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Is A $200 Billion Bet On One Investment Theme Crazy or Brilliant?

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A friend who has been around tech almost as long as I have wrote the other afternoon with a question. “What was the tech stock in 2002 that was essentially an index of all the dot-com names?”

I knew right away what he meant. “ICG,” I replied, for Internet Capital Group, a shooting-star dot-com-era failure that hit $60 billion in valuation before crashing to earth.

“The Vision Fund is giving me ICG flashbacks,” he wrote.

He was referring to SoftBank’s $93-billion-dollar Vision Fund, Masayoshi Son’s investment vehicle that is gobbling up billion-dollar stakes in multiple startups that could be conceived of as big data or artificial intelligence plays. Late last week word broke that even when he rounds up at $100 billion Son won’t be content. He intends to raise another $100 billion as soon as possible.

My friend’s memory was mostly right, but for two key details. ICG wasn’t an index fund so much as a collection of venture-capital investments focused on so-called business-to-business Internet companies. (Fortune, in 1999, accurately if painfully described ICG as “a one-stock way to play the net”—a description that worked on the way up and down.) I also was reminded that ICG was essentially done for by late 2000, not 2002 as my friend recalled.

ICG became a dot-com joke, a one-stock example of extreme hubris on the part of its management and the investment bankers and sell-side analysts who embarrassed themselves by pumping it up. “Internet Capital has the potential to emerge as the dominant 21st-century operating model for creating shareholder value” wrote Henry Blodget, then a Merrill Lynch analyst and today a respectable media executive.

Hindsight taught us ICG has no special sauce, just a huckster’s sense of timing that didn’t last. Masayoshi Son has a track record far more impressive than anyone ever associated with Internet Capital Group, so it is potentially foolhardy to go against him. But $200 billion to invest on a single investment theme?

Incidentally, I was surprised to learn ICG still exists. In 2014 it changed its name to Actua. One of its founders remains CEO. It is worth nearly $500 million. It is somehow comforting to know that old dreams die hard.