Motley Fool Money - 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

This episode is brought to you by Indeed. Stop waiting around for the perfect candidate. Instead, use Indeed sponsored jobs to find the right people with the right skills fast. It's a simple way to make sure your listing is the first candidate C. According to Indeed data, sponsor jobs have four times more applicants than non-sponsored jobs. So go build your dream team today with Indeed. Get a $75 sponsor job credit at Indeed.com slash podcast. Terms and conditions apply.

People often ask me, you know, you're cynical, about Silicon Valley or cynical about Wall Street, which is going to put Massa son on a pedestal. And that's the reason. I mean, he had this quality that completely alludes 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 Natsalok-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, bite dance, arm holdings. Also, Uber, DoorDash, Lemonade, Open Door, and a lot more. Some of those bets have paid off handsomely. Others, quite the opposite. From 2014 to 2019, Samo 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 100,000.

billion dollar 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 open AI news because you know, you're comfortable talking about your 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 Open AI right now? Yeah. I mean, I candidly, I think South Bank investing 500 million is probably the least interesting aspect of the deal. You know, you've got to keep in mind as mind-boggling as these numbers seem. South Bank has, when I last look, close to $40 billion in cash, so on sign 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, you know, usually spectacularly successful moves. This is not his big moves, I guess.

So I think the, let's talk about Open AI. 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, you know, forget about business model, just the concept from our Open AI employee, raising a billion dollars at a five billion dollar valuation now open AI at 157 billion for a company that is bleeding cash, $5 billion from reports and beating people too. I mean, they'll last their their CTO and a whole bunch of people. You have to ask the question are things getting overdone?

Is there element of formal going on? And I suspect in the private space there is, is 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 world, chat GPT has become almost synonymous with AI in the eyes of the world. They are strong traction in the enterprise user base. So 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 superintelligence for a company.

That's just, you know, 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 open AI. Sorry, I'm branding on a little bit, but I just, I mean, I just find this so interesting with the other thing that's really, interesting about Open AI is you've got Thrive Capital leading this round. They let 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 Open DIY 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 that's kind of my point. I don't know. And as far I can, now, having said that, I've been in tech investment land. And frequently in my book, I tell the story of how Son Son Son and I have dinner with Mark Zuckerberg.

And the one thing that came through to me loud and clear, is massas regret even paying it 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 over $2 trillion the way Nvidia is or the way Facebook is. 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. that makes something up, but I can't come up with something on the square of the moment. Yeah, I mean, in your book, you talk about these early stage companies that, where they don't have cash flow, and that's often, or that's, 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, for 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, you know, five or ten percent. That's Amazon's revenue, right? So you could have a huge GMV and not make any money at all. You know, the 10 percent is revenue and then there's costs. So when I see people extrapolating of revenue multiples into infinity and kind of, you know, the profit is a complete leap of faith, I start scratching my head. I mean, that to me is a bit of a red flag. I won't call it a BS.

I think that's way too strong. I mean, I think Openia 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, you've been a part of multiple bull cycles and your book covers being a part of those. And 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 valuation. And, you know, for us listening, you would 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 a book, I talk about this wonderful example of this book, Charles McCa, written by the Scotsman, Charles McCann, 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 tulips in Netherlands and how ridiculous that they came right now. 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, Dunnabby. Lord Grantham, that's how he lost his shirt, Betty on Railroad. So it is, 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 a loss 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, is, it's good.

And this is actually really useful to talk about is the, to the extent there's frat, 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, 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 in 2021, right? I mean, 2021, you had, I think the number is 1,100 IPOs, off which 600 were specs, 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, 23 and Me, for example. All these specs went public at $10, but, you know, 23 and me is trading at pennies. So it takes, if you again look at previous cycles, 2000, for example, it takes the IPO market at the minimum of four years to recover, and you haven't had access 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, you know, 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 like 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, kind of, 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, 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 this, the lesson that you mentioned earlier with Masa, 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, 1,000 xing, that kind of thing. Yeah, I mean, look, these are some of the smartest, savviest people around, and I 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 truth.

