Masayoshi Son, the founder and chief executive officer of SoftBank Group Corp., the Japanese telecom and investment giant, has long attracted attention due to his enigmatic personality and bold investments, supposedly based on his “300-year plan” for the company and the future of humanity.
Recent difficulties surrounding some of SoftBank’s failed “Vision Fund” investments and the dramatic uncertainty caused by the coronavirus pandemic, however, may make the next few months, not 300 years, a priority if Son’s vision is to be reached.
Beginnings
Born in 1957 to Korean immigrants to Japan, Son’s rise to billionaire status reads like a manual on prescient investments. Having studied in the United States at UC Berkeley, Son sold his first company at just 21 years old, a multilingual translator bought by Sharp Corporation for US$1.7 million.
Son’s breakthrough, however, and the wealth he has accumulated to date, came with the founding of SoftBank. SoftBank, originally a telecommunications company, now earns its wealth as a global investment specialist. A savvy US$20 million investment in Alibaba in 2000 earned Son more than US$100 billion in return and the 30 percent stake in Alibaba that SoftBank retains to this day is more valuable than Son’s entire company.
In recent times, Son has charted an even bolder course with investing his billions. In 2017, Son launched the “Vision Fund,” an investment vehicle that specializes in emerging technologies. Son secured around US$100 billion from a variety of backers, including US$45 billion from Saudi Arabia’s Public Investment Fund.
Son’s “Vision Fund” is closely tied to his reported “300-year plan” for the future of SoftBank and the future of humanity more generally. One presentation of the “plan,” held by Son in 2010, charted a future of enhanced AI and cloning technologies, the drive toward transhumanism and a dramatic increase in life expectancy.
The Vision Fund has also sought to tear up existing ideas of how investments should be made.
According to Bloomberg, “the standard VC playbook involves making small, speculative investments in early-stage startups” and following on with more as they grow and show signs of making a return.
Son’s investment strategy is bolder and, some might say, much more risky. Huge sums of money, no less than hundreds of millions of dollars, are poured into startups that are seen to be on the edge of breaking out, with the hope that they will be propelled forward and become industry leaders.
This investment strategy has led some to declare Son “the most powerful person in Silicon Valley” for his ability to commit to transformative industry change, with the money and bold vision to back this up.
Vision interrupted?
Son’s vision of the future trajectory of humanity and its technology, however, has not translated into much success as of late.
Last year, SoftBank’s Vision Fund was wracked by a fiasco surrounding the office-space business WeWork. When WeWork’s Initial Public Offering (IPO) failed dramatically last fall, SoftBank’s Vision Fund is believed to have lost some US$4.7 billion following the collapse.
The Vision Fund’s other investments have not fared particularly well, either. A report by Business Insider has suggested that over 8,000 people have been laid off by companies backed by Son’s SoftBank since January, among them Uber, Zume, Oyo and, of course, WeWork. Son himself stated in an interview this April that he expects 15 Vision Fund-invested companies “will go bankrupt.”
The difficulties surrounding Vision Fund’s current investments have also cast skepticism on its successor, the second round of the Vision Fund. Although plans were drawn up in July 2019 to create a US$108 billion “Vision Fund 2,” this time focused on AI technologies, investors remain cautious.
As yet, Vision Fund 2 is running with only the US$38 billion pledged from Son’s own SoftBank and previous crucial investors, like Saudi Arabia, are nowhere to be seen.
Son, though embattled, is still defiant.
In an interview with Forbes in April, Son admitted that “tactically, I’ve made regret … but strategically, I am unchanged. Vision-wise? Unchanged.” Likewise, in a call with investors in May, Son likened himself to Jesus Christ, claiming he was equally as “misunderstood” as the messianic figure was in his time.
With the coronavirus pandemic, however, Son may face the greatest test of his faith yet.
A way forward?
In May, Son admitted that his WeWork investments were “foolish” and stated that due to the uncertainty created by the coronavirus, “we cannot promise that there will not be additional valuation loss.”
This uncertainty is what Son has on occasion termed the “Valley of Coronavirus.” Some companies will collapse into this valley as a result of the pandemic and the subsequent contraction of the global economy, but others, Son believes, will fly out into success like “unicorns.”
In the midst of the pandemic, Son’s Vision Fund has struck a more cautious approach, determined not to collapse into this “valley.” Son is reportedly scaling back on risky investments given the present economic uncertainty and in June SoftBank sold most of its stake in telecoms group T-Mobile in a reported US$21 billion deal.
Despite the pandemic, Son appears to be cautiously optimistic for the future. Regarding COVID-19, Son stated that the “shock” of the pandemic “will accelerate the paradigm shift toward a new era” and that he and SoftBank “look forward to navigating the challenges.”
Always looking toward the future, the coronavirus pandemic provides an unprecedented challenge that neither Son nor others could have foreseen some months prior.
With his personal fortune already hovering around US$20 billion (an increase from around US$8 billion in March), SoftBank and the Vision Fund’s future may not be as precarious as the fiasco surrounding its investments last year may suggest.
According to Tom Nicholas, professor at Harvard Business School, given the size of Son’s Vision Fund investments, “the fund might need only a few bets that pay off big to make up for losses elsewhere.”
But with a projected US$17 billion annual operating loss this year alone and no sign of further big money investors lining up, Son’s Vision Fund needs to return on its bets soon before it goes bust.
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