2024-12-11 15:06:48 :
Son is a man of contrasts. The Japanese tech tycoon briefly became the world’s richest man during the height of the dot-com bubble in the early 2000s, but subsequently lost $77 billion of his paper wealth, more than anyone before him. In 2021, SoftBank Group Corp., whose telecoms and software conglomerate turned investment giant, posted the largest annual net profit in Japanese corporate history, a year after posting its second-largest loss. In 2000, he made a $20 million bet on Alibaba, a humble online marketplace that grew into China’s most powerful electronics mall and one of the best bets in venture capital (VC) history; He later invested $16 billion in WeWork, an office rental startup that billed itself as a technology company, but it failed completely. He has been called a “genius” and “dumb money”.
Such drastic fluctuations in fortunes would tire anyone. In November 2022, they exhausted even the tireless billionaire Martha. During an earnings call, the then-65-year-old announced that while he would continue to run SoftBank, future updates on SoftBank’s finances and strategy would be presented by his chief financial officer. This was out of character for a man with an overactive vanity, who sarcastically compared himself to Napoleon. And, like the periodic retreats of the Corsicans, this did not last long. In June, a rejuvenated Son told SoftBank shareholders that all of his past bets were “warm-ups for my great dream of realizing artificial intelligence superintelligence.”
To keep the main action going, SoftBank bought a small stake in OpenAI for $500 million on October 2, a $6.6 billion funding round that valued the world’s leading maker of generative AI models to $157 billion. Earlier, Son had invested a similar amount into self-driving car startup Wayve, a smaller sum into next-generation artificial intelligence search engine Perplexity, and talked about raising more money (perhaps $100 billion). , to create a competitor to Nvidia. AI chip champion. From 2017 to 2020, after Masayoshi Son mentioned artificial intelligence more than 500 times in his financial reports, he is now getting down to business. He looked hopelessly late.
For those who tend to look toward the future, this may seem strange. When he was 19 years old, he formulated a 50-year plan to build a corporate empire; when he was in his 50s, he stretched his horizons to 300 years. The Gambler, a fascinating new biography by former Financial Times editor Lionel Barber, chronicles a life in which looking to the future is often preferable to contemplating the present. His earliest memories are filled with the stench of his family’s pigs. After his father turned pork profits into a booming gambling industry that funded young people, disdain for him remained among the Japanese, who regarded Koreans like him as second-class citizens. Masa aspired to finish high school and college in California, despite a close brush with death from hepatitis in the mid-1980s and two bankruptcies during the dot-com bubble and financial crisis of 2007-09. Let his life improve. Now according to Mr. Sun’s estimation.
Sometimes that deep-rooted futurism pays off. It gave him an early awareness of the promise of software, the Internet and smartphones, which made him a fortune and, even better, given the discrimination his family suffered, shook up Japan’s stolid corporate establishment. Alok Sama, a former Morgan Stanley banker who worked for Son from 2014 to 2019, said he was “very correct” on these big matters. Yet this obsession with the future may obscure aspects of the present, and he continues to make mistakes in these areas. .
Politics is a blind spot. His $22 billion acquisition of Sprint in 2013 was based on a merger with another wireless provider, T-Mobile, that was blocked by the Obama administration. Although the deal moved forward under Donald Trump, Son called his misreading of regulators “one of the biggest mistakes of my life.”
If so, he didn’t learn from it. In 2020-21, he was troubled by China’s crackdown on the technology industry, where SoftBank is the largest foreign venture investor. Bets on companies such as ride-hailing giant Didi Chuxing have failed. Its Alibaba stake has lost two-thirds of its value. In 2022, antitrust authorities blocked the $40 billion sale of chip design company Arm (which SoftBank acquired for $32 billion in 2016) to Nvidia. A rift between China and the West is engulfing TikTok and could damage the $230 billion valuation of its Chinese parent, ByteDance, in which SoftBank is a shareholder. The United States, where SoftBank has made significant investments, may be skeptical of a company partnering with Alat. Alat is a Saudi industrial automation company also linked to a blacklisted Chinese surveillance equipment manufacturer.
Son also doesn’t care about profitability. His fixation is growth, which is all good. But businesses need steady returns if they are to stay afloat, let alone last three centuries. In their absence, SoftBank has had to rely on borrowed funds. Although it recently paid for a large portion of this through proceeds from the sale of Alibaba shares and the listing of Arm, it remains the 11th most indebted non-financial company in the world and has stakes in two companies in the top ten, Among them is Deutsche Telecom. and T-Mobile. Fluctuations in the price of SoftBank’s stock (part of the debt is guaranteed by SoftBank’s stock) may mean margin calls should the market fluctuate. This just ties Son’s hands when he can buy stocks and startups at low prices.
The curse of farsightedness
Instead, he often made the wrong bets and overpaid. SoftBank’s $100 billion Vision Fund, the largest fund in venture capital history and filled with money from the Bay Area, began acquiring in the late 2010s, when valuations for startups such as WeWork were particularly frothy. In 2019, the company sold its entire 5% stake in Nvidia for $3.6 billion; today its price would be $160 billion. SoftBank and asset manager Fidelity backed OpenAI in the same round. “I told you everything,” one venture capitalist sneered. SoftBank’s investors are scathing in their own way. Its share price is trading at a discount of more than 50% to its net asset value, indicating a lack of confidence in Son’s future. Your feet are just as important as admiring the horizon.
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