Why we love SoftBank
You got SoftBank all wrong, and it’s time someone speaks up
Let me start by saying this: no one asked that I write this. Not even hinted. There was no secret handshake, and there’s nothing for us to gain from it now. That’s why we waited with posting this, until Lemonade went public.
On a beautiful summer day a couple of years ago, Daniel and I were making our way to a Bay Area estate in a rented Tesla. We were scheduled to meet Masa Son, SoftBank’s legendary founder and one of Japan’s most formidable business leaders. In those pre-WeWork-debacle days, they seemed like a great investor for our expansive plans. Building a high-growth insurance company requires deep pockets and big ambitions. These guys had both, in abundance.
It was an odd meeting, and we left it equally energized and perplexed. It’s not often we meet people who accuse us of being too conservative. Actually, now that I think about it, the only ones to ever say that were Masa, and Eric Schmidt. If we were to become a global challenger brand in a category of entrenched, wealthy incumbents, we had to get a SoftBank-caliber investor in our corner. We took Eric’s and Masa’s advice, and went on to raise a $300M round, led by SoftBank.
Of course, little did we know they’d become the poster child for all that’s wrong in our industry and the VC everyone loves to hate. Following the WeWork debacle, and with Uber’s controversies in the rearview mirror, SoftBank, and with it, its portfolio companies, would become labeled for no good reason. In fact, there have been very few news articles since our IPO that failed to mention us alongside SoftBank, and with them, WeWork.
It’s one thing to have an opinion about raising large rounds at high valuations, and a totally different thing to create a narrative where WeWork and all other companies who raised capital from SoftBank are the same.
They’re not. In fact, they have absolutely nothing in common. Even though we’re proud to be part of SoftBank’s portfolio, we’re not ‘SoftBank’s Lemonade’ any more than AirBnB is Andreessen’s.
Companies should be judged by who they are, what they do, their motives and impact on the world — and not by superficial things that make catchy headlines. But this goes further than just labeling. Experienced investors don’t turn management teams into their puppets. It just doesn’t work that way. In our case, SoftBank’s investment bought them a single board seat among 8, which is the same voting power as Sequoia, Daniel, or myself.
Share classes and voting rights aside, in reality, investors and board members have limited control over companies. The larger the organization, the harder it becomes to look inside and see it for what it really is. That’s why I strongly believe that the management team is mostly responsible for successes and failures, not the board. The fact that WeWork blew up, doesn’t mean that SoftBank or Benchmark or JPMorgan caused it. Sure, they may have made mistakes, but the buck stops with Adam Neumann and his team.
All this isn’t to say that the board of directors isn’t important. It’s critical, and finding great board members is very hard. We are blessed with an amazing group of people who constantly support and help us on our journey. We’ve all grown to be friends, and can’t wait to meet and spend time together. That’s why we were so happy to learn that Shu Nyatta will be SoftBank’s assigned board member for Lemonade, and since he joined our board he’s been incredible.
Lemonade is a sample of one, and we don’t speak for our fellow SoftBank portfolio companies. But to the entrepreneurs out there who are thinking of partnering with them, we say this: we’d do it again in a heartbeat. We’ve gotten nothing but support from the entire SoftBank team, and never felt any pressure from them on any topic. We have no doubt that they will always be there for us, whether they still own stock in our company or not.
So, pretty please, stop picking on our friends.