I think the jury is out in terms of at the individual level, how it might impact our lives. I mean, you know, I haven't seen any apps the way we did with Web 2.0, Uber, etc. And maybe those will come, but the jury still out. But at the enterprise level, it is transformational as a productivity through. 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 Wobapinkas, which is not a household name, but one of the, for people in the business would 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, fleshy valuations. and I 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, if I'm answering your question, but from a VC growth investor perspective, it's like you can't afford to sit this out. And it's something where, you know, with your analytical brain, you can't value.

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 mean, 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 I value it.

Let's get into your journey at SoftBank. The investing style really revolves around the happiness for everyone, pitched this dream of Masa. 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 is trying to get at is idealism when it comes to technology investing, right? I mean, 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, 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 loadable. So that's a lot of where Massa is coming from. Very different from Haysley of Eli 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, there's also, I was talking to Nate Silver on the show a few weeks ago, the base case, which makes, it's, it's, it's, that AI makes the world sort of a worse version of a casino. Um, you mentioned to the, the robot and many of the predictions of, uh, Masa's son 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 loneliness. And I mean, that's a whole rabbit hole. We're a very complicated feelings. But for the base of this, it is something, it's something that it came true. Yeah. When you were going through these deals, was that something where like you would present like evaluation case, but you would also have to present like this is how it makes the world happier with the companies were interested in investing in?

Or did that sort of come upstream before it got to you? I mean, I think the key with Masa, the short answer is no. I mean, we didn't have like something like a, I never thought about it, but like something like a happiness index or anything associated with an investment memo. But the thing about Masa is, and this is what really, really got being hooked. I mean, this is a man who describes him. is a crazy guy who lives in the future, right? And a lot of people think of investing as, you know, kind of, it's almost gambling, right? I mean, you know, Sunsan is not a man you'll,

you'll find within a million mile radius of Vegas, right? I mean, it's not a gambling man. I associate gambling with addictive, thrill-seeking behavior. That's not him. So a man who lives in the future and when you live in the future, you're saying 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 Massassan 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 and 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 Masasone, before the iPhone existed, I just talked about 2005, draws up a picture of something that looks like an iPhone and takes it to Steve Jobs and says, Steve, you're the only one who can come up with something like this. And when you do, you've got to give me an exclusive for Japan. Steve kind of tells them you're a crazy guy.

I like you. 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, you know, kind of somewhat casual conversation, hand shake, you know, no contractual obligation.

He goes and buys, spends $20 billion, by, 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 on the company actually lends Masa money to take it off its hands, right? And Steve Jobs comes up with the iPhone in early 2007, gives Masa the exclusive, and, you know, because he always kind of saw this smartphones.

He builds this company around marketing, you know, data-oriented network selling smartphones to the Japanese and ends up on a market basis when the company went public, making $40 billion. Some monumental numbers. 100 billion mark-to-market on arms, $75 billion on Alibaba, you know, $40 billion on South Bank, 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 got to make a lot of, you got to make a, is 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, 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,

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 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. Because that 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 Son San, 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 I, people often ask me, you know, you're cynical about Silicon Valley, you're cynical about Wall Street, would you think to put Massa 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 Masa Sun 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-tonged, Adam Newman, like a silver-tonged 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 most other 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 a, that's an illusion. I can barely control my own bladder, right? So, and it gets philosophical when I lose both my parents, my dog,

in a very short period of time. And it's 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 we work, I mean, you know, like, it's an Adam Newman's a cool, fun story. It's been a movie made about it. And it's a fun movie. I enjoyed it. Jared Lido does a great job.

