Motley Fool Money Ex-SoftBank CFO on OpenAI, Bubbles, and When to Sell
Oct 12, 2024
Alok Sama, former President and CFO of SoftBank and author of "The Money Trap," shares his insights into tech investments and the bubble dynamics of the market. He discusses SoftBank's substantial investment in OpenAI, raising concerns about overvaluation and market cycles. The conversation dives into the emotional aspects of tech investing, including herd mentality and the distinction between private and public market volatility. Sama emphasizes the importance of genuine connections with visionary leaders and reflects on the power dynamics in venture capital.
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OpenAI Valuation
- OpenAI’s high valuation raises concerns about potential overhype in private AI markets.
- Competition from Google and Facebook adds complexity, despite OpenAI's strong traction.
Valuation Metrics
- Overemphasis on revenue multiples, especially without clear profitability, can be a warning sign for early-stage companies.
- Gross Merchandise Value (GMV) can be misleading if the company's actual revenue is a small fraction.
Historical Bubbles
- Historical bubbles, like the 18th-century tulip mania and railroad bubble, demonstrate recurring market excesses.
- Even experts can miss major bubbles in their own time, highlighting the cyclical nature of markets.
