{"id":13793,"date":"2018-09-04T05:25:03","date_gmt":"2018-09-04T05:25:03","guid":{"rendered":"http:\/\/qatar-news.org\/qatarnewsEn\/?p=13793"},"modified":"2018-09-04T05:25:03","modified_gmt":"2018-09-04T05:25:03","slug":"the-japanese-billionaire-shaking-up-silicon-valley","status":"publish","type":"post","link":"https:\/\/qatar-news.org\/qatarnewsEn\/?p=13793","title":{"rendered":"The Japanese billionaire shaking up Silicon Valley"},"content":{"rendered":"
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How billionaire Masa Son is shaking up Silicon Valley<\/h2>\n

By Seth Fiegerman<\/h2>\n

Not far from the storied venture capital firms on Sand Hill Road<\/a>, there\u2019s a palatial estate where Masayoshi Son, Silicon Valley\u2019s newest kingmaker, shapes the future. Reaching him requires driving into a leafy enclave filled with mansions overlooking Palo Alto before passing through a gated entrance into a sprawling compound where waiting attendants escort you inside.<\/p>\n

Startup founders fortunate enough to earn an audience with Son, a 60-year old billionaire with a global network and vast funds, recall being led down a hallway lined with artwork to make the pitch of a lifetime. Some were ushered into a large conference room with an enormous table, spotless marble floors and ornate woodwork. Others found themselves in a small side room illuminated by chandeliers waiting for the meeting to begin. Eventually they met Son in an intimate sitting room where a two-seater couch faces a couple of\u00a0chairs and a small coffee table.<\/p>\n

Matt Barnard remembers time moving slowly in that side room as he awaited his chance to convince a man he described as \u201clarger than life\u201d to bet on his indoor farming startup, Plenty<\/a>. To help make his case, Barnard brought along a seven-foot tower of mustard greens and bok choy grown by his startup. It was just tall enough, it turned out, to whack one of the chandeliers. \u201cHow perfect,\u201d Barnard said. \u201cI walk into this immaculate and impressive home and manage to almost break a chandelier.\u201d<\/p>\n

Son\u2019s fund would go on to lead a $200 million investment round in Plenty after the meeting.<\/p>\n

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\"Son<\/p>\n

Son with Softbank\u2019s humanoid robot, Pepper\/Getty Images<\/p>\n<\/div>\n

Barnard wasn\u2019t the only one to have an anxiety-inducing moment in the house. Mohit Aron, founder and CEO of the data storage startup Cohesity<\/a>, remembers Son staying silent throughout much of his pitch. When Son did speak, it was to ask Aron how much bigger he thought the company might really grow with an infusion of capital. Aron told him it could one day capture much of the world\u2019s data.<\/p>\n

Son pondered that pitch for 30 seconds before saying \u201cOK\u201d and shaking Aron\u2019s hand, sealing a deal to lead a $250 million investment round in the startup. The deal done, Son led Aron to the front door and bid him goodbye.\u00a0\u201cHe is a man of few words,\u201d Aron says. \u201cHe doesn\u2019t say much. He will just shake hands and that\u2019s it.\u201d<\/p>\n

The $100 Billion Gatekeeper<\/h2>\n

That\u2019s how it is when you\u2019re the visionary leader of SoftBank, one of the world\u2019s most influential and aggressive technology firms. Under Son\u2019s guidance, the Japanese conglomerate, which he founded in 1981, has repeatedly shaken up entire industries with blockbuster acquisitions of companies like Sprint and prescient investments in startups like Alibaba.<\/p>\n

Son capitalized on the rise of personal computing in the 1980s and bet so heavily on the dot-com boom of the 1990s that he is said to have at one point owned 25%<\/a>\u00a0of the Internet. He lost billions in the dot-com bust, but sinking $20 million into\u00a0Alibaba in 2000 helped revive his fortune<\/a>. Son is now worth about $15 billion<\/a>\u00a0— and, remarkably, maintains his tremendous appetite for risk and long-term thinking. At a time when most CEOs look no further ahead than the next quarter, Son forges ahead with a 300-year plan<\/a>\u00a0for his company.<\/p>\n