But it was, son Tats, he acknowledged it himself. You know, he, I think his exact words were. He said that I blame myself even more than Adam Newman. And 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 he might have lost $10 billion in Wewer, which is monumental by any standards. But he also made $100 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 multiple definitions of power. 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 this, 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's, that is also combined by power. And when when billions of dollars is being put into we work,

when billions of dollars is being put into chip companies, when, when you, there's a business model that you're also a part of that has led to things like people getting free Uber rides 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. That's also very real. And it's just, it's different from the other thing you're describing. Yeah. Yeah. Look, I mean, that's fair. That's fair. I mean, I think the, the impact that SoftBank had on the investment landscape in the valley is, profound, right? I mean, I talk the book about how Sequoia, which is King of the Hill and 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, not kind of describe 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 old times when he sees Jack Nicholas 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.

The next fund turned out to be $8 billion. So everyone felt they needed a bigger boat, right? I mean, you know, when that $100 billion fund came along, I think the total volume of investing in the previous year was 70 billion. So this was 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 they need to deploy money a lot of money in the new 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. So it's a combination of factors. And Sequoia, the relationship with them wasn't always rosy. They were upset at soft bank 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, 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, so forth. So I very tightly controlled allocation to cap. Nothing wrong with that. It's people like Sequoia brilliantly. Massa's view is, you know, he, I used the, I used 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, in the context of Sequoia. You know, Ratesh got married. Massa flew from, you know, Japan to India to attend the guys married. So it's that personal level of engagement that

belief in an entrepreneur. Like, I believe in you. I back you, you know, 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 master 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, you know, we're back into a, we're heavy into a mega trend. We're back into a bull market. And you're right, quote, while Masa had an impressive track record investing ahead of technology megatrends, he frequently held on too long, end quote. Yeah. I'll get you. We'll start with what, 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? frequently we hear the reverse that investors are too tradery and never 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 and just based on the observation that South Bank's Yahoo's stake, Yahoo was king of the hell, right? Some of us were old enough to remember like late 90s, 2000, it was the, it was the portal to the web. And his stake in Yahoo at its peak was 30 billion. He ended up selling it at seven 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, that, you know, he's not a great fader. But I mean, man, I mean, that's a, that's a completely different, completely different skill set. So that's what prompted that remark. The other side of this, though, is Nvidia. Yeah, soft bank did have an investment. And, you know, it is, it's better to have loved than to have never loved it all. What's that?

But what led to the sale in Invidia? 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 Indyia. Early 2017, Masa wanted to buy the company, Nvidia, I mean. And with a controlled company, 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. and now we all know that. Sipheus, which is the Committee for Foreign Investment in the United States, there is no way the U.S. government would have, Sipheus, acting through Sipheus, would have allowed a deal like that, foreign ownership of something as strategic to AI's and Vidia.

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 arm with the intention of holding us, 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, you know, he put on a leverage basis, made a brilliant return. But if he'd held on, I mean, 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 we think of high tech investments, you're going for those big home runs, you're not going for these sort of steady dividend payments. Yeah. So 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. 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 the 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 sideline 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 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 on Sprint, and I let 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, SoftBanks focuses very much on the Vision Fund. So there was an element, I think it's fair to say, of being, if not sideline,

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 to, 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 all 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 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 a hundred X I mean you know like you know Masa son you look at you look at the alibaba success story I mean that's like you know 40 million eventually 75 billion realized now you know you could be it would be it would be really really unfair to criticize him for not realizing 200 billion

because it is arguably the most spectacular investment 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 tech 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. because Sequoia started this is frequently because of their venture funds.

They, 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, you know, 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. I want to mention this to listeners. Aluk, 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, and just in experimenting, like all students do, it was like, you know, I was writing and throwing stuff up on the wall

and see what sticks kind of thing. And that's how this book came about. So, yeah, I mean, it's been a real laborer of love for me. So it's a lyrical, it's beautifully written. I really enjoyed the stories in it. I learned some stuff 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 a, sometimes it's a hastily written thing that's given off to a ghost writer. 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, Wiki. As always, people on the program may have interest in the stock. talk about and The Motley Fool may have formal recommendations for or against. So don't buy ourselves stocks based solely on what you hear. I'm Mary Long. Thanks for listening. We'll see on Monday, fools.