Published in Svenska Dagbladet, 2024-12-25. Translated from Swedish.
He has been right on companies like Alibaba, Uber — and Klarna. Masayoshi Son is the legendary investor who plays for extremely high stakes, and sometimes loses everything. But who always comes back to find the next success.
It is an investor’s dream. Identify a company early, have the right thesis — and be richly rewarded. If the company in question is chipmaker Nvidia and the return over the past five years has been around 2,400 percent, it is about as good as it gets. One investor found Nvidia long before anyone else: Masayoshi Son, founder of the Japanese conglomerate SoftBank. As early as 2016 he invested $2.8 billion in the company on the thesis that it would become a winner from the development of AI. Masa got it right. But he sold too early. SoftBank exited in 2019 — and missed the 2,400 percent. For most any other investor this could have been devastating. Masa shrugged. If you have had a hand in some of the biggest successes in the history of the internet, you can perhaps forgive yourself for a billion-dollar miss here and there.
In the new book Gambling Man by Lionel Barber there is a lengthy list of well-known internet companies — and how Masa has been involved in them in various ways. He does deals with Bill Gates at age 25, collaborates with networking giant Cisco and Yahoo in Japan — and in the middle of it all loses 99 percent of his assets in a crash. But he comes back again. How does he do it?
There are a few episodes in Masa’s life that perhaps best illustrate what is so distinctive about the Japanese investor. One of them unfolds in a grand building in central Beijing in 1999 — a local version of Dragon’s Den taking place in an office, without cameras. Chinese entrepreneurs pitch their ideas hoping to hook an investor. A short man who works as a teacher and tourist guide pitches his new company. What if you took the “Yellow Pages” of the day and put them on the internet? Today the concept is obvious and well-established. Then it was an innovation. The service was only a few months old and was already attracting thousands of new users every day. Masa had a good feeling about the teacher turned entrepreneur. He saw him as an underdog — someone he recognised something of himself in. He offered on the spot to invest $40 million for 49 percent of the company. That may sound extraordinary — until you add that the company was called Alibaba and the entrepreneur was Jack Ma. Alibaba would go on to become one of the largest and most influential companies in China and the world. Ma turned down Masa’s millions: “Alibaba is just a baby, and a baby doesn’t need this much money,” he said. Perhaps he could consider half as much. Masa’s colleagues at SoftBank were unimpressed and advised against the deal. Jack Ma was neither a skilled engineer nor a product developer — just an apparently ordinary Chinese man with an idea. That was enough for Masa. He overruled his colleagues and negotiated a deal in which he and SoftBank got 30 percent of Alibaba for $20 million, valuing the company at $60 million. Fifteen years later Alibaba listed in New York at around $230 billion. By May 2023 SoftBank had sold almost its entire stake — at a profit of around $72 billion. Masa had been right.
In 2005 Masa visited Steve Jobs in California. He had brought a sketch showing how the iPod music player could get a large screen and work as a phone — in essence using Apple’s operating system. It was a sketch for something like an iPhone. Jobs was not interested in the sketch: “I have my own,” he said laconically, revealing no more. But Masa persisted. He secured a follow-up meeting at which he reportedly extracted a promise from Jobs of exclusive rights to the coming phone in Japan. Japan was a pioneer in smartphones, already having a system called i-mode that enabled smartphone-like functions before the concept had been established elsewhere. As a tech-focused Japanese company, SoftBank followed the developments closely. They wanted into the market — but Masa needed “a weapon.” He believed Steve Jobs’ future product could be exactly that. In 2006 SoftBank bought Vodafone Japan for around $17 billion. A few months after the deal closed the company was renamed SoftBank Mobile. Three years after the first meeting with Masa, Jobs released the iPhone in Japan. By that point Masa had made an investment equivalent to 187 billion kronor in today’s money to become the mobile operator that brought the iPhone to Japan — without having seen so much as a prototype from Apple, or having any formal agreement with Steve Jobs. The gamble paid off. From 2008 to 2011 SoftBank had exclusive rights to sell the iPhone in Japan and grew its market share significantly during that period.
But the deals do not always go Masa’s way. The appetite for risk and the fondness for big visions have also led him badly astray — rarely more so than when he tried to revolutionise the office industry. Masa was late to a meeting with a tall Israeli entrepreneur in 2016. There was no time to visit the company’s headquarters, so the entrepreneur got into the back seat of Masa’s car while he drove to his next meeting in New York. The visitor was Adam