THE LONG VIEW

There is no internet bubble, and never was, according to this tech visionary

SoftBank CEO Masayoshi Son, one of the world’s most prominent investors in early-stage tech startups, does not think that internet companies are in bubble territory right now. Then again, he doesn’t think the tech euphoria of the late ’90s was a bubble either!

I do not think this is the Internet bubble. On year 2000, most internet companies were losing a lot of money….So there was a correction of the price. But if you look at right now, most of the stocks that went down, crashed year 2000, did they come back in the price? Did they go even higher the price of that peak price of the year 2000? The answer is, yes, so that means even the ‘net bubble crash on year 2000 was not really a ‘net bubble, if you think back from today.

These quotes come from a transcript of SoftBank’s earnings call this morning, provided (and translated from Japanese) by FactSet.

This time people already have learned from their experience. This time most Internet companies already start making a lot of profit including Alibaba. So people have got more experience, more educated price analysis. So this time, I do not think that this is an Internet bubble as a general.

Son famously has a 300 year vision for SoftBank, so he can afford to look at things over the very, very long term. Maybe on that basis, the tech wreck of 2000 does seem like a blip. (Ditto the weak set of quarterly results from SoftBank today.)

Indeed, the share prices of iconic consumer tech and internet companies (Apple, Microsoft, Google and Amazon, but notably not Yahoo) have recovered since then, and are now at or near record highs.

Yet most investors—be they venture capital funds operating on five- to 10-year timeframes, or stock market investors with even shorter horizons—do not enjoy this luxury. And back in 2000, most of the risk was in the hands of stock market investors. Today it is concentrated among venture capital funds and other private market investors, including corporates like SoftBank.

SoftBank, a Japanese telecom and internet giant, was an early backer of Yahoo (they are still joint venture partners in Japan) and remains one of the biggest shareholders in Alibaba, the Chinese e-commerce colossus that went public on the New York Stock Exchange last September. It bought the struggling US wireless carrier Sprint in 2013. Lately it has been pouring a lot of money into rivals to Uber, the app-enabled car booking service.

The debate about whether we are in the midst of another tech bubble hasn’t made much of a dent in the financing available to privately held internet startups remains plentiful. According to the Wall Street Journal, there are at least eight tech startups with private market valuations in excess of $10 billion. Four of those companies have already raised more than $1 billion.

On the other hand, a handful of tech companies have recently gone public at valuations lower than what they had achieved in the private markets—a sign that things could be cooling down.

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