Yes this was and remains my thoughts since the fund was first announced - this whole thing very much echoes the previous strategy in certain respects.
Two key differences:
1. Stage of investment
Last go round Son was writing a vast number of (relatively) small checks in early stage companies before stumbling into late stage investments like Webvan. Standard VC stuff - playing the averages and buying a lot of lottery tickets. Alibaba was only $20MM investment as I recall
This time around he seems to be making massive investments in much later stage companies. What is the rosiest possible outcome for his $7BB Uber investment? and how does this compare to the alternatives for an investment of this size?
2. Makeup of the fund
This article touches on it but important to note that this is not a $100BB pile of equity from the partners. The fund is structured with a substantial debt component - ie the fund needs to pay out a coupon every year so very different structure than typical VC funds. I understand the reasoning behind this but things could get difficult in a hurry should the market take a big turn at the wrong time in the funds cycle.
Similar situation, our sick child was passed off by initial doctors as having something minor. We were fortunate to try a different ER where a nervous young doc took a more skeptical approach and ran down the checklist fully before correctly diagnosing with bacterial meningitis. The doctor had never even seen a meningitis case before.
Per discussions with the infectious disease specialists this timely diagnosis likely saved our child's life.
Xi seems to have overplayed his hand over the past few years. Instead of China quietly amassing power as it had done since the early 90s, Xi pushed China into a much more assertive role before it was necessarily ready.
The US and others had looked the other way on China’s mercantilist actions in the past on a strategic gamble that China would slowly evolve into a more democratic state, with open markets, freedoms and rule of the law. This strategy had worked out well with South Korea and Taiwan as they made their transitions from poor dictatorships to wealthy democracies (and peaceful US allies).
During the reign of Xi’s predecessors this did seem to be a possibility but Xi’s policies and perhaps most importantly his ascension to President for Life ended any illusion that China would make this sort of evolution.
The Made in China 2025 program for example explicitly codifies what many had long assumed - that China is directly targeting the most advanced foreign industries with a state backed industrial policy.
With China moving away from even playing lip service to liberalization and now directly threatening US/European interests with Made in China 2025 and other initiatives, there is no longer any reason for the US to play nice with China.
Frankly if China had simply continued quietly moving forward as they had under Hu and made perhaps some nominal reforms or concessions they probably could’ve continued their plans unabated.
> ...South Korea and Taiwan as they made their transitions from poor dictatorships to wealthy democracies (and peaceful US allies).
If I'm not mistaken, both these countries became wealthy during the dictatorship period. It was only after the stability and wealth that they become democracies.
Taiwan's first democratic vote was in 1996 and South Korea's first public election was in 1987.
> The US and others had looked the other way on China’s mercantilist actions in the past on a strategic gamble that China would slowly evolve into a more democratic state, with open markets, freedoms and rule of the law. This strategy had worked out well with South Korea and Taiwan as they made their transitions from poor dictatorships to wealthy democracies (and peaceful US allies).
One important difference is that both Taiwan and South Korea have been continuously dependent on US military protection from WWII until now.
I agree with many of your points but I do take issue with one: "during the reign of Xi’s predecessors this did seem to be a possibility but Xi’s policies and perhaps most importantly his ascension to President for Life ended any illusion that China would make this sort of evolution."
It may look like that to us now, but these things have a way of unraveling themselves faster than we expect. Xi is 65 and it's unlikely he'll try to hold on to power for more than the next 15 years. China's GDP/capita is currently right around where SK and Taiwan's were when they switched to democracy. And SK, Taiwan, and Japan all have tried, in many ways succeeding, to have their own advanced industries - it didn't spell the end of the world when they did so.
Dictatorships often crumble suddenly, and China is still on the approach of the trajectory that SK and Taiwan followed. For that reason I think it would be silly to write off China just yet.
No economist has ever claimed that global trade is Pareto-optimal inside nations. It's well known fact that some industries suffer and some thrive. It's just that the total sum is positive.
The trade shocks should not be handled with tariffs or restricting trade. It's domestic policy issue.
The issue is that distributional losses historically have been significantly underestimated in terms of scale and persistence or glossed over as insignificant. Economists traditionally have held that workers who lose their jobs to free trade, while losing their job in the short term, find a new job elsewhere and ultimately are better off. This is turning out to not be the case, some workers persistently remain worse off.
To be fair, the rate of economic change is increasing, so part of the problem is that workers over-invest in skills only to have those skills obsoleted by the changing landscape.
So of course the worker who over-invested in job A and was compensated based on that over-investment is going to be worse off in job B when he/she has under-invested in the skills needed for job B.
The fields that are best for workers today are those that have built in required continuing education, or fields in which rapid change is widely acknowledged and understood by the workforce (software engineering, etc.)
> No economist has ever claimed that global trade is Pareto-optimal inside nations.
This is an important point, and I think plays into the question about tariffs (which, to be clear, I think are probably net negative).
The conventional argument is that free trade is a Kaldor Hicks [0] improvement, not a Pareto improvement. KH means that the sum of benefits and costs is positive, and it would be possible (in principle) to tax the beneficiaries and pay off the people harmed and create a synthetic Pareto outcome.
