Masayoshi Son is one of the most influential dealmakers of our time.
“This is Masa of Softbank from Japan.”
Son, who goes by Masa, is considered by some as one of the most brilliant risk takers in
venture capital.
$32 billion for chipmaker ARM, $9 billion to Uber, $4.4 billion into WeWork.
The list goes on.
Others think the chief executive of Softbank is a wreckless daredevil with a spotty track record.
After the dotcom crash he lost more money than anyone has ever lost in history.
$70 billion.
“We almost went bankrupt.
Somehow I survived.”
But love him or hate him, he’s shaking up Silicon Valley and global investing.
Has Masa just been lucky, or is he actually a genius when it comes to investing in the
future of technology?
So is he a genius investor?
I think the jury is still out but one thing you cannot
deny Son is that he certainly seems to have foresight.
Bloomberg tech reporter Pavel Alpeyev has been covering Masa and Softbank for the last decade.
One famous example is… a few years prior to Apple’s launch of the iphone, Son was
visiting with Steve Jobs in California and offered him sketches of a prototype device
that combined the functionality of the ipod and a mobile phone.
Knowing Apple was developing the iphone, Jobs refused.
So Masa got him to agree to exclusive rights for their product in Japan, bringing Softbank,
and Masa, a lot of success.
This wasn’t his first big business deal however.
While attending the University of California at Berkeley he invented a digital translator
and sold it to Sharp for 100 million yen or about $1 million.
Using that money, he founded Softbank which is a household name in Japan that aires popular
commercials with Tommy Lee Jones and a dog.
For a brief period during the dot-com bubble, Masa was the world’s richest man ...before
99% of his deals failed.
At the center of his reputation is one very important transaction -- In 2000 he made a
$20 million investment in an unknown Chinese startup called Alibaba...
And a young founder named Jack Ma.
"I could tell from the way he talks that he has charisma, has leadership.”
Softbank’s stake in Alibaba is now worth $138 billion -- one of the most lucrative
venture investments of all time.
One could potentially be lucky.
So if you assume that a track record of one is just lucky, then it certainly casts doubt
on Son's ability to pick winners.
Nowadays, Masa is aggressively making investments… on a massive scale… in tech.
He invested in 100-or-so startups in 2017, including two of the most valuable-- Uber
and Didi.
With both, he used a similar maneuver to close the deal.
Son went publicly on record saying that the company was considering investing in Uber
or Lyft… you know a not so subtle hint at ‘take the money or we’ll find someone
else who will.
Masa has a distinct deal-making style.
He’s known to invite founders to Tokyo for a formal meeting, followed by a meal… and
then offers them a massive amount of money.
The picture that we get is that when Son comes into the room, at this point, his business
people know your company through and through, and he's there to make an offer.
Although he doesn’t acquire controlling stakes in any of the companies and is generally
hands-off…
Softbank’s money still comes with comes with one important condition...
Like he told San Diego based robot company Brain Corp… basically he wants them to reach
their goals at an accelerated rate.
As Masa pours money into one startup after another...
He has also been lining up some generous backers for Softbanks’s $100 Billion Vision Fund
-- the largest investment fund in history to finance technology startups.
He got pledges from Apple’S Tim Cook, Qualcomm, Foxconn and 1 unexpected place: the Middle East.
What’s interesting is the main backer of the fund is the Crown Prince of Saudi Arabia,
who contributed $45 billion.
“45 minutes $45 billion...
One billion dollars per minute”.
Not all investors are on board with his vision.
They point to SoftBank’s stock in Alibaba and other assets, which are worth more than
19 trillion yen but SoftBank’s market cap is only 9.8 trillion yen.
That's just evidence that a lot of investors are not buying Son's future.
Critics not only don't believe Son can pick the next Alibaba; they're convinced he's going
to squander what he already has.
Whether a believer or not in Masa’s strategy…
The investments he’s making now are not like those he made during the 90s dotcom bubble.
They are companies which have already proven that they can survive.
In the end whether Son deserves to be called a genius investor rather just one with
very deep pockets, will probably depend on his ability to not just deliver a decent return,
but also the kind of societal impact that he aspires to.