Motley Fool Hidden Gems Investing - Ex-SoftBank CFO on OpenAI, Bubbles, and When to Sell

Episode Date: October 12, 2024

With great swings, come great wins and great losses. Few companies know that better than SoftBank, the Japanese holding company made famous for its investments in Alibaba, Arm Holdings, WeWork, and other tech names that have dominated headlines from the past decade-plus.  Alok Sama is the former President and CFO of SoftBank and the author of the new book “The Money Trap: Lost Illusions Inside the Tech Bubble.” Ricky Mulvey caught up with Sama to discuss: OpenAI’s latest fundraising round. “Happiness for everyone” as an investment philosophy. The illusion – and reality – of power. Help Motley Fool Money win Signal’s Best Money and Finance Podcast: https://vote.signalaward.com/PublicVoting#/2024/shows/general/money-finance   Companies discussed: MSFT, NVDA, META, ME, ARM, BABA, OTC: SFTBY  Host: Ricky Mulvey Guest: Alok Sama Producer: Mary Long Engineer: Desireé Jones Learn more about your ad choices. Visit megaphone.fm/adchoices

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Whatever lies ahead, don't change your morning. Let your morning change you. Discover Coffee Plus on Nespresso.com. People often ask me, you know, you're cynical about Silicon Valley, you're cynical about Wall Street, but you seem to put Masa Son on the pedestal. And that's the reason. I mean, he had this quality that completely eludes me. And, you know, when he tells me that, you know, you're not enough of a hunter, I get where he's coming from. I could not have the, I don't see what he does. I don't see risk the way he sees it. I'm Mary Long and Natsulok Sama, former president and CFO at SoftBank International and author of

the new book, The Money Trap, Lost Illusions Inside the Tech Bubble. SoftBank is a Japanese holding company that's made big bets on some of the biggest names in tech. Alibaba, ByteDance, Arm Holdings, also Uber, DoorDash, Lemonade, Opendoor, and a lot more. Some of those bets have paid off handsomely. Others, quite the opposite. From 2014 to 2019, Sama was a top executive at SoftBank, where he worked closely with the firm's founder, Masayoshi-san, and had a front row seat as the company launched its legendary $100 billion vision fund. My colleague, Ricky Mulvey, recently caught up with Sama for a conversation about the delicious circularity in AI markets, the difference between being a hunter and being a cook,

what it means to live in the future, and knowing when to sell. Quick programming note before we get to today's show. Since this conversation runs a bit longer than usual, we won't be posting an episode tomorrow. Enjoy the day off, fools. We'll see you again on Monday. We'll get into the book, but I want to start with this OpenAI news because, you know, you're comfortable talking about your former employer.

You just wrote a book about them. And they're back in the news with this investment in OpenAI. The nonprofit just raised $6.6 billion at a $157 billion valuation. SoftBank putting $500 million into the mix. What do you make of this valuation, this rise of OpenAI right now? Yeah. I mean, candidly, I think SoftBank investing $500 million is probably the least interesting aspect of the deal. You know, you got to keep in mind, as mind-boggling as these numbers seem,

SoftBank has, when I last looked, close to $40 billion in cash. Son signed at his last AGM, talked about everything else he's done previously. It's a warm-up act, right? So you can put that together in the context of a man who's been known for big, bold, audacious, usually spectacularly successful moves. This is not his big moves, I guess. So let's talk about OpenAI. I mean, to me, the question I get asked a lot is AI, is it overhyped?

Are some of these valuations overhyped? And when I see Safe Superintelligence, which is another company that raised pre-revenue, forget about business model, just the concept, from our OpenAI employee raising a billion dollars at a $5 billion valuation, now OpenAI at $157 billion for a company. that is bleeding cash, $5 billion from reports and beating people too. I mean, they lost their CTO and a whole bunch of people. You have to ask the question, are things getting overdone? Is there element of FOMO going on?

And I suspect in the private space there is because unlike, you know, Google, for example, in its early days, you know, with open AI, there's real competition out there. There's Google, for one, and getting AI right is existential for Google. And I talk about deep pockets, right? So Google's got their own Gemini, LLM. You've got Facebook, again, with that kind of monumental user base across its various platforms. Insta, Facebook, WhatsApp, and they've got an open source AI LLM out there. So there's competition.