At the heart of his plan lies the Vision Fund, a $93 billion pool of money that Son intends to use to shape the future for centuries to come.<\/p>\n

If that kind of timeline seems odd, well, Son is something of an eccentric. He often quotes Yoda<\/a>, passionately prepares for the singularity<\/a>, and has been known to make big bets on companies based upon what he once called his \u201csense of smell<\/a>.\u201d He plays an active role in \u00a0SoftBank\u2019s investment decisions, and Aron recalled being told that Son has \u201cfinal say\u201d on each Vision Fund deal.<\/p>\n

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\"Son<\/p>\n

Son at a 2016 press conference\/Getty Images<\/p>\n<\/div>\n

That\u2019s not entirely true, according to a spokesperson for SoftBank Investment Advisors. Son sits on an investment committee that performs a final review of potential investments. Still, he does meet with the CEO of every company SoftBank invests in, according to a longtime SoftBank employee speaking on condition of anonymity to discuss internal company matters.<\/p>\n

Such meetings have grown increasingly frequent since last year, when Son launched the Vision Fund\u00a0to invest in technology startups that he believes will fundamentally change the world. The fund, backed by the likes of Apple and Saudi Arabia\u2019s Public Investment Fund, has already pumped $30 billion into companies including Uber, WeWork, and Slack.<\/p>\n

Not everyone celebrates this.\u00a0Rival venture capitalists complain that Son and his immense VC fund wield an unprecedented ability to inflate startup valuations and pressure companies to take money they may not need — or want. And they know Son is only getting started. During SoftBank\u2019s annual shareholder meeting in June, Son said he plans to devote “97% of my time and brain” to investing in technology companies.<\/p>\n

SoftBank, he said, is now \u201ca unicorn hunter.\u201d<\/p>\n

The rise, fall and rise of Mr. Internet<\/h2>\n

Son has always had a penchant for making deals.\u00a0As a student studying economics\u00a0at UC-Berkeley forty years ago, he convinced Forrest Mozer, a professor who had invented a talking calculator for the blind, to join him in building a pocket translator.<\/p>\n

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\"Son<\/p>\n

Son in 1999\/Getty Images<\/p>\n<\/div>\n

\u201cIt surprised me,\u201d Mozer told CNN recently. \u201cHere\u2019s this young, little kid coming into my office with a business plan that really made a lot of sense. I went home and told my wife that I just met this guy who is going to own Japan someday. It turned out I was more right than I thought.\u201d<\/p>\n

Son sold the device to Sharp in a deal he said netted him \u201cclose to $1 million<\/a>\u201d — an early win for the young entrepreneur. \u201cIt was clear if you spent an hour a day with him that his mind was all on business,\u201d Mozer says.<\/p>\n

Son returned to Japan after graduating from Berkeley in 1980 and founded SoftBank –the name is short for \u201cbank of software\u201d– in 1981. It focused on distributing software developed by other companies, before branching into computer trade shows and tech magazines. From the start, Son focused on \u201chow he could help change society with technology,\u201d said the longtime SoftBank employee.<\/p>\n

By the mid-90s, it seemed clear that answering that question meant investing in online companies. In what could be seen as a precursor to its activities today, SoftBank pumped billions into hundreds of internet startups. Some, like Yahoo and Alibaba, paid off handsomely, helping overshadow losses from notable flops like Kozmo and Webvan. Son bet so heavily on online ventures that people took to calling him \u201cMr. Internet<\/a>.\u201d<\/p>\n

Son\u2019s net worth soared accordingly, only to collapse when the bubble burst. He is widely reported to have seen his paper wealth fall by $70 billion in 2000. \u201cOne year before that, my personal net worth was increasing $10 billion per week. For three days, I became richer than Bill Gates,\u201d Son told Bloomberg TV<\/a>\u00a0last year. \u201cBefore I told anybody else, our stock started crashing\u2026 We almost went bankrupt. Somehow. I survived.\u201d<\/p>\n

