For one and a half years after graduating from college in 1979, Masayoshi Son, the Japanese entrepreneur, did nothing but research and think about what business he wanted to start. He had no income, was recently married, and had a new baby. All his relatives were extremely worried. After years of studying, Son was doing nothing but thinking!
Masayoshi Son thought of 40 new businesses he could start and had 25 criteria on which to judge the attractiveness of the businesses. Some of the important criteria he chose to evaluate business ideas were that:
- He should be excited about the business for at least the next 50 years
- The business should be unique
- Within 10 years he wanted the business to be No. 1 in the chosen sector
- The industry in which the business was active should be growing for the next 30 to 50 years
Finally, in 1981, Son founded Softbank in the personal computer software business. Softbank grew rapidly and Forbes magazine ranks Son as now being worth around USD 23 billion. Softbank is a holding company for a range of businesses, all centered around technology. The most high-profile investments include mobile telecoms (in the US and Japan), semiconductor and software design companies, e-commerce (China), finance, and media.
Son has always taken bold steps and is not afraid to make mistakes. He is flexible in how he grows his businesses and uses a combination of strategic investments, joint ventures, acquisitions, and organic growth.
Son’s decision making is unique. He makes quick decisions. Even for multimillion-dollar investments, Son takes at most 20 minutes to decide. Son famously took only 15 minutes to decide on investing USD 20 million in a tiny Hong Kong-based start-up called Alibaba. That USD 20 million is now worth an incredible USD 140 billion.
Not all of Son’s investments have made money so easily. Son is famous for losing the most money in history as an individual. During the dot com market crash in 2000 Son reportedly lost USD 70 billion but quickly bounced back to make even more money. The ups and downs of life have made Son even more ambitious.
In 2017 Son raised a USD 100 billion Vision Fund. The fund’s investors include Apple, Foxconn, Oracle co-founder Larry Ellison, Qualcomm, and the Saudi Arabian sovereign investment fund. Is this a step too far for Son?
The Vision Fund has invested in 88 companies but many of these investments are showing large
losses. (In India the Vision Fund has invested over USD 10 billion including in Paytm, Grofers, Ola,
PolicyBazaar). Son decided on investing in WeWork after Son met the WeWork founder for just a few minutes. WeWork made a loss to the Vision Fund of USD 4.6 billion. Uber made a loss to the Vision Fund of USD 5.2 billion. As of 31 March 2020, the Vision Fund has suffered a total unrealized loss of USD 18 billion. “The situation is exceedingly difficult,” Son said, “Our unicorns have fallen into this sudden coronavirus ravine. But some of them will use this crisis to grow wings.”
The next few years will be critical in determining whether Son recovers from his present dire situation. Masayoshi Son is, however, rare amongst top leaders in that he takes full responsibility for the losses. A day after announcing the huge losses he tweeted, “The cause of failure falls entirely with me, not the outside. There is no way forward until I admit that.”
© Kaikhushru Taraporevala