The Failure of the Vision Fund

Masayoshi Son: The Last Capitalist Icon

January 15, 2017

In a previous post , we mentioned that our model designated 2019 as the start of the crisis years which will be a general economic downturn culminating as a global stagflation.

This period will be a time for mentality change specifically with thecapitalist system which is really just the perfection of the old mercantile system. Capitalism ‘arbitrages’ equity while mercantilism ‘arbitrages’ commodities.

First, Some History..

The mercantile system was created when paper money and paper instruments were invented by the Dutch in the 17th century, who got the idea from the Jews.

Dutch mercantilism

According to Montesquieu, it began when the French kings drove the Jews out of France but kept Jewish wealth inside France in the 14th century, notably in 1394. So, the Jews moved to Milan and invented cheques(letters of exchange) which they gave to foreign businessmen which let those businessmen claim (or ‘encash’) the Jews’ wealth stuck in France to get around French laws and continue their own business.

Milan is close to Venice which traded with Asia through Constantinople.

When Constantinople fell in 1453 to the Muslims, the Venetians (and the Jews) moved to Spain and Portugal which were looking for an ocean route to Asia. The Jews were then expelled from Spain and Portugal notably in 1497 and 1540. Some moved to Amsterdam which seemed to be the only major European country that allowed Jews (probably in the same way that nowadays they allow drugs and prostitution which are banned in other European countries).

From there, they spread their financial paper inventions, which probably influenced the first stock certificates issued by the Dutch East India Company which created the first commercial corporation in 1602 (In contrast, the British East India company started as a private regulated company).

Those value-carrying papers now manifest as the fiat dollars of the United States and term sheets and stock certificates of corporations. Capitalists then and now use these papers to control the work of people to execute their grand plans.

In the 17th century, those grand plans were the monopoly of the commodities trade and grabbing land from natives, called colonialism. In the 21st century, it manifests as:

  • the ownership of too-big-to-fail global companies which monopolize the buying and selling of goods and services
  • the privatization of utilities, which force people to pay more for electricity, water, and telecoms while giving a guaranteed profits to investors

A Shallow Vision1

Masayoshi Son is Japan’s richest man and is the founder of the venture capital Vision Fund.

His fund tries to outdo all other venture capitalists by buying tech companies that can go global and disrupt all the other companies. To do this, he got money from very rich people and used it to buy disruptive companies such as Grab, Uber, WeWork, Flipkart, and NVIDIA.

The Last Capitalist

The whole idea is for those companies to disrupt the old industry leaders and then become corporate monopolies, all through their tech advantage.

The liquid-money invested in them will then solidify into an asset-treasure as stock prices which will then be cemented by an IPO (initial public offering). That’s why the ultimate goal is for those investees to have an IPO.

This whole notion is ego-based, because it presupposes that a single supplier can address the needs of all humans. It also has some fakeness to it – the stock price of those investees can be propped up by public relations and marketing.

These are the same notions that mercantile companies had. The British East India company, for example, created the first too-big-to-fail company to monopolize international trade.

In addition, such an idea is ignorant of the fact that wealth is based on total human productivity which is limited by nature. Each human:

  • only has 24 hours in a day
  • can run at a certain range of speed
  • can eat only a certain amount of food
  • can only do work for a certain number of hours, etc.

But the human’s metaphysical desire for wealth however is unlimited. This difference between the limited and unlimited causes problems as crashes, systemic failures, etc.

Uber

Such huge companies need huge funds which then leads to steady losses because of the nature of human ego:

The directors of such companies are the managers of other people's money. They cannot be expected to watch over it with the same vigilance as the partners in a private co-partnery. They are like the stewards of a rich man. They think that attending to small matters are not for their master's honour. They very easily exempt themselves from attending to such matters. Negligence and profusion, must always prevail, more or less, in the management of the affairs of such a company. Simple Wealth Of Nations, Book 5
Update: 2019

Accordingly, The Vision Fund’s companies, such as Uber, WeWork, and ARM for example, have been losing money steadily.

In a short time, the Vision Fund is experiencing what the great mercantile companies experienced. History repeats itself and unless those tech monopolies don’t change course, we can safely predict that they will also go to ruin like the mercantile companies of the past.

The behavior of human ego is consistent throughout history even if it is masked by the most advanced technology, since ego is the cause and technology is just an effect.


  1. The advent of ‘deep learning’ in artificial inteligence (AI) allowed many tech people, us included, to have ideas on the next big thing. The problem is that outsiders to AI think that AI is some tool that can be used instantly. In reality, it needs a lot of data which takes a lot of work and time collect, clean, and process. ↩︎

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