IPO in 2019. The fallout from Son's investment in WeWork and other start-ups was amplified by the initial $60 billion committed by the Saudi and Abu Dhabi wealth funds to the first Vision Fund. Son's aggressive investment strategy inflated valuations globally, pressuring rivals to match the Vision Fund's large investments. However, these inflated values soon plummeted when spending failed to translate into sales, profits, and IPOs.