In partnership with Saudi Arabia and others, SoftBank Group founded the 10-trillion yen (880-billion USD) SoftBank Vision Fund, the largest of its kind in the world. With the dawn of IoT era, AI, and advanced robotic technologies, changes are afoot in various industries. Can Masayoshi Son be a changemaker?” We will take a closer look at SoftBank’s ambitions to become a 300-year empire.
In May 2017, SoftBank created the SoftBank Vision Fund, aimed at investing in the IT industry. It announced that the Fund invested an average of 100-billion yen ($0.8-billion USD) in 20 companies in the seven fields: IoT, Robotics, E-Commerce, Rideshare, FinTech/Settlement Technology, and Medicine.
With the corporate philosophy: “Information Revolution — Happiness for everyone, Masayoshi Son’s goal is to grow and transform SoftBank into a 5000 companies industry group, with the aggregate market value of 200-trillion yen ($1.7-trillion USD) by 2040, and become one of the top ten companies in market capitalization in the world..
In the 1930’s, Masayoshi Son’s grandfather Chongkyong left Korea, crossed the Tsushima Strait and came to work at a coal mine in Japan. Masayoshi was born in 1957 as the second oldest of four brothers. His family operated a pig farm, but lived a very poor life, and were discriminated against because they were Korean.
However, Son grew up in a loving family. His father kept telling him that he was a genius, and his parents never once scolded him. Later, as his father’s business grew successful, his family became rich. He was admitted to an elite local high school, but he left half a year later to study abroad in the United States because he thought no company in Japan would hire someone of Korean origin like him. He took the entrance examination for Holy Names College (currently Holy Names University) and was enrolled there. In 1977, he transferred to the University of California at Berkeley.
While Son was in college, he resolved to stick with a goal of “one invention a day.” After selling one of his inventions, the automated translating machine to Sharp Corporation in 1978, he launched a new business with the capital of 20-million yen ($176,500 USD), gained from the profit of selling the translating machine. In the same year, he married Masami Ohno, whom he met while he was studying abroad. In the following year, he founded Unison World, a software wholesale company in the United States.
In 1981, Son founded SOFTBANK Corp. The company also entered the publishing business, rapidly growing with sales totaling 4.5-billion yen. However, he was hospitalized due to chronic hepatitis. He had to resign his position as CEO of the company. His doctor told him that he only had five more years to live. He was hospitalized for three and a half years, and he underwent steroid desorption therapy, a form of experimental treatment for which there were not many precedents. This treatment saved his life.
SOFTBANK did a wholesaling business of word processing and game software. Its word processor Ichitaro became a massive hit. Afterwards, the company founded Digital Tu-Ka, a cellular phone firm. In 1994 SoftBank was registered with Japan Securities Dealers Association and became public with an IPO at Stock Exchanges in Tokyo and Osaka.
In 1996, with the joint investment with Yahoo!, SoftBank founded Yahoo! JAPAN, (later, Son became the head shareholder of Yahoo!, Inc.). SoftBank partnered with The News Corporation Limited (Australia) to start JSkyB (later SKY PerfecTV!), a digital satellite broadcasting cooperation.
In 2001, SoftBank started Yahoo BB, broadband integrated services, rapidly transitioning from dial-up to broadband connections. By distributing modems on the street, free of charge, SoftBank made up for a great operational deficit, but this strategy gained customers who had never used the internet before, eventually gaining the largest market share of broadband services in Japan.
In 2004, SoftBank became the parent company of Japan Telecom Co. Ltd, a major telephone company in Japan at the time, and launched a fixed network company. In the following year, SoftBank partnered with Alibaba Group to operate the internet business in China.
In pursuit of joining the mobile market in Japan, SoftBank acquires the Japanese corporation of Vodafone UK—a subsidiary company of Japan Telecom—at the price of 1.75 trillion yen ($15.4-billion USD), the most expensive acquisition price in Japan at that time. With this acquisition, SoftBank enters the mobile business.
In 2008, SoftBank started to exclusively sell Apple’s iPhone 3G. Ever since he was in college, he has been good friends with Steve Jobs, Bill Gates and others.
In 2010, Son announced his “Next 30-Year Vision.” In the presentation, he has publicly stated that he intends to pass on his business to a successor. In order to discover and foster candidates for his successor, he founded SoftBank Academia. More than 10,000 people applied for the 300 spots in the school.
In response to the 2011 Tōhoku Earthquake and Tsunami, he donated 10-billion ($0.8-billion USD) yen out of his personal assets. He founded the Renewable Energy Institute. He developed policy proposals, centered on pulling out of nuclear energy, and focusing on renewable energy.
In 2012, SoftBank agreed on the strategic acquisition of Sprint Corporation. In the same year, together with US PayPal, it founded PayPal Japan. In 2016, SoftBank acquired Arm Holdings plc, at 3.3 trillion yen ($29.1-billion USD), the record-breaking price of the Oversea M&A Deals. Arm Holdings now specializes in the CPU design, and it established an overwhelming position in the field of mobile devices, where it has the 90% market share.
Together with the investments from the Public Investment Fund of Saudi Arabia, Apple, Qualcomm, Sharp and others, Son launched a 10-trillion-yen venture capital fund. “It is as big as all the venture capitals in the world combined,” says Son. “And we are managing to run the fund by ourselves.”
Recently, SoftBank has made acquisitions of two robotic development companies: Boston Dynamics and SCHAFT, from the Alphabet, Inc., a holding company of Google. It paves the way for developing Pepper, humanoid, and multi-limb robots.
SoftBank invests in Saudi Electricity Company as a chief shareholder. They launch an enterprise of solar-power generation in Saudi Arabia, the largest of its kind in the world.
SoftBank is in a period of transition to becoming the tech conglomerate that is to last for the next 300 years. While the company accelerates the speed of M&A, that does not mean that there is nothing to worry about. In November 2017, Sprint, a subsidiary company of SoftBank, and T-Mobile US called the merger talks off, and rebuilding the communication business within the United States remains to be a big challenge.
Furthermore, as of September 2017, SoftBank’s interest-bearing debts (i.e. the sum of current liabilities and noncurrent liabilities) is up to 15.6 trillion yen ($137.7-billion USD), a 1.3-trillion-yen ($11.4-billion USD) or 9.3% increase from last year.
SoftBank is likely to accelerate the M&A; however, it was unable to invest in Didi, China’s top taxi dispatching company. This was caused by the fact that Saudi Arabia’s PIF—contributing 45-billion dollars to SoftBank Vision Fund—is directly investing in Uber, a rival company of Didi.
There is no doubt that reducing the interest-bearing debts, as well as improving the finance are all urgent issues; furthermore, as SoftBank furthers the progress in M&A, there will surely be more cases of conflicts of interest in the field.