SoftBank declined to make Son available for this article.<\/p>\n

Son started rebuilding immediately. \u201cWhen something like that happens he doesn\u2019t sit back and sulk and become inward looking,\u201d the longtime SoftBank employee said.\u00a0Son looked to new opportunities, including investing in broadband services in the early 2000s, acquiring Sprint for $20 billion\u00a0in 2013 and buying multiple robotics companies in 2017 — among them Alphabet\u2019s Boston Dynamics, which builds robots that run, jump and climb stairs. More than a decade after the Dot Com bubble burst, SoftBank reaped the financial rewards of the early Alibaba deal. When the Chinese e-commerce company went public in 2014, SoftBank\u2019s $20 million investment was worth nearly $75 billion<\/a>.<\/p>\n

Mr. Internet was back, and more ambitious than ever.<\/p>\n

\u201cHe likes to joke he has had more failures than anyone else, but has learned from all of them,\u201d says Chris Lane, an analyst with Bernstein who tracks SoftBank. \u201cMost people still admire his track record, and the amazing success he has had despite these setbacks.\u201d<\/p>\n

A Bridge Too Far<\/h2>\n

Yet some in Silicon Valley worry SoftBank\u2019s massive investments could create a venture funding arms race and allow unprofitable startups to keep chugging along with questionable business models. And several investors told CNNMoney that SoftBank is driving up valuations for everybody.<\/p>\n

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\"Son<\/p>\n

Son earlier this year\/Getty Images<\/p>\n<\/div>\n

Scott Sandell, managing partner at New Enterprise Associates, said he was \u201cvery close\u201d to sealing a $30 million investment in a startup\u00a0at a $180 million valuation. But \u201cMasa swooped in\u201d and offered the startup $100 million at a $500 million valuation. \u201cThe entrepreneur, who was very favorable toward us, basically couldn\u2019t say no,\u201d Sandell said.<\/p>\n

It\u2019s certainly not news that one investor can push another aside, but most of them can\u2019t brandish a $100 billion checkbook. Multiple investors said startups may feel pressure to accept SoftBank\u2019s funding regardless of whether they want it, simply to prevent SoftBank from handing that money to a rival and upending the market.\u00a0Son appeared to play that card very publicly last year. During his negotiations with Uber, Son casually told reporters<\/a>\u00a0that he\u2019d be just as happy investing in Lyft instead.<\/p>\n

\u201cI think they\u2019ve completely changed the dialogue, for better or for worse,\u201d said Dan O\u2019Keefe, managing partner at Apax Digital, a growth equity fund. \u201cThere\u2019s no one not talking about them. Everyone is trying to figure out how it might impact their subset of the market.\u201d<\/p>\n

All of this aside, Son faces a deeper question: Can he invest in enough winners to generate the kind of returns that make his $100 billion experiment worthwhile for investors? Doing so means surpassing the performance of major indices like the S&P 500, which gained 19% in 2017, says Steven Kaplan, who teaches entrepreneurship and finance at the University of Chicago Booth School of Business.<\/p>\n

\u201cYou can\u2019t argue with the fact that he\u2019s been successful in the past,\u201d Kaplan said. \u201cI just think $100 billion is a bridge too far.\u201d<\/p>\n

Number One Strategy<\/h2>\n

Son laid out his plan for crossing that bridge during the shareholder meeting in June. He called it his \u201ccluster of number one strategy\u201d — investing in unicorns that are, or could be, \u201cthe number one players in the market.\u201d<\/p>\n

Near the top of that list is WeWork, an eight-year-old\u00a0startup that provides trendy\u00a0coworking spaces in 80\u00a0cities worldwide. SoftBank invested $4.4 billion in WeWork last year, despite the fact the company wasn\u2019t actively seeking funding. Now estimated to have a $20 billion valuation, some critics<\/a>\u00a0have called WeWork overvalued, but not Son.<\/p>\n

