SoftBank Vision Fund Employees Depict a Culture of Recklessness

https://www.bloomberg.com/news/features/2019-12-18/softbank-vision-fund-employees-depict-a-culture-of-recklessness

by yarapavan • 7 years ago

105 59 7 years ago

danso• 7 years ago

This is comedy gold:

After Vision Fund invested $375 million in Zume Pizza Inc., whose mission to use robots to automate pizza making had shades of Silicon Valley frivolity, CEO Alex Garden expanded his mission to include rethinking the entirety of U.S. food production. Employees were unnerved. “Are we the next Theranos?” went one anonymously submitted question at an all-hands meeting over the summer

edit: More info about Zume and the investment: https://www.vox.com/recode/2019/11/21/20974979/zume-pizza-so...

dragontamer• 7 years ago

The four-year-old company has largely pivoted to an enterprise model where it works with restaurants that have no storefront and prepare their food in shared centralized kitchens, or “cloud kitchens”; with delivery providers like DoorDash and Postmates; and with existing pizza companies to build a hub-and-spoke model for the entire delivery industry. The company has been trying to morph into a data and logistics provider, part of an effort by founder Alex Garden to become “the Amazon of food.”

So they want to become... a commercial bakery? https://www.youtube.com/watch?v=3UjUWfwWAC4

Once again proving that SV companies do no market research before making their ideas...

I'm not in the food industry. I've talked to a couple of food engineers though, and its apparently a very difficult space to work in, with a variety of safety regulations to prevent disease (and if disease does break out, provide a mechanism to track where it came from).

Ignoring that, the space of commercial kitchens / commercial bakeries already produces tons of bread for a variety of companies. From my understanding, these commercial bakeries are flexible enough to change the recipe and create different breads / doughs for a variety of companies. That is to say: commercial bakeries are already "hub-and-spoke" models that centralize production for McDonalds / Burger King / Grocery Stores / etc. etc.

-------

If you're entirely focused on logistics / sales of products from a kitchen to a variety of restaurants, that job is called a Food Broker (http://www.foodbrokers.org/). Its kind of the opposite of a commercial kitchen: if a small kitchen makes a particular food that probably has mass-appeal, a food-broker will distribute that food in a wide area. Food broker work for many kitchens, delivering food to many commercial locations.

In effect: the food industry is already filled with "hub-and-spoke" style businesses. Food Brokers, Restaurants, commercial kitchens, etc. etc. Ever think why your cheap chinese food all tastes the same despite coming from 10 different restaurants?

wayoutthere2• 7 years ago

The new "cloud native" model that's popping up in places like NYC is one where restaurants will farm out their delivery orders to a commercial kitchen. This commercial kitchen may make the delivery orders for 50+ restaurants, some of which have no physical storefront. Delivery drivers just go to a warehouse somewhere instead of the main storefront and the customer is none the wiser.

Most takeout / delivery places have been reduced to a menu and a handful of recipes by services like GrubHub and Postmates, so I guess this isn't surprising.

refurb• 7 years ago

Cloud kitchen? Are you serious?

Is Silicon Valley now at the point where they are inventing things that already exist, but they aren't yet aware of because of the bubble they are stuck in?

peteradio• 7 years ago

Can't audit a cloud kitchen! It's everywhere man!

take_a_breath• 7 years ago

It is the echo of WeWork "disrupting" office rentals.

Pigo3• 7 years ago

It's hard to be worse than Theranos, Holmes put people's health at risk. It's going to be difficult to beat that level of narcissism and recklessness.

Every since I heard of WeWork though, I've been fascinated with this SoftBank drama.

pjscott2• 7 years ago

I looked into Zume a bit more and as far as I can tell it actually makes sense. They're not reinventing the wheel. It's odd that people are jeering at them.

Their initial focus was on incrementally improving the way pizza delivery works. The classic pizza delivery model was that the pizza was prepared somewhere (maybe a pizzeria, maybe some centralized kitchen), baked in a pizzeria near where it was ordered, then loaded onto a car for delivery. Zume combined the baking and delivery: the uncooked pizza would be prepared as usual, then loaded onto delivery trucks with automated ovens. Routes would be calculated, and pizzas would be cooked en route so that they arrived fresh out of the oven. Because the baking happens during delivery they don't need to pay for a fixed number of physical locations; instead they can predict pizza demand and scale capacity up and down by adjusting the number of trucks active in each area at each time of day. The intended result (at scale) is fresher pizza, delivered faster, at lower cost.

Obviously this can apply beyond pizza. There are plenty of other businesses in the food industry that operate the same way as classic pizza delivery. If Zume can provide them with scalable, low-fixed-cost delivery and final cooking, that's potentially worth a lot of money.

Apocryphon• 7 years ago

Surely vehicles with ovens already exist. Zume is based in a region that is replete with food trucks. They're simply building a high-tech version specific for deliveries. How is that worth $375 million? And what other cuisines require such low amount of human interaction that the cooking can be automated in such a way- other types of fast food?

RiOuseR2• 7 years ago

The strategy that Son and his all-male phalanx of managing partners followed seemed less about any specific technology than about placing large bets on the buzziest startups...

What does his staff being male have anything to do with how he runs his fund?

soVeryTired• 7 years ago

I think the author is trying is to paint a picture of bro-ish groupthink. Which, to be fair...

michaelt• 7 years ago

Isn't that just flavour? I mean, the article also says one of the partners collects cars and wine which is arguably also irrelevant, but articles often include such details so you can picture what they're describing.

JumpCrisscross2• 7 years ago

What does his staff being male have anything to do with how he runs his fund?

