Sun Zhengyi's "all-in" move with OpenAI triggers anxiety within SoftBank! Will the $60 billion gamble repeat the "WeWork disaster"?

After committing to investing over $60 billion, some internal SoftBank (SFTBY.US) employees are increasingly uneasy about Masayoshi Son's "obsession" with OpenAI. According to sources familiar with the matter, when SoftBank started pouring billions of dollars into OpenAI last year, some executives asked Son what would happen if - even though the likelihood was extremely low - the ChatGPT developer ultimately failed. Son had expressed his belief that Sam Altman is leading the most important technological revolution of this century. Faced with such questions, he repeatedly denied them so vehemently that his subordinates later stopped bringing up the issue. However, just as OpenAI is set to possibly launch its IPO as early as this year, recent breakthroughs by competitor Anthropic have raised doubts about OpenAI in the financial markets. Some internal SoftBank employees are anxious about the company's commitment of over $60 billion and are concerned about their leader's almost "starstruck" admiration for Altman. They believe that the relationship between the two founders is one-sided and dangerous. Based on interviews with about ten sources familiar with the matter, a key concern mentioned by these individuals is that Son is placing too much of SoftBank's capital on a single company, especially one that is currently facing business, reputation, and legal issues. SoftBank has sold off assets including its stake in NVIDIA Corporation (NVDA.US) and has not invested in other AI model companies, further deepening its reliance on OpenAI. While these concerns remain a minority within SoftBank internally, some executives fear a repeat of the disaster of SoftBank's investment in WeWork - where Son's fervent support for another charismatic founder led to write-offs of over $14 billion due to ignoring warning signs. And this time, the stakes are much higher. SoftBank stated that the company has "high confidence" in OpenAI and its leadership. SoftBank said in a statement, "SoftBank has established a strong strategic partnership with OpenAI, based on shared understanding of the direction of AI development and the conditions necessary for global scaling." OpenAI also stated in another statement that the two companies have a "very good" relationship. The statement read, "SoftBank and OpenAI are one of each other's closest partners." At least on paper, SoftBank is benefiting from this investment. Last week, SoftBank announced a more than fourfold increase in annual profits, reaching a record of 5 trillion (approximately $320 billion), with a significant portion of the gains coming from the rise in valuation of OpenAI. But Son's motivation is not just for short-term financial returns - he hopes SoftBank will be at the core of the next major technological leap. From the beginning, he has firmly believed in Altman's vision of "General Artificial Intelligence" (AGI), to develop a highly advanced AI with human-level capabilities to accelerate breakthroughs in science and medicine that would have otherwise taken decades to achieve. SoftBank CFO Yoshimitsu Goto said at the earnings call last week, "We are looking at the next 30 years, and the AI revolution is just beginning." "We want to be a valuable player in this revolution." Supporters of Son point out that OpenAI remains a pioneer in the AI services sector. Many tech investors also say that SoftBank is not the only company making large bets on AI. Ben Narasin, Founder and General Partner of Tenacity Venture Capital, said, "Big checks fit their risk-reward logic. You can't win if you don't play, and once you're in the game, you have to take real risks." If OpenAI can achieve a valuation of over a trillion dollars in its IPO, Son will have the opportunity for a "second legend" - similar to the massive success he achieved by early investing in Chinese e-commerce giant Alibaba Group Holding Limited Sponsored ADR. However, with increasing competition, this highly anticipated IPO is not a done deal. Claude from Anthropic is challenging OpenAI's dominance, and its newly launched Mythos model is said to be able to identify and exploit vulnerabilities in multiple key software. Alphabet Inc. Class C (GOOGL.US)'s Gemini is also rapidly catching up, showing outstanding capabilities in scientific research and reasoning. Sources said last month that Anthropic is accepting investor offers, with its valuation likely to more than double to over $900 billion, surpassing OpenAI to become the world's highest-valued AI startup. With investors concerned about whether OpenAI can maintain its lead, SoftBank's stock price has fallen over 20% since hitting a record high in October last year. In March this year, S&P Global, Inc. downgraded SoftBank's outlook, saying that its massive bet on OpenAI could exhaust liquidity and weaken the credit quality of the assets. Sources said earlier this month that due to some hesitant creditors, SoftBank has scaled back its planned $10 billion collateralized loan scheme pegged to OpenAI holdings. Habib Imam, Managing Partner at Menlo Park Capital and former SoftBank employee, said that investments in WeWork and OpenAI have commonalities, including "key person-centric" leadership and aggressive spending for grand visions. He said that for Son, this latest investment is not just a bet on OpenAI but a "bet on a worldview about AGI," ...