There's real alternatives. Having said that, there's no doubt open AI is very real. First of all, chat GPT has become almost synonymous with AI in the eyes of the world. They are strong traction in the enterprise user base. I don't argue with the fact that it's worth a ton. I just wonder about the 150 billion number as I do about, you know, kind of 5 billion for safe super intelligence for a company that's just barely even a concept. You know, that to me, and it's a good thing this stuff is going on in the private markets because I've lived through inflated valuations, 2000. You had these sorts of things going on in the public market at that point in time.

There are other aspects of OpenAI. Sorry, I'm rambling on a little bit. But I just I mean, I just find this so interesting with the other thing that's really interesting about OpenAI is you've got Thrive Capital leading this round. They led the previous round, so they get to mark up the deal in their books at 2x. That's unusual in VC land. People don't very often do that. You've also got investors to the investors who are participating are Microsoft and Nvidia. Well, guess what OpenAI does with the money they raise? They take the cash and they buy capacity on Microsoft Cloud.

So the money goes to Microsoft. What does Microsoft do with the money? Well, it buys NVIDIA chips. So the money goes to NVIDIA. So there's kind of almost a delicious sort of circularity. It's a little bit incestuous too. So there's a lot going on in that deal. And as great a company as it is, and Sam Altman's a kind of terrific entrepreneur and obviously

a fundraiser and a salesman too. I just wouldn't, I think there's a real risk when you start extrapolating that valuation as people often do in terms of other things going on in the private and the public space. So what do you think that valuation is based on then? That $157 billion? Well, I think that's kind of my point. I don't know. Now, having said that, I've been in tech investment land and frequently in my book, I tell the story of how so-and-so and I have dinner with Mark Zuckerberg. And the one thing that came through to me loud and clear is Masa's regret, even pain at not investing in Facebook at a $10 billion valuation.

And I dare say when Facebook was served up at $10 billion, you and I might have had the same discussion and not come up with an answer, which is, what is that $10 billion based on? And look, I mean, that's frequently the case with technology, relatively early stage technology investments. It's just very difficult to hang your hat on a specific valuation number. There is a huge leap of faith involved, and you kind of take the view that, look, there's an asymmetric payoff. I mean, this thing from $150, it could be worth over $2 trillion the way NVIDIA is or the way Facebook is, right? I mean, that's the only sensible response I can give you. There is no conventional valuation metric that would, as I sit here today, give me enough time I could make something up, but I can't come up with something on the spur of the moment. Yeah. I mean, in your book, you talk about these early stage companies where they don't have cash flow and that is what you value companies on. So you have to move to something like, what would it be like gross merchandise value or the total amount of sales going on in an online marketplace and not necessarily the cut or the profit even that a company is being taken from that.

we're seeing a lot for the retail investors listening. What are, I mean, what are the company metrics that sort of set off your BS meter for these young, emerging, exciting companies? I think too much of an emphasis on revenue multiples, for example. I mean, you talked about GMV, that was a real hot button. GMV is gross merchandise value in the context of an e-commerce company. I mean, you buy something on Amazon for a hundred bucks. That's the gross merchant value. Amazon's cut of that might be five or 10%. That's Amazon's revenue, right? So you could have a huge GMV and not make any money at all. The 10% is revenue and then there's cost. So when I see people extrapolating of revenue multiples into infinity and the profit is a

complete leap of faith i start scratching my head i mean that to me is a um um it's a bit of a red flag um i won't call it a bs i think that's way too strong i mean i think opening is very real it's going to be worth a lot i just don't know how much and i don't know how to value it well it's it's you've been a part of multiple bull cycles and your book covers being a part of those and yeah people uh people go with the herd they react as if they're i mean i'm not going to quote directly, but people react as if they're on drugs when they're a part of these mad herds running towards these valuations. And for us listening, you'd expect the bankers to react as you write, like Mr. Spock evaluating these investing decisions with very cold,

hard analytical skills. And that doesn't seem to be the case. It seems that emotions continue to rule no matter where you are in the investing spectrum. I think that's always going to be the case and i think that's been the case for the last few hundred years i mean you know in the book i talk about this wonderful example of this book um charles mccain written by the scotsman charles mccain i think it was written in the 18th century and this guy's like and it's considered to be like the ultimate authority on bubbles he talked about some people might have heard of uh tulips in netherland and how ridiculous that became right now but but but this guy missed the biggest bubble in his own lifetime, which was railroads in England.

