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SoftBank Vision Fund seeks to reduce risk



Masayoshi Son,

SoftBank's chairman and CEO, who also runs the Vision Fund, told fund employees to push the companies he owns money-generating shares into, said those people, a dramatic shift from his previous demands that they spend aggressively to stimulate sales growth. Vision Fund executives are scrutinizing some deals, such as one for a company that designs burger cooking robots.

After three years of rapid and rapid growth, the fund also focuses on improving corporate governance in portfolio companies and eventually seeking to reduce staff by asking some weaker employees to leave.

In recent weeks, leaders of the fund's investment teams have been asked to make lists of weaker employees, possibly a prelude to small staff cuts, according to those people who also say the fund deliberately delayed hiring. Both moves are first for the fund. About a dozen investment staff have left on their own since spring this year, many dissatisfied with what they see as a toxic culture with competing teams, inexperienced investment managers and poor communication, and a risky incentive structure that, for some, ̵

1; less attractive to be in the fund, said people familiar with the structure.

A spokesman for the Vision Fund stated that the fund was still hiring new staff. "Consideration of lower-performing employees is standard business practice, not redundancy."

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The change in strategy comes after the Vision Fund has expanded to more than 100 investment employees since launching three years ago and investing nearly $ 85 billion in just three years. He has participations in some of the most popular startups worldwide, including

Uber Technologies Inc.,

Oyo Hotels & Homes, an Indian hotel reservation company and

Slack Technologies Inc.

While the fund has had some success as an investment in chip maker

Nvidia Corp.

and Indian e-commerce company Flipkart Pvt. Ltd., it has seen stakes in WeWork, Uber and

ZhongAn Online P&C Insurance Co.

decreases. People familiar with the fund point to a number of other investments that can reduce their value. They include car leasing company Fair.com, which released 40% of its staff Thursday saying it should find a way to profitability, and launching e-commerce Brandless Inc., where sales dropped 54% in August from the same month a year earlier, according to credit card data analyzed by research firm Second Measure.

A Brandless spokesman said the company stopped marketing in the summer until moving to higher margin products.

WeWork's SoftBank rescue came so trying to put together a second Vision Fund, larger than the first. But while SoftBank says it has more than $ 100 billion invested in investors, most of the money for the fund appears to come from SoftBank and its employees.

The change in investment strategy is a major change for Mr Son, who offered startup startup founders more than they wanted, pushing them to grab market share while showing little concern about losses, according to people familiar with The Fund, a Growth Strategy at All Costs, has supported WeWork and has not yet generated large profits from the Fund's portfolio of more than 80 investments, although this is not unusual for a fund that is only three years old.

Below the lower-quality strategy imposed by Mr. Son, the fund is now more attentive to the deals it might otherwise make quickly, say people familiar with its strategy. Mr. Son recently asked for more information from his investment team before pulling the trigger on some deals, said one of those people, including a proposed investment in Creator, a startup in San Francisco that is designing a robot that cooks hamburgers.

A Creator spokesperson declined comment. A Vision Fund spokesman declined comment on Creator.

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Many employees are disappointed that Mr. Son makes all investment decisions and does not communicate well with the staff, say people familiar with the fund. These people said that the team structure led to competing funds in the fund.

Partner David Tevenon, who resigned earlier this month, is the most senior investment executive to leave the Vision Fund to date. Mr. Tevenon serves on the ride-sharing giant Didi Chuxing Technology Co. and GrabTaxi Holdings Pte., two of Vision Fund's largest investments. People familiar with his tenure said he was sometimes undermined by other investors, causing disappointment. A person familiar with his term said that his departure was not a surprise, as he was brought in by

Nikes Arora,

Former Google colleague who left SoftBank in 2016.

Tevenon referred questions to a Vision Fund spokesman who declined to comment on the departure and other issues related to his appointment.

The team under the management of the managing partner

Jeff Husenbold,

which is the largest in the Vision Fund, has also seen the highest number of staff departures. He manages a number of important SoftBank deals in the US, some of which are subject to internal scrutiny for poor performance or dubious business strategy, according to people familiar with the matter. These include Brandless and the dog walking company Wag Labs Inc. People familiar with the team say some employees who left Mr Husenbold's team are dissatisfied with his management style.

Wag CEO

Hilary Schneider,

said in a statement that the company is focused on improving its customer experience and profits.

A SoftBank spokesman said that Mr. Husenbold is a top performer in a successful investment fund, including a real estate brokerage compass, Opendoor home buying company and DoorDash Inc. food delivery startup.

Some Vision Fund employees were also dissatisfied with the fund's unusual incentive structure, said people familiar with the structure. Instead of sharing a percentage of the return on investment, as is customary for mutual funds, the Vision Fund lends money to co-investment employees of the fund. A small portion of the loans will be repaid to the employee, which means that if the fund performs poorly, they will have to repay SoftBank. Some employees were dissatisfied with the plan, including its 10-year acquisition schedule and the fact that the investments were made at estimates from October 2018, which are higher than those in which the Vision Fund first invests in some cases, say people familiar with the plan. A Vision Fund spokesman declined to comment on the incentive program.

Investment personnel also receive traditional bonuses each year in the spring. One person familiar with the fund suggested that he might notice more staff leaving after paying bonuses for next year.

Write to Rolfe Winkler at rolfe.winkler@wsj.com and Yoko Kubota at yoko.kubota@wsj.com

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