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Hello readers! This is Erin Griffith, one of the newest members of The Times’s tech team. I’m taking over the start-up and venture capital beat, which — judging from conversations on the V.C. summer party circuit — consists entirely of scooters, cryptocurrency and SoftBank. While I plan to venture far beyond that, I’m now prepared for the inevitable day that SoftBank puts scooters on the blockchain and I get to write about all three at once.
This week, though, I just needed to worry about SoftBank.
Every SoftBank investment can make waves because of the size of the company’s ambitions. SoftBank’s $100 billion Vision Fund is larger than the total amount invested by all venture funds in the United States in 2017. The deals are so large, start-ups can now can ask themselves: I.P.O. or SoftBank?
That firepower is why SoftBank’s name tends to strike fear, envy and longing into the hearts of investors and start-up chief executives. Some investors accuse the Vision Fund of distorting the funding market by inflating start-up valuations. Masayoshi Son, SoftBank’s C.E.O., has been called a “one-man bubble maker.” Some founders are desperate to get access to the company’s Scrooge McDuck pool of money. But others charge that the fund, which invests a minimum of $100 million per deal, is pushing companies to take on capital they may not want or need out of fear. (Dara Khosrowshahi, Uber’s C.E.O., once said he did a deal with the firm because he’d rather have SoftBank’s “capital cannon” behind him, rather than pointed at him.)
This week SoftBank positioned its capital cannon behind Brandless, sending $240 million to the e-commerce start-up, which sells a variety of organic and “clean” household consumables for $3 each. Brandless started selling products just one year ago, and is notable because it is taking on Amazon and Whole Foods, among others.
Taking on Amazon is not a popular strategy in 2018, and competing on price can be a recipe for death. Most e-commerce start-ups play up the ways they’re not competing with Amazon by, say, working with local vendors or selling bespoke items that Amazon doesn’t.
But SoftBank and Brandless will be using Amazon’s own playbook against it. Like Amazon, SoftBank is known for pushing executives to think bigger and bolder, trading profits for market dominance. Tina Sharkey, chief executive of Brandless, described an ambitious plan to “reimagine the entire stack of consumption,” including “what it means to be a brand.”
SoftBank knows a few things about e-commerce — its investment in Chinese internet giant Alibaba is regarded as one of the greatest deals in the history of venture investing. SoftBank’s attempt to recreate that success in India, with investments in Snapdeal and Flipkart, has not been as successful. But the end result, in which SoftBank agreed to sell its stake in Flipkart to Amazon’s local rival, Walmart, likely annoyed Jeff Bezos nonetheless.
I can’t endorse anyone going up against Amazon, but I do appreciate a David and Goliath story. With today’s tech giants only solidifying their dominance, the Davids need a capital cannon on their side.
What else happened this week?
■ Facebook was in the news — again. My colleagues Nicholas Fandos and Kevin Roose had the scoop on how Facebook had detected a new political influence campaign that was potentially built to disrupt the midterm elections.
■ Apple crossed the $1 trillion market capitalization threshold. It’s hard to wrap one’s head around a sum that large, but this bouncy visualization helps. Meanwhile, Jack Nicas analyzes the company’s 21-year path from the brink of bankruptcy to $1,000,000,000,000.
■ At Mindful Meats, a socially conscious meat company, employees “look each cow in the eye and say ‘thank you’ as they load onto the trailer” on the animal’s final day. This, The Wall Street Journal wrote, is “the final frontier in the discussion about transparency in food.” Meanwhile, a set of Bloomberg charts illustrate the surprising fact that 41 percent of land use in America’s lower 48 states revolves around livestock.
■ Cryptocurrency critics (also known as “no-coiners”) often knock the digital assets for having no purpose beyond currency speculation. It’s nearly impossible to use cryptocurrency to buy a coffee, for example. But currency speculation is a fantastic business. Bitmain Technologies, a China-based crypto mining company, generated $1.2 billion in net profit in 2017, according to a memo obtained by Fortune. Should we be surprised that a money-printing business is printing money?
■ Richard Kerby, a venture investor, analyzed a sample of 1,500 venture capitalists and found that 40 percent of them went to Harvard or Stanford. It’s another symptom of Silicon Valley’s problematic love of pattern matching.
Erin Griffith covers start-ups and the world of venture capital. Her previous stops include Wired and Fortune. You can follow her on Twitter here: @eringriffith.
Orignially published in NYT.