So it was, for those of you who might have watched Downton Abbey, Lord Grantham, that's how he lost his shirt, betting on railroads. So this has been documented for a long time. And I got to tell you, I mean, I've been in and out of these markets for the last, at this point, man, I'm showing my age, almost 40 years. And I get caught up too. Everyone goes for it. But I tell you, the one thing that is, it's good,

This is actually really useful to talk about is to the extent there's froth, a lot of that is in the private markets and not the public markets, right? I mean, the big difference relative to the internet bubble is the hype at the time was in public markets. You had companies pre-revenue, you know, going public at ridiculous valuation, IPOs that would double, 2x, 3x. And I think what's happened now, it's interesting, is you had so much access in the public markets, and we've forgotten very quickly, 2021, right? I mean, 2021, you had, I think the number is 1,100 IPOs, of which 600 were SPACs.

Remember those, right? And so many of those just blew up. You know, kind of some of those were like WeWork, which went to zero. Others, 23andMe, for example. All these packs went public at $10, but 23andMe is trading at pennies. So it takes, if you, again, look at previous cycles, 2000, for example, it takes the IPO market at a minimum of four years to recover. And you haven't had excess in the public markets. Yes, NVIDIA has been a rocket ship, but if you look at NVIDIA, it trades at, depending on what your projection is, between 35 and 40 times earnings.

That's not for a company with 75% profit margins and growing the way it has. That's not outrageous, right? I mean, outrageous was Cisco at 200 times earnings in the year 2000. And by the way, if you'd invested in Cisco in the year 2000, you'd still be losing money, right? I mean, so it's the private markets where I kind of, you know, that's where there's a lot of raised eyebrows. So why do you think, why is there so much lag, you think, in the private markets compared to the public markets right now, especially with froth? And, you know, you mentioned the SPAC lesson where, you know, I got burned a little bit on a couple of SPACs that I got excited about that still haven't recovered. But within the private markets, especially, it seems to be ruled by almost the lesson that you mentioned earlier with Masa Sun not investing in Facebook at $10 billion.

A lot of these private market investors, VCs, almost don't lament the things they spent money on and then lost. They lament the opportunities that passed them by that ended up 100xing, 1,000xing, that kind of thing. Yeah, I mean, look, these are some of the smartest, savviest people around, and I'd put Masa as king of the hill in terms of his ability to spot macro trends. And there's no doubt that what's going on with AI, certainly at the enterprise level where it's proving out very quickly, truly is transformational as a productivity tool. I think the jury's out in terms of at the individual level, how it might impact our lives. I mean, I haven't seen any apps the way we did with Web 2.0, Uber, et cetera. Maybe those will come, but the jury's still out. But at the enterprise level, it is transformational as a productivity, true, and people kind of get that.

And there's just not a lot of plays around. And as a VC, it's not a trend you can sit on, sit out, right? So you're seeing that. There are others. For example, I'm associated with Wobba Pinkus, which is not a household name, but one of the – for people in the business who recognize it as absolutely kind of cutting edge when it comes to growth investing, particularly in technology. And they've chosen to sit out these big, flashy valuations and focus instead on AI at the enterprise level and buying into businesses where you could make a huge impact on margins. You can top line as well as bottom line, leveraging AI. So it is, I don't know if I'm answering your question, but from a VC, growth investor perspective, it's like you can't afford to sit this out.

Mm-hmm. And it's something where with your analytical brain, you can't value. If we're moving towards the singularity, how do you even put a price tag on that kind of thing? Yeah, putting a price tag on dreams a little bit, right? I use that expression in my book. It's tough. I mean, the excitement is very real. I'm excited about it. I just can't figure out how to value it. Let's get into your journey at SoftBank. The investing style really revolves around the happiness for everyone pitch, this dream of Masa-san. And while I know you've heard it a bunch of times, many of our listeners haven't. What is happiness for everyone? Yeah, what he's trying to get at is idealism when it comes to technology investing, right? I mean,

it is, let's go back. I mean, General Electric used to be a technology company once upon a time, right? It's Thomas Edison's company. And light bulbs, I mean, you could make a legitimate case that electricity, light bulbs, for example, kind of contributed to happiness for everyone, right? So I think that's a lot of what Son San's talking about, which is leveraging technology to improve lives. Happiness, he could get overly philosophical about that, but that's what he's trying to get at.

