Image: Marco Verch, via Flickr

Protocol Index: SoftBank’s sinking startups

Protocol Index

Good morning! This Monday, SoftBank's Vision Fund is underwater, Huawei sanctions are taking a toll, and how someone arbitraged a pizza. Want Index in your inbox each morning? Subscribe here.

What Matters Today

  • It's a big week for Asian earnings. SoftBank just reported (more on that below), while Baidu and Bilibili report later today, along with Weibo tomorrow. The standout, though, is Alibaba, reporting Friday. Over in the U.S., Analog Devices' report on Wednesday should give a look at the state of 5G investment, and Expedia's earnings will likely spell a grim story about travel. On Thursday, Nvidia, Splunk and HPE all offer some hope at an enterprise-driven boost.
  • PMI data on Thursday should offer some sense of a recovery, while tomorrow's quarterly ecommerce report will likely show a big boost in online sales during lockdown.
  • Fed Chair Jerome Powell is one to watch, too: Tomorrow he'll testify alongside Treasury Secretary Steven Mnuchin, giving an update on the CARES Act to the Senate Banking Committee.

Layoff Watch

  • Zomato reportedly laid off 520 people, 13% of its staff, with marketing, events and content the hardest hit departments.
  • Swiggy, another Indian food delivery startup, laid off 1,100 people, almost 14% of its staff.


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Today's News

As of 4:50 a.m. PDT: Nasdaq Futures: 1.82% | Euro 600: 2.34% | Nikkei: 0.48% | Hang Seng: 0.58%




  • Facebook acquired Giphy for a reported $400 million.
  • SMIC received a $2.2 billion investment from Chinese state-backed funds.
  • General Atlantic invested $870 million in Jio Platforms, maintaining its $65 billion valuation.
  • AppLovin reportedly paid around $500 million for Machine Zone, which was valued at $5 billion in 2016.
  • Discord is reportedly raising at a valuation as high as $4 billion, significantly higher than its last valuation of $2 billion.
  • Uber and Grubhub have reportedly not agreed on a price yet. The Wall Street Journal reports that Uber offered 1.9 shares per Grubhub share, valuing the company just under $6 billion, and is considering raising the bid to $6 billion. Grubhub reportedly wants around $6.8 billion.

Everyone's Talking About

SoftBank's sinking startups

SoftBank Group announced earnings this morning, and it was unsurprisingly painful. The company reported an operating loss of $13 billion for the last financial year, its biggest ever — almost all of which was driven by its disastrous startup bets.

  • The Vision Fund lost $17.7 billion last year, SoftBank said. Of that, around $5.2 billion came from Uber, with another $4.6 billion from WeWork.
  • WeWork's failure is particularly staggering: SoftBank says it's now worth just $2.9 billion, compared to the $7.8 billion when SoftBank bailed it out in September. SoftBank has invested over $10 billion in the company.
  • Overall, the Vision Fund is now under water. It has made $75 billion worth of investments, but its portfolio was worth just $69.6 billion at the end of March.

Amid the bad news, SoftBank tried to appease investors. The company said it would double its stock buybacks, using its Alibaba stake to raise the cash. It's also reportedly trying to unload some of its T-Mobile stake to Deutsche Telekom, perhaps at a discount.

  • With the company saying it likely won't pay a dividend this year, buybacks are perhaps the only way to keep activist investors like Elliott Management happy.
  • Still, it's interesting timing. "The buyback announcement is a surprise, given the slew of low expectations and bad news," United First Partners' Justin Tang said.

It seems CEO Masayoshi Son is still confident. He's acting like the company's shares are undervalued and is pretty clear that he thinks his big bets will eventually pay off.

  • "Our unicorns have fallen into this sudden coronavirus ravine," he said today, illustrating his point with an image of cartoon unicorns stuck in a hole. "But some of them will use this crisis to grow wings."
  • Son had bounced back before: His $70 billion loss in the dot-com crash is just a distant memory today. The question is whether he can do so again.


  • "This happened very fast." — Betaworks' John Borthwick told Protocol's Issie Lapowsky that a lot of Zoom calls were involved in Facebook's Giphy acquisition.
  • "If Uber takes over Grubhub, it isn't good for competition and it isn't good for you." — Sen. Amy Klobuchar is not a fan of the rumored acquisition.
  • "Survival is the key word for us at present." — Huawei chairman Guo Ping said the company would "inevitably be affected" by new U.S. restrictions on its suppliers.
  • "Nobody is banking on cloud processing making standalone VR headsets viable. We have to make them viable with the chipsets that are in them. But in the long run, cloud solves a lot of problems because it most effectively puts the processing power where it's needed." — Facebook's Jason Rubin told Protocol that game-streaming is how VR levels up, but we're between five and a million years away from that being a reality.

Closing Bell

The great pizza trade

A thing that DoorDash sometimes does is create pages for businesses without their permission, take orders from customers, and then call up the restaurant to place those orders. And sometimes DoorDash gets the pricing wrong, as it did with Ranjan Roy's restaurant-owning friend. Specifically, it charged consumers $16 for a pizza that it then had to pay Roy's friend $24 for.

So, obviously, the pair exploited the system, placing $16 orders through DoorDash, getting $24 from DoorDash, and giving the delivery driver a box with a topping-less pizza in it (which was then delivered to another friend). "I wonder if we've managed to watch an entire industry evolve artificially and incorrectly," Roy writes. I think we might have.

Thoughts/feedback/tips? Email me — shakeel@protocol.com — or anonymously contact Protocol. And subscribe to get Index in your inbox each morning. Thanks for reading, see you tomorrow.

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