The CEO of a private-equity giant that invested alongside SoftBank says it pushed too hard for growth without making the economics work first

• At a Davos panel, Bill Ford, the CEO of General Atlantic, said he's seen where SoftBank has gone wrong in investments that the two companies did together.
• Ford said SoftBank has pushed companies to expand globally before they're ready and they haven't focused on getting unit economics working.
• Stacey Cunningham, the president of the New York Stock Exchange, also said private investors shouldn't use a valuation from "one high-profile investor."
• For more BI Prime stories, click here.

General Atlantic CEO Bill Ford has seen the SoftBank effect - too much money with too few guardrails - up close.

The private-equity firm, which has $35 billion in assets under management, has a history of investing with SoftBank through its Vision Fund and other vehicles.

On a panel with Andrew Ross Sorkin at Davos on Tuesday, Ford highlighted SoftBank's missteps as part of a broader trend of "the market losing its discipline."

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SoftBank's money has enabled fast growth, which in the last year has been followed by job cuts and pullbacks at some of its biggest investments.

Ford said the lack of discipline stems in large part from too much money - $500 billion raised for growth equity overall in the last five years.

SoftBank "would just be one example of other places that pursued growth at all costs," he said.

"One of the things we really objected to, in terms of places where we invested together, is they were really pushing companies to globalize so quickly even before they perfected their business model in one geography," Ford said. "We were saying, 'let's get the model right, let's get the path to profitability, let's get the unit economics working, and then we can focus on expansion and growth.'"

SoftBank pushed back, Ford said.

"Instead it was 'no, we've gotta get to China now and we've got the capital to do it,'" he said. "I think that caused the market to lose its way."

The 11 companies in which General Atlantic and SoftBank invested, per Pitchbook, include those that are still private, like Opendoor, TikTok owner Bytedance, and Gympass.

Other investments include Gilt Group, which was sold to a retailer in 2016 for less than the capital the online shopping platform raised, and messaging platform Slack, which has traded down since its June public listing.

'It's a concerning trend'

Uber was another SoftBank-backed company that traded down after its 2019 IPO. Like Slack, investors shared concerns about the company's path to profitability - a growing focus

On the Davos panel, Stacey Cunningham, the president of the New York Stock Exchange, said one big investor should not dictate how everyone views valuation.

WeWork had picked Nasdaq for its IPO, but the offering was eventually shelved in part due to concerns about valuations as well as governance concerns and an unclear path to profits.

"I don't think you can look at the valuations in the private markets that are based on one investor, and then use that as a proxy for 'hey, this is how this company is valued' because it's really one opinion," Cunningham said. "I think it's a concerning trend, especially if you have one high-profile investor who is valuing companies differently than the broader market would, because it is becoming a reference point for the market."

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