I mean, the first time I met him, I remember right in the lobby of his building, and then he talked about it when I met with him. He had this empathetic robot, Pepper, which was supposed to be a companion for the agent, right? So this is, again, AI-powered with an emotional engine, supposed to be a companion. And in Japan, with an aging population, it's a real issue with the highest suicide rates in the world. That's addressing, you know, kind of, that's laudable. So that's a lot of where Masa is coming from.

very different from his view of ali is a benign it's going to make lives better view very different from elon who thinks that this might be something we have to run away from and colonize mars yeah and it's it's there's also i was talking to nate silver on the show a few weeks ago the base case which makes um it's it's that ai makes the world sort of a worse version of a casino know um you mentioned to the the robot and many of the predictions of uh masasan came true with the pepper robot you can now you now have ai chatbots that are exactly like the movie her where people are having real quote-unquote real relationships with them in order to combat uh loneliness and i mean that's that's a whole rabbit hole where i have very complicated feelings but

for the base of this it is something it's something that um it came it came true yeah um when you were going through these deals was that something where like you would present like a valuation case but you would also have to present like this is how it makes the world happier with with the companies we're interested in investing in or did that sort of come upstream before it got to you um i mean i think the key with masa the short answer is no i mean we we didn't have like a something like a i never thought about it but like something like a happiness index or anything associated with it with an investment memo but the thing about masa is and this this is what really really got me hooked i mean this is a man who describes himself

as a crazy guy who lives in the future right and a lot of people think of investing um as as as you that kind of, it's almost gambling, right? I mean, you know, Sunstein is not a man you'll find within a million mile radius of Vegas, right? I mean, he's not a gambling man. I associate gambling with addictive, thrill-seeking behavior. That's not him.

It's a man who lives in the future. And when you live in the future, you're seeing tomorrow's headlines, your assessment of risk is fundamentally different. And it was often felt, you know, when I had doubts, reservations, Like, who am I to hold him back? I mean, you know, he backed Alibaba based on his vision for, you know, what e-commerce, how e-commerce might unfold in China based on looking at how it had evolved in the U.S.

But I tell you, what's even cooler, this is literally my favorite Masa San story, and I think one that people will relate to. So I think we can all agree. We all felt that excitement when we held a smartphone, an iPhone, for the first time. I certainly did in my hands, which is, man, this is seriously cool, right? I mean, this is life-changing, right? But Masa Son, before the iPhone existed, this is talking about 2005, draws up a picture of something that looks like an iPhone and takes it to Steve Jobs and said, Steve, you're the only one who can come up with something like this.

And when you do, you got to give me an exclusive for Japan. Steve kind of tells them, you're a crazy guy. I like you. You know, I don't have a product. You don't have a phone company. What am I going to give you an exclusive for? But, you know, I like you. If I do something like this, I'll give you an exclusive.

So on the back of this kind of somewhat casual conversation, handshake, you know, no contractual obligation. He goes and buys, spends $20 billion buying or close to $20 billion buying this company in Japan, which is just bleeding cash. I mean, it is such a dog that Vodafone, which owned the company, actually lends Masa money to take it off its hands, right? So, and Steve Jobs comes up with the iPhone in early 2007 and gives Masa the exclusive. And, you know, because he always saw this, smartphones, he builds this company around marketing, you know, data-oriented network, selling smartphones to the Japanese. and ends up on a mark-to-market basis when the company went public, making $40 billion. Some monumental numbers.

$100 billion mark-to-market on ARM, $75 billion on Alibaba, $40 billion on SoftBank, Japan, the mobile company. I mean, these are spectacular successes. When you meet him through your friend, it was Nikesh where you met Masa's son. And you said, I made Masa feel I understood his brand of genius, end quote.

