INTERVIEW: MASAYOSHI SON
feer.com
The Man Who Would Be King
Having built Japan's biggest software wholesaler into an Asian Internet colossus, Son has watched a souring market, questionable investments and the lack of a coherent strategy take the sheen off Softbank Corp.
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By Chester Dawson/TOKYO
Issue cover-dated November 16, 2000
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MOST PEOPLE KNOW Masayoshi Son, the 43-year-old head of Internet powerhouse Softbank, as one of the world's richest men. Fewer are aware of his humble upbringing, literally on the wrong side of the tracks. Son's childhood home was a makeshift structure built on the side of a railway owned by the former national rail company in rural southwestern Japan. His birth certificate has no street address. As an ethnic Korean whose grandfather worked in the coal mines of Kyushu, he faced plenty of schoolyard taunting and learned early on that it wouldn't be easy winning acceptance in Japan's close-knit and status-conscious society.
Son appears to bear remarkably few scars--or ill will--from the discrimination he suffered. In fact, he says half-jokingly that having a Korean surname may have helped him stand out from the crowd as a young entrepreneur. Yet one form of prejudice he encountered when starting out appears to have irked him more than any other: repeated rejections for bank loans because of his non-Japanese name. Frustrated, Son had to find alternative sources of funding such as bond and equity-based financing and loans from insurers instead of banks. This could also be part of the reason why, two decades after blue-chip lenders closed their doors to him, he now owns one.
Softbank plans to reinvent the failed Nippon Credit Bank, renamed Aozora Bank, as a provider of seed capital to start-ups. In many ways, NCB was a trophy purchase marking his arrival in the major leagues of Japanese business. But it also reflects a deep passion for fixing what he sees as a weakness in the Japanese economy--a serious dearth of funding for entrepreneurs.
Son makes no secret that he views himself as being in the vanguard of a movement to shake up the status quo and make crusty Japan Inc. more open to outsiders. "In order for us to be successful in our information revolution, we have to change Japan," he says. Setting that kind of far-reaching goal is classic Son. So is a penchant for big risk-taking. He could easily walk away from critics and retire comfortably on the gains from farsighted early investments in the Yahoo! franchise. Instead, he is seeking to make a deeper mark as an Internet kingpin and self-described revolutionary.
Son's relentless drive, honed during his years as a maverick entrepreneur, is reflected in hobbies outside work. In addition to golf with business partners and spending time with his wife and children, Son enjoys an occasional round of "Street Fighter" on his PlayStation videogame console. He's also fascinated with great historical figures; his bedside reading list is heavy on biographies of brilliant tacticians such as Chinese philosopher Sun Tzu, American oil baron John D. Rockefeller, Japanese warlord Oda Nobunaga and Mongol conqueror Ghengis Khan. Son says the key factors for success "are the same no matter whether it's business or revolution or history or politics or whatever."
Those factors include a knack for innovation and sensing opportunity. Son acquired his first taste of success as an undergraduate student at the University of California at Berkeley in the late 1970s. In his spare time, he built a business selling used Japanese videogames to American pizza parlours. Later, Son pocketed $1 million selling his designs for a pocket-sized translation device to electronics maker Sharp. He used those funds in 1981 to set up Softbank. A pioneer in Japan's software-distribution business, the company quickly became the country's largest wholesaler of software titles during the 1980s. In the 1990s, it enabled Son to finance his first strategic investments in promising Internet plays.
Son's disdain for nemawashi, or traditional Japanese consensus-building, and his penchant for rhetorical flourishes haven't endeared him to everyone, especially in his home country. Many in Tokyo's big-business establishment are known to look down on him as an outspoken publicity hound. Some sceptics in the investment community and media see him as little better than a modern-day snake-oil salesman.
Indeed, Son is the first to admit that some of his more eccentric business ideas never took off. An early example of one such flop was the styrofoam toilet-seat cover, a product he says he patented in the late 1970s. "I still think it's a good idea. It's disposable, soft and very sanitary," he says today. Yet Son is probably wise to focus his creative energies not on soft seats but on Softbank and his long-term business strategy.
Son spoke about those issues, and the infotech stock downturn, in a recent interview with REVIEW technology editor Charles Bickers and Tokyo bureau chief Chester Dawson at Softbank's headquarters in Tokyo. Excerpts:
DO YOU WORRY ABOUT THE DIRECTION OF GLOBAL STOCKMARKETS? COULD THAT AFFECT THE PACE OF YOUR SELF-DESCRIBED "SPEED INVESTMENT" STRATEGY?
That's a short-term issue. It's like the beginning of the automobile industry or the beginning of telephones or TVs. If you look at all of those major investments of mankind, how many years did they take to become profitable? Of course, they were not profitable [initially] because there was not enough content, not enough infrastructure. But once it becomes profitable, it grows for so many years. The Internet is something like that.
DOES SOFTBANK HAVE AN IMAGE PROBLEM?
We should always learn from our lessons, from our history. Once there was big criticism about our organization: not open enough or transparent enough. That was not our intent at all, but if people say that then we should increase our effort to make it easier for people to understand. So this is just a part of our improvement.
HOW MUCH OF SOFTBANK'S OWN MONEY IS INVESTED IN ITS NETWORK OF 450 AFFILIATES?
The total money on pure Internet companies that we have invested so far is about $2.5 billion. We've cashed out $3 billion, so we've already got all the money back . . . out of the 30 IPOs. So we still have 420 pre-IPOs. I would say compared to any other VCs or other investment holding companies, we are doing very well--even with this current stockmarket.
WHAT IS THE TOTAL AMOUNT OF MONEY INVOLVED, INCLUDING SOFTBANK'S OWN CAPITAL AND MONEY FROM OUTSIDE INVESTORS?
The total fund size is about $6 billion.
WILL B2B REALLY TAKE OFF IN JAPAN?
Definitely. Definitely.
BUT A LOT OF JAPANESE TRADING COMPANIES SAY B2B WILL GROW ONLY A LITTLE BIT . . .
They don't understand. They don't understand. And it's sad. But it's a great opportunity for us. When something big happens, the reaction in the beginning is so small. Do you know the market cap of Ariba in the U.S.? Did you know that Ariba is the fastest-growing [company] in market cap in American history? Did you know that they were $200 million in IPO value last year--June last year? Today, they are $32 billion. Over one hundred-fifty times [bigger] in one year and three months.
HOW DO YOU RECONCILE THE PURCHASE OF A MAJOR JAPANESE BRICKS-AND-MORTAR BANK WITH SOFTBANK'S AIM OF BECOMING A PURE INTERNET ZAIBATSU?
The NCB and Nasdaq Japan is a little bit different from our pure Internet investments. It is helping change, reshape Japan. In order to make our digital-information revolution successful, we have to reshape the Japanese business environment. Japan is one of the most important markets for us. About half of our total investments and activities are in Japan, so in order for us to be successful in our information revolution, we have to change Japan. |
