Alok Sama, a veteran investment banker who was a dealmaker at SoftBank when the Japanese conglomerate used to splash tens of billions of dollars across the globe on a whim, has come out with a memoir that fills a critical "whitespace", a term venture investors often use for untapped markets.
While many books are written on startups and venture capital, it is rare to find a candid account by an insider who was a key player — and victim — of the sweepstakes of the tech world.
The The Money Trap: Grand Fortunes and Lost Illusions Inside the Tech Bubble is an enviable rolodex of corporate elite — Silicon Valley czars and Wall Street honchos. Guest appearances by a motley cast of Mossad and MI6 agents to Bollywood and Hollywood stars enliven the tales of high-octane deal-making.
Sama reveals things that were either unknown or unconfirmed — there was a time when SoftBank doubted if Paytm could evolve into a broader finserv company and passed on the deal, Masayoshi Son’s plan to back OYO with so much money that "no one can stand" in its way and the then Sequoia chief Doug Leone telling Son that his all-in funding style won’t work.
While he entices the reader with the suspenseful story of a smear campaign designed to oust his compatriot and him —an episode that grabbed headlines—Sama does not leave the reader any wiser about who orchestrated it.
In a conversation with Moneycontrol ahead of the book's launch on September 19, the former SoftBank executive talked about his days at the fabled tech conglomerate — and betting on companies like WeWork, Paytm, Ola, OYO, Arm and Nvidia. Edited excerpts of the interview:
At different points, you sat on the table with Dick Cheney, Masa, Jamie Dimon, Mark Zuckerberg and Larry Ellison. Are there any commonalities on how they saw money?
I met some of these people only once and I don't think you can make generalisations about attitudes to money among the billionaire class anyway.
The one person where I do offer some insights about the relationship with money is Masayoshi Son. I described an incident where Masa tells the story, to an audience of over 1,000 people in Delhi, of how he was the richest man and then lost it all. He lost almost $60 billion and what does he do — he laughs about it! That’s what makes him such an interesting character.
You have written in many places that you wanted to caution Masa about risky moves but didn't most of the time. Was it just you who didn't flag concerns or did seniors like Yoshimitsu Goto and Nikesh Arora, too, did the same?
It's not as if we didn't have those conversations. But the more fundamental point is if Masa Son listened to people like me, I don't think he would have done the Alibaba deal. I would have said you’re investing $20 million in this guy who barely has a business plan! He made $75 billion on Alibaba. Likewise, I thought Arm was very expensive but SoftBank has made almost $100 billion on it.
Closer home, we valued Ola at over $400 million back in 2014 but while I was thinking how much money people spend on taxi cabs in India, Masa had a higher order of thinking. He lives in the future and in the future world, nobody owns cars. There will only be autonomous cars and when you don't have drivers to deal with, what would be the margins for a company like Ola?
Masa is a futurist and his way of looking at risk is completely different.
Your British investigators didn't give you the name of the person who orchestrated the mess that led to Nikesh and your exit. You start the book in a dramatic way where you meet a former Mossad agent to uncover the truth but then refrain from naming names for lack of evidence.
I completely understand a reader’s frustration. As I say towards the end of the book, if this was a work of fiction, this ambiguity would be unforgivable, right? But, the reality is much more complicated.
Do you believe it was sabotage by an insider?
It shall remain an unsolved mystery and it's just not reasonable for me to speculate on the identity of who was behind this. All I can talk about in a very honest way is how it impacted me.
Also, it's not the case that Nikesh and I left because of this campaign. SoftBank supported us all the way. It's not as if Masa at any stage believed any of the lies that were spread about us.
There is an interesting anecdote about Masa telling then Sequoia chief Doug Leone that SoftBank will give Ritesh Agarwal so much money that no one can stand in his way. There are quite a few companies where SoftBank and Sequoia are both investors. Was such a tiff a common occurrence or was OYO unique? Is it possible that Airbnb was the reason?
If you're saying that Sequoia's views were influenced by being an investor in Airbnb, I'm not even sure if at the time they were invested in Airbnb. Even if they were, I don't believe that was driving their thinking. I think the point of including that anecdote was to make the point that Masa Son disrupted the disruptors. He disrupted tech investment of which Sequoia was the king.
It's a very different approach. Masa backs founders to the hilt. I write in the book that Masa said 'Ritesh reminds me of me when I was his age'. He went to Ritesh's marriage. I don't think Doug Leone would go to India for a founder's wedding.
In the first instance, Vijay Shekhar Sharma failed to convince you (and Nikesh Arora) that Paytm could evolve into a broader finserv firm and you passed on the deal. How did the investment happen later?
Initially, when we spoke with Vijay Shekhar Sharma in 2014, it was still early days. It was not obvious how a payments business would evolve to become a digital bank or diversified financial services business.
I think SoftBank ultimately invested in Paytm about two years later, which is a lifetime in the technology business. By that time, Alipay had already invested in Paytm and Jack Ma was enthusiastic about it. I’m sure that played a role in Masa’s decision.
You have talked at length about investments like WeWork, Zume (a pizza startup) and Greensill (a supply-chain financier) which didn’t turn out well. It’s debatable if they are tech companies at all. Can you shed light on Masa's thinking behind the investments?
I wasn't on the investment committee, so I can't comment on the specifics of those deals. I think we spend too much time talking about WeWork or Zume Pizza because they're funny stories, right? It's fun to talk about the things that didn't go so well when it comes to very successful and rich people. But the reality is that SoftBank’s mark-to-market gain on Arm already is 10 times what it lost in WeWork. Its gain on Arm is almost $100 billion.
This is the nature of the VC game. You don’t get everything right. When the final story of Masa Son is written, it will be about the spectacular successes.
While Masa was talking about AI, he was also investing in businesses like WeWork. Isn’t there a dissonance there?
It's not that dissonant. It's a case of you've got the money, you're in the investment business and back in 2015, it was difficult to find AI companies you could buy.
Your book gives the impression that SoftBank didn’t push hard enough to acquire Nvidia, as it did to make the Arm deal happen. Given that Masa foresaw what was coming in AI, was not acquiring Nvidia a big miss?
As I relate, Masa was always an Nvidia fan. In fact, he tried to merge Arm with Nvidia but the regulators blocked the deal. And there’s no way the US would have allowed foreign control of Nvidia, then and now. I think the more interesting question is whether the UK government would allow the Arm deal today. There was a window of opportunity after Brexit. The idea of a foreign firm investing $34 billion in the UK was a huge vote of confidence in the country — I think that worked in our favour.
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