I mean, as a banker, you have to make a lot of really wealthy people feel smart and understood. This is that game at the highest level. How do you do that? I talk a little bit about that. I think my experience with CEOs is they like to talk about their business, their vision, and they don't like being sold to. and you know when you start like reading from a pitch book and you get into salesy mode you kind of denigrate yourself a little bit my approach was always to look them in the eye and you know as if i'm having a cup of coffee with them having a drink with them and let them talk

and hopefully try and respond intelligently to what they say and you kind of get a rapper going and they come away saying that okay this is a guy i can relate to he kind of gets me and when they have an idea or a problem they want to solve hopefully they call you and with with masa you don't need to convince him that like you're also a crazy guy like he's not he's not looking for that he's not looking for a little bit of crazy well look i mean that the the the one of the pivotal chapters in the book is i talked about this idea of hunters and cooks and son san tells me um that look i mean you need to be more of a hunter you're basically suggesting i was a cook you're a michelin cook well that's that was a michelin star chef man i mean that's what i was

fishing for uh because because i was good at what i did and which is which is getting deals done No, but honestly, I mean, my role there, and I think that's true for a lot of people around Sun Sun, is they tend to be facilitators, facilitating his vision, because what he has, the quality he has, living in the future, vision, you know, as a futurist, as a technologist, it's just not something you can replicate, right? I did not have that. And that is part of why people often ask me, you know, you're cynical about Silicon Valley, you're cynical about Wall Street, but you seem to put Masa Son on a pedestal. And that's the reason. I mean, he had this quality that completely eludes me. And, you know, when he tells me that, you know, you're not enough of a hunter, I get

where he's coming from. I could not have the, I don't see what he does. I don't see risk the way he sees it. One of the central themes of your book is the idea of power and how there are people who you have an immense amount of power where you're flying on private jets, you're moving in billions of dollars. And then there's also times within your interactions with with Masa-san where you appear almost like more powerless. I would say one of those is within the WeWork deal where SoftBank goes on to invest tens of billions of dollars in WeWork. right and you seem to be in this spot where you're like this person is a silver-tongued adam newman like a silver-tongued snake oil salesperson and feel free to disagree with my assessment i

see a shake of the head well two things my i talk about power but my not to be overly philosophical about this but i talk about power being an illusion i in the epilogue i My book starts with this dramatic scene where I'm at Claridge's Hotel in Mayfair in London with two Mossad agents, if you can believe. And they tell me I have power because I control billions of dollars. And my feedback to them is power. I mean, that's an illusion. I can barely control my own bladder, right? And it gets philosophical when I lose both my parents, my dog, within a very short period of time.

I mean, it just kind of brings home that the notion that you control anything in your life is a bit of an illusion. So that's a bit of a philosophical as opposed to an investment point. In the context of WeWork, I mean, look, Adam Neumann's a cool, fun story. There's been a movie made about it, and it's a fun movie. I enjoyed it. Jared Leto does a great job. But it was, so and so has been, he acknowledged it himself. You know, I think his exact words were, he said that I blame myself even more than Adam Neumann.

Um, and, um, that's the nature of the VC game. You're not going to get everything right. And you just got to keep in mind that you might've lost $10 billion in WeWork, which is monumental by any standards, but he also made a hundred billion on arm. I'd take that trade any day. Yeah. Well, let's, I'm going to stay on the philosophical point for a sec, because I think it's interesting where you put that, where you, there's, there's multiple definitions of power and we almost

need different words for it, right? Yeah. There's the idea that you cannot control almost the acts of uncontrollable natural forces, sickness, that kind of thing. We have that word for power, but then we also have the ability to make people do things. That's also a word for – that is also combined by power. And when billions of dollars is being put into WeWork, when billions of dollars is being put into chip companies, um when when you there's a business model that you're also um a part of that has led to things like people getting free uber rides that that i've you know i've been on the downstream of soft

banks actions in the market that is an intense form of power man like that that's also very real and it's just it's different from the other thing you're describing yeah yeah yeah look i mean that's That's fair. That's fair. I mean, I think the impact that SoftBank had on the investment landscape in the Valley is profound, right? I mean, I talk in the book about how Sequoia, which is king of the hill in the Valley, you know, that's Google, you name it. I mean, kind of every major technology success story they've been behind. And I'm a bit of a golf nut, and I kind of described the meeting with Doug Leone, who's the managing partner of Sequoia, and his reaction, using a golfing metaphor, I go back to Bobby Jones, arguably the greatest of all times, when he sees Jack Nicklaus plays, and his reaction is, he plays a game with which I'm not familiar. So what Masa did, what the Vision Fund did was a game changer. And just to be very specific, Sequoia, billion-dollar funds were rare in the Valley.