For one, there is research on all-male trading and investment teams taking more risk than mixed-gender teams. For another, we have documented cases of overt sexism among SoftBank-backer founders (most notoriously, Adam).

thedogeye• 7 years ago

Is the team all-male?

When I met Lydia Jett I assumed that she is a woman but I did not ask.

https://www.linkedin.com/in/lydiajett

trianglem2• 7 years ago

“All-male run”

This article is trash.

RiOuseR2• 7 years ago

Too true.

Terrible management comes in all forms. Look at Stephanie Korey or Elizabeth Holmes.

sterkekoffie2• 7 years ago

The problem is the dearth of women, not the presence of men.

elliekelly• 7 years ago

Gender Diversity and Securities Fraud:

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2471081

paulsutter• 7 years ago

Softbank isn't perfect, but its disappointing to see such a snarky/dismissive tone coming from Bloomberg.

This is ridiculous:

Three months later, Zume has yet to revolutionize food production or to be profitable

I've worked with Jeff Housenbold. They got his intelligence right, but this nonsense sounds like Gawker not Bloomberg

Jeff Housenbold,... Acquaintances describe him as smart and arrogant and almost entirely lacking in self-awareness

And when did random company gossip become news reported as fact? How does publishing the denial make it OK to report anonymous smears as fact?

Navneet Govil, told a Mormon employee to “go back to Utah to get more wives.” The employee left the company. Via a spokesman, Govil denies making such a statement. Around that time, Govil also berated a young accountant in front of a group, bringing her to tears. She later quit. And at a work lunch a few months later with several colleagues, Govil remarked that “Chinese people sound stupid,” according to two people who heard the comment. Via a spokesman, Govil denies making such a statement or berating the employee; SoftBank says it has no record of these events.

Pigo3• 7 years ago

the Vision Fund’s Zambia-born chief financial officer, Navneet Govil, told a...

Make sure you say where someone is from that way you can judge how upset you should be about their comments.

berniepebbles2• 7 years ago

You can’t even mention someone’s place of origin in our politically correct world without a racist accusation.

The above suggestion is a shame. It appears to be a victim “woke” mentality.

Is it possible Bloomberg was describing where the individual was from for reasons outside what you suggest?

jahlove• 7 years ago

All this from Bloomberg, who published an explosive piece on Chinese spies infiltrating "America’s technology supply chain". [1] Then when it became clear that the story was bogus, refused to admit they made a mistake. [2]

[1] https://www.bloomberg.com/news/features/2018-10-04/the-big-h...

[1] https://pxlnv.com/blog/one-year-after-big-hack/

wnevets2• 7 years ago

you say bogus, I say its entirely possible.

https://www.wired.com/story/plant-spy-chips-hardware-supermi...

jdminhbg3• 7 years ago

Lots of things are entirely possible; many fewer have any tangible evidence that they actually happened.

Bartweiss• 7 years ago

Bloomberg didn't say possible, though. They said it had happened, and been discovered.

Specifically, they said "A major U.S. telecommunications company discovered manipulated hardware from Super Micro Computer Inc. in its network". And then that manipulated hardware was never produced and verified, Bloomberg provided no evidence for the claim, every outside investigation disagreed with it, and their primary source criticized the story (in favor of an even broader, equally unproven assertion).

It's an interesting theoretical attack, but Bloomberg made specific, concrete assertions which are, according to all available evidence, bogus.

https://www.bloomberg.com/news/articles/2018-10-09/new-evide...

rasvj• 7 years ago

Supermicro never sued Bloomberg despite having lost a chunk of their valuation because of that article. Just saying.

pathseeker• 7 years ago

This rarely works. And it's not the company that would lead such a lawsuit, it's the shareholders.

jdminhbg3• 7 years ago

The problem is that they would have to prove that Bloomberg wasn't just incompetent, but rather malicious. It's entirely possible (and imo the most likely scenario) that Bloomberg didn't fabricate the story, but were duped.

duxup• 7 years ago

This article reads like some authors found a popular topic and just tried to use it to push it's own little unrelated insults, insinuations, and agendas.

It reads like silly the "rome fell because <insert topic i care about>" articles that were semi popular a while ago.

SoftBank might be reckless, but I've no idea what the metoo movement or the random insults have to do with it.

deminature• 7 years ago

It's popular to hate Softbank-backed companies at the moment, so even an extremely thin article that is basically gossip and anecdotal character assassination strung together into a narrative can get eyeballs.

Disruptive_Dave• 7 years ago

This is so shoddily written:

At a portfolio meeting in October, Housenbold defended his performance by arguing he’d been trying to back female CEOs. Then he seemed to blame the #MeToo movement for limiting his ability to maneuver, bewildering at least one attendee.

What? This gives absolutely no specifics, no quotes, even softens the shit sandwich the author is attempting to feed us by saying "seemed to." And it's supposed to matter because it "bewildered" one unnamed attendee. God almighty I need to stop reading shit like this.

resters• 7 years ago

I met with SoftBank one time as part of due diligence. They had virtually no substantive questions about the tech. The person who led the deal was soon fired. I lost respect for SoftBank after that.

tempsy• 7 years ago

I wonder if Nuro will be swept up in all this...it seems like a legit opportunity but left wondering with the SB investment.

omarhaneef• 7 years ago

This article turned out to be a lot more contentious on here than I would have expected.

Nonetheless, I will add one perspective from the inimitable Matt Levine:

https://www.bloomberg.com/opinion/articles/2019-12-18/the-st...

Of course, you could gain infinite karma votes on here just by posting his article every day, but he has some interesting things to add to this article.

Specifically, its not clear if Softbank is doing all that badly and maybe Masa's gift is this meta ability to get people to think bigger.

Levine is always also a little cynical.

SoftBank Vision Fund Employees Depict a Culture of Recklessness

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