You could view tariffs as a clumsy attempt to apply the Kaldor-Hicks concept. I personally think there are much better ways, but I think the argument is at least plausible.
This needs to be emphasized more - Economics is given a bad rep for creating inequalities, but the field is playing with half the handbook - domestic policy in the form of fiscal policy (i.e. decision on how much and where to spend $), as well as distribution policy (i.e. how much redistribution to engineer via taxation/subsidies, etc.) has never been in the hands of any real economists - domestic politics has always taken the forefront in these decisions, and rightfully should take the blame for the results.
I think this is a fair point, but I'd argue that there are two separate issues, trade policy and job training programs, etc.
We've seen a lot of innovation in the area of free trade, commerce, etc., but virtually no innovation in education, on the job training, and other areas where policy can help make the economy stronger overall.
So in my view, tariffs are used in a way that is meant to undo the damage from decades of neglect of our educational and skills training infrastructure.
This doesn't call for a more nuanced view on trade (freer is always better), it is a call for us to begin to think rationally about job training.
Whatever job anyone has today, whatever product is demanded today, etc., will not necessarily be the same tomorrow. When we pretend otherwise -- such as the fiction that first world nations should manufacture steel -- we invite all sorts of bad policy when what we really needed was honest understanding that economies change.
Keep in mind that most moral progress over time is not the result of rational people convincing others of something that was previously opaque, it is due simply to economic progress. In other words, moral progress is a luxury we buy with prosperity.
Where we lag in this area most today is that we fail to understand that we must invest heavily in job training, education, entrepreneurship, and other areas that create new life when industries change, move abroad, or shrink.
It so happens that in US politics there are some influential electoral districts that contain steel mills and which have suffered from economic globalization. Sure the easiest way to placate those districts is to introduce tariffs or use other means to offer welfare that prevent those impacted from adapting.
Most of the buildings that house startups in urban parts of the US were once used for manufacturing or meat packing. This is a good thing in the medium term.
But creating job training or investing in new industries to replace old ones is not economics, it's social policy. We should not make the mistake of confusing it with economics.
Or Softbank. The Bank of Japan is printing money like crazy to keep the Yen from deflating. Softbank seems to intent on getting out of Yen and into assets while the Yen still has the value it does right now.
The world is quite lucky that the current batch of terrorist orgs are relatively unsophisticated - mostly using small arms and driving cars into crowds.
The mass terror potential from even just slightly more sophisticated methods is chilling to consider.
Contacts are a commodity item - whenever I need to reorder contacts I do a lazy 2 min search for the cheapest price online and order there. Customer experience is same everywhere.
Not sure what sort of competitive edge JetLenses has, seems like the idea would've been great in 1995. As a long time contact wearer this market has already been disrupted pretty severely .
For me costs going down fairly steadily since the advent of 1-800-Contacts and the subsequent federal law which put an end to the shenanigans of eye doctors trying to block online fulfillment.
I have long believed that the real solution to Boston's housing crunch is high speed transit to Worcester, Fall River, Lowell, New Bedford etc.
Build HSR out to these areas and drop in lower cost high density density housing. Essentially use these old mill towns as Boston's Brooklyn -as none of the closer in cities are willing to take on the role.
You already have an example of a city with HSR to Boston: Providence. Amtrak does this run in 38 minutes, Acela a few minutes faster. Providence is seeing a recent uptake in tech activity; GE Digital is hiring downcity, and other companies like Virgin Pulse and a small startup scene. Still, there are a lot of people who ride the rails between Boston and Providence every day.
It's 38 minutes to the 128 station, which is hardly Boston proper. It's an hour between Providence and Boston (South station), and the cost difference between the commuter rail or even Amtrak regional with the Acela is crazy. $12 MBTA train vs $16 Amtrak regional vs $50-$80 or more for the Acela. For what amounts to a 5-10 minute savings.
Looks like it depends on direction. Southbound trips are scheduled for 38 minutes from S. Station to Providence, but around an hour going north. MBTA is currently $11.50 each way. Amtrak is $.50 more if you buy two weeks in advance.
Quincy and Lynn could be vastly improved first. Lynn needs blue line access and Quincy needs to build up its downtown and along its four fucking Red Lines stops.
Also I would love Worcester high-speed transit, but that's a bigger and more complicated problem than just getting the wheels turning in the two big cities right next to Boston.
Two key differences:
1. Stage of investment
Last go round Son was writing a vast number of (relatively) small checks in early stage companies before stumbling into late stage investments like Webvan. Standard VC stuff - playing the averages and buying a lot of lottery tickets. Alibaba was only $20MM investment as I recall
This time around he seems to be making massive investments in much later stage companies. What is the rosiest possible outcome for his $7BB Uber investment? and how does this compare to the alternatives for an investment of this size?
2. Makeup of the fund
This article touches on it but important to note that this is not a $100BB pile of equity from the partners. The fund is structured with a substantial debt component - ie the fund needs to pay out a coupon every year so very different structure than typical VC funds. I understand the reasoning behind this but things could get difficult in a hurry should the market take a big turn at the wrong time in the funds cycle.
Will be fascinating to follow