Sequoia was probably the biggest one. I think their fund was $2 billion. Their next fund turned out to be $8 billion. So everyone felt they needed a bigger boat, right? I mean, when that $100 billion fund came along, I think the total volume of VC investing in the previous year was $70 billion. So this was monumental. And we talked about open AI towards the beginning of that discussion.

It's these large mega cap technology funds, venture slash growth funds with a ton of liquidity. And that's a little bit of what you're saying. They need to deploy money, a lot of money in the new thing. And you're still saying that. So that is a little bit of that is the soft bank effect. A little bit of that is also this weird notion we had of modern monetary theory and printing money, right? So it's a combination of factors.

And Sequoia, the relationship with them wasn't always rosy. They were upset at SoftBank because of essentially the valuations and the money that the investment fund was putting into smaller companies to which they were also invested, which on the surface, you would think, oh, great, more money going into an investment I own, the valuation's getting larger. I'm making a lot of money off of this. but that wasn't the case always with Sequoia. No, I mean, I think their objection to be fair was, again, it comes back to the notion of power and control, right? The conventional VC approach

is you sit on the board and you drift feed capital. It's like, you know, you're talking about tens of millions at the time, you know, kind of, okay, I gave you a certain benchmarks, I evaluate you against that, you hit your goals, I'll give you no money, so on and so forth. So, A very tightly controlled allocation of capital. Nothing wrong with that. It served people like Sequoia brilliantly. Masa's view is, you know, he, I use the expression, he treated founders the way they want to be treated by an investor,

which is, I love you, man. I mean, you know, it is, I give the example of Ritesh, which is what came up in the context of Sequoia. You know, Ritesh got married. Masa flew from Japan to India to attend the guy's marriage. So it's that personal level of engagement, that belief in an entrepreneur, like I believe in you, I back you, whatever capital you need, I'm behind you. I think that's a little bit of what the VCs were struggling with. And that's one of the things that's very different about our massive approach to investing. All right. One of the things you write about, let's talk about selling. This is something a lot of our listeners think about, especially, we're heavy into a mega trend. We're back into

a bull market. And you write, quote, while Masa had an impressive track record investing ahead of technology mega trends, he frequently held on too long, end quote. I'll get you. We'll start with what led you to that conclusion, and then I'll ask you what you learned from it. So what led you to that conclusion of why do you think Masa held on too long? Because frequently we hear the reverse, that investors are too tradery and they sell too much and that hurts them. Yeah, I think the, let's look at the, that comment was made at probably halfway through the book when I, and just based on the observation that SoftBank's Yahoo stake, Yahoo was king of the hill, right? Some of us are old enough to remember like the late 90s, 2000, it was the portal to the web. And his stake in Yahoo at its peak was $30 billion.

He ended up selling it at $7 billion. I think the same thing turned out to be true with Alibaba. I think on a mark-to-market basis, at one point, that stake would have been worth, I want to say, $200 billion or something very close to that. At its peak, he ended up liquidating it at $75 billion. Now, it is still a spectacular success story, or those are still spectacular success stories. But obviously, had he sold out at a different time, he would have made a lot more, which would suggest that he's not a great trader. But I mean, man, that's a completely different skill set. So that's what prompted that remark. um the other side of this though is nvidia where softbank did have an investment and yeah you know it is it's better to have loved than to have never loved at all um but uh what led to the sale in nvidia because this is also sort of what happened to the that's a great question i think we

can learn something from that so first of all two things about nvidia uh early 2017 masa wanted to buy the company, NVIDIA, I mean, and with a control premium, we could have bought the company for $80 billion, right? I mean, it would have been history. I mean, it's worth over $2 trillion now. We all know that. CFIUS, which is the Committee for Foreign Investment of the United States, there is no way the US government would have, CFIUS, acting through CFIUS, would have allowed a

deal like that, foreign ownership of something as strategic to AI as NVIDIA. So that was off the table. So what Masa ended up doing is buying in the fund. And when you buy on your own balance sheet, if you've actually bought a company the way he did on with the intention of holding on, making some operational changes, as opposed to buying on a leverage basis in a fund where there's pressure to recycle fund to investors, your mindset changes a little bit. And that's what happened with Nvidia in the fund, which is, which is, you know, he put on a leverage basis, made a brilliant return. And, but if he'd held on, I mean, that, that, that 4X, 5X could have been 20X. And some of that was, did that have to do with the sort of the funds deal where it was paying out? What was it like a 7% dividend to all of its holders throughout, which is sort of uncommon for a tech. When, when we think of high-tech investments, you're going through for those

big home runs. You're not going for these, these sort of steady dividend payments. Yeah. So that the division fund was completely unique in as much as there was a layer of leverage provided by the limited partners that was part of the fund, right? So the investors, the limited partners, mainly the Middle Eastern investors out of Saudi Arabia and the United Arab Emirates, they also provided capital in the form of mezzanine, which paid a cash dividend of 7%.

