WeWork’s bankruptcy filing caps a years-long saga that revealed breathtaking flaws in the investment style of Japanese billionaire Masayoshi Son, damaging his professional reputation far beyond the money he lost.
Son overrode his lieutenants’ objections and handed WeWork founder Adam Neumann billions of dollars from both SoftBank Group Corp and the Vision Fund, lifting the co-working office space’s valuation to an astronomical US$47 billion in early 2019. Just months later, investors balked at the deep losses and conflicts of interest WeWork’s initial public offering (IPO) filings revealed.
WeWork’s subsequent nosedive is costing SoftBank more than the estimated US$11.5 billion in equity losses and another US$2.2 billion in debt still on the line.
WeWork’s very public decline, along with the Vision Fund’s record loss of US$32 billion last year, battered Son’s standing as a shrewd investor who scored one of venture capital’s legendary wins through an early bet on Chinese e-commerce leader Alibaba Group Holding, owner of the South China Morning Post.
“You can recover from mistakes, but how do you recover from the perception that you don’t know what you’re doing?” said Aswath Damodaran, a professor at the Stern School of Business in New York University (NYU). “His actions say, ‘I am arrogant'.”