\u201cThis company,\u201d he told shareholders, \u201cis ready to become next Alibaba.\u201d The choice to namedrop his most famous investment may say as much about the pressure on Son to find yet another Alibaba-sized opportunity as it does about his actual enthusiasm for WeWork. The Alibaba deal is arguably the signature achievement of his career. But Son\u2019s future as an investor may depend on proving, as he once put it<\/a>, that his success with Alibaba \u201cwas not just one lucky hit.\u201d<\/p>\n

It\u2019s been barely a year since the Vision Fund officially launched<\/a>, but, SoftBank has scored some modest wins with the Vision Fund. It invested $2.5 billion in Flipkart, India\u2019s leading online retailer, in 2017. That investment yielded a 60% return<\/a>\u00a0when Walmart bought the company less than a year later in a deal that reportedly pegged SoftBank\u2019s stake at $4 billion. And then there\u2019s Uber, which SoftBank first invested in when the ride-hailing company was valued at $48 billion<\/a>. Uber is believed to be pursuing a secondary stock sale at a $62 billion valuation<\/a>\u00a0— with plans to go public<\/a>\u00a0next year.<\/p>\n

Lane, the analyst, says the first \u201csuccessful IPO\u201d for one of SoftBank\u2019s big bets — likely Uber next year — should help convince skeptics to support Son\u2019s ambitious investment strategy. But a quick payday from a blockbuster IPO falls short of Son\u2019s towering rhetoric. By his own account, Son is laying the foundation for a company, and, by extension, a personal legacy, that endures for centuries.<\/p>\n

\u201cIn 300 years\u2019 time, we would like to become that company that makes the most contribution to human evolution — the company that has greatest impact on humanity,\u201d he said during a recent\u00a0shareholder meeting.<\/p>\n

To achieve that grandiose goal, Son continues pursuing bold, almost brash, deals designed to keep SoftBank at the center of any trend he believes will fundamentally shape world. In the past, that meant telecoms and internet firms. Today it means big data, biotechnology, robotics, agriculture, ride-hailing and autonomous vehicles. Son likes to say he is preparing for the day when \u201call sectors of society and industry will be redefined\u201d by super-intelligent machines.<\/p>\n

Son\u2019s conversations with founders reflect that abiding desire to reshape the world. Eric Gundersen, the CEO of the open source mapping startup Mapbox, says Son didn\u2019t even mention maps during a discussion that led to Vision Fund leading a $164 million investment round. Instead, Son focused on how new modes of transportation will shape the design and construction of cities.<\/p>\n

During that conversation, Gundersen experienced first-hand what it\u2019s like to engage with a CEO and investor who thinks on a 300-year timetable. He marveled at how Son was able to discuss ideas that were \u201cmulti-decades out\u201d before going back to \u201cspecific customers\u201d and industry details in the present.<\/p>\n

\u201cYou can\u2019t have a visionary strategy unless you know the details,\u201d Gundersen said. And he has an idea what Son\u2019s visionary strategy is. \u201cYou\u2019re seeing him own the infrastructure for the future.\u201d<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

How billionaire Masa Son is shaking up Silicon Valley By Seth Fiegerman Not far from the storied venture capital firms on Sand Hill Road, there\u2019s a palatial estate where Masayoshi Son, Silicon Valley\u2019s newest kingmaker, shapes the future. Reaching him requires driving into a leafy enclave filled with mansions overlooking Palo Alto before passing through…<\/p>\n","protected":false},"author":10,"featured_media":13794,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-13793","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-world_news"],"_links":{"self":[{"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=\/wp\/v2\/posts\/13793","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=13793"}],"version-history":[{"count":0,"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=\/wp\/v2\/posts\/13793\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=\/wp\/v2\/media\/13794"}],"wp:attachment":[{"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=13793"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=13793"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=13793"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}