So you had to, the fund had to pay them cash and that created pressure to realize liquidity. And that, again, is at least a small part of the explanation that when you have an opportunity to liquidate something, you try and do it. You told the story earlier of the dinner you had, where you were described as a cook and not a hunter. Your job changed dramatically at SoftBank around 2019. You went from president and CFO to senior advisor. When did you feel your job really changing? We talked about power as a nebulous thing. When did you feel your power sort of softening and feeling almost sidelined, moved

out of the one of the top seats there? I think that that happened earlier when I left and became a senior advisor, I was basically out. And, and that's the way I wanted it. And that's the way we negotiated. Someone wanted me out of the vision fund. And when I was shut out of the vision fund, even though there was some very interesting stuff that was going on outside of the vision fund, For example, SoftBank owns Sprint, and I led the merger of Sprint with T-Mobile. So there was a lot to do outside of the Vision Fund, but I was excluded from the Vision Fund. And at the time, SoftBank's focus was very much on the Vision Fund. So there was an element, I think it's fair to say, of being, if not sidelined, certainly being kind of one step removed from where the real action was.

So that's kind of where it started to happen in terms of the drift. I did a two-part question, then I went down a digression. I'm going to get back to the two-part question now that I remember it. What did you learn about when to sell from your experience at SoftBank? How does that affect you as an investor now? So my personal philosophy is, you know, that old line about, you know, bulls make money, bears make money, pigs get slaughtered. So my personal view of the world is, man, I mean, if I run into a situation where I've

I've doubled my money or, you know, kind of tripled my money or whatever. I mean, you know, I'm out of there. I tend not to get too greedy. And but that's not in the world of technology. That is most certainly not the right answer, because if you've got a winner in the world of technology, you need to be thinking not just 10x, but like, you know, potentially 100x. I mean, you know, like, you know, Masa Son, you look at the Alibaba success story, I mean, that's like, you know, 40 million, eventually 75 billion realized. Now, you know, it would be really, really unfair to criticize him for not realizing 200 billion, because it is arguably the most spectacular investment of all time.

So that's one of the things kind of my view, you know, my mindset is a little bit conservative because, you know, I'm kind of particularly at my stage in life. I mean, I'm thinking in terms of my next in my nest egg for retirement. But if you want to be a technology investor, successful technology investor, you've got to think in terms of, you know, kind of really, really backing your winners. And you're seeing that with the funds. Sequoia started this frequently because of their venture funds. Because of pressure to recycle capital, they were getting out too early. They created a separate fund where you could hang on much, much longer. I mean, it's like the Google could be the next Google. You bought Google at IPO, it would be a spectacular investment. the money trap lost illusions inside the tech bubble uh i want to mention this to listeners uh alok you wrote like you didn't get a ghostwriter for this it is beautifully right i did what no i mean quite the contrary i did not set off to write this book but i wanted to be a writer and i spent two and a half years in graduate school i got an mfa at new york university

and, you know, I, and just in experimenting, like all students do was like, you know, I was writing and throwing stuff up on the wall and see what sticks kind of thing. And, and that's how this book came about. So, yeah, I mean, it's, it's, it's been a real labor of love for me. So it's, it's a lyrical, it's beautifully written. I really enjoyed the stories in it. I learned, I learned some stuff for, for my investing brain. I think our listeners will get a lot out of it. And, you know, there's a lot of like big business people when they write a memoir, It's almost like sometimes it's a hastily written thing that's given off to a ghostwriter. Your book is the complete opposite of that.

It's thoughtful. It's warm. It's personal. I really enjoyed it. And I'm grateful for the time and insight. Thanks, Vicky. As always, people on the program may have interest in the stocks they talk about. And The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear.

I'm Mary Long. Thanks for listening. We'll see you on Monday, fools. Thank you.