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<html><body><div><p>Turns out, Adam Neumann is no Jack Ma.</p><p>A year ago, as SoftBank founder Masayoshi Son was raising his stake in WeWork owner The We Company, he called Neumann's office-sharing startup his "next Alibaba." That description was as heavy with meaning as it gets in Silicon Valley circles.</p><p>The $97 billion Vision Fund that Son established in late 2016 was predicated on a spectacular bet he had made on Ma. The $20 million Son handed the English teacher from Hangzhou in 2000 exploded into more than $50 billion of equity when <a href="/companies/alibaba-group-holding-ltd2">Alibaba Group Holding</a> listed in 2014.</p><p>This wins a lot of credit for Son's vision. Or was it dumb luck? This question is gaining renewed traction after WeWork's initial public offering was hurriedly postponed this week and as its value has evaporated. Skepticism is now rampant about the business model Neumann and his co-founders sold Son.</p><p>WeWork is just one of Son's recent stumbles. His stakes in ride-hailing business Uber, messaging service Slack and others are looking wobbly. So, potentially, is Son's reputation as the Warren Buffett of Japan.</p><p>It is odd that Son missed that WeWork is really a leveraged property investor, albeit with fancy offices with free-flowing coffee and beer, dressed up as a tech disrupter. Son piled nearly $11 billion into a company his team valued at $47 billion in January, but its market capitalization looked like it might be as low as $10 billion if its IPO went ahead.</p><p>Comparisons with Buffett do not stand up for long. Son seemed to view WeWork as a foundational investment in the same way that Buffett's Berkshire Hathaway sees General Re. This reinsurer provides steady income no matter where else Buffett is exposed.</p><p>Son toyed with replicating this dynamic and in early 2018 eyed a stake in Swiss Re to act as his own shock-absorber. He opted against it, upping his wager on WeWork instead.</p>        
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<p>The question is this: are we seeing fatal flaws in Son's investing strategy just as he is rolling out a second giant fund?</p><p>Two of the biggest investors in the original Vision Fund, for example, are reportedly re-evaluating whether to support the new one. The WeWork fiasco and Son reportedly being down $600 million on his Uber investment, given its low stock price, may be giving Saudi Arabia's Public Investment Fund and Abu Dhabi Mubadala Investment reason for pause.</p><p>Son, to his credit, has got Apple,  Foxconn, Microsoft and other tech titans onboard. The absence of specific dollars amounts, though, makes you wonder if their role is more symbolic than pivotal.</p><p>Oddly, Son reportedly hopes to lend SoftBank employees as much as $20 billion so they can invest in Vision Fund 2. The scheme adds to questions about the gap between Son's ambitions and actual funding. All in, SoftBank plans to kick in about $38 billion. Kazakhstan's sovereign wealth fund will reportedly chip in an amount just shy of $3 billion.</p><p>Son can still make good, of course, but he suddenly confronts a trust deficit that requires more than spin to correct. Some entrepreneurs think in three-year intervals; Son has a 300-year vision. Perhaps, though, his investors can be excused for worrying that he is making it up day to day and is more concerned with gut feelings than grand plans.</p><p>That gut has Son believing he can find ready targets for another $100 billion of ammunition. First, though, he must assure markets that the first $100 billion was deployed wisely.</p><p>Son's scattershot venture-capital approach baffles many. Mystery surrounds how Son's bets on everything from microchips to indoor farms to investment banking to ride-sharing apps to office suppliers coalesce into a clear strategy for steady profits. His penchant for overpaying for startups around the globe cheers tech founders, but what about his investors?</p><p>Son may find new startups in artificial intelligence, renewable energy and robots. But he also needs some splashy unicorns of scale to preserve his Midas-touch reputation.</p><p>One option is to slow down. Son could telegraph plans to roll out Vision Fund 2 gradually, while shoring up returns on the first. He should take another page from the Buffett playbook: focus more on steady, reliable profits than finding shooting stars.</p><p>Son also might want to avoid risky corporate governance setups. In WeWork's case, Neumann, as founder, would have majority voting rights. That would give him too much power over the board as CEO, creating what shareholder activists call "key man risk."</p><p>Son could be a much pickier investor, too. He virtually commandeered the ride-sharing space with bets on Uber, Southeast Asia's Grab, China's Didi Chuxing and India's Ola. Time for a new area of focus?</p><p>Spending the next 300 days perfecting his investment strategy will pay off for Son for years to come. Maybe even 300.</p>        
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<p><em>William Pesek is an award-winning Tokyo-based journalist and author of "Japanization: What the World Can Learn from Japan's Lost Decades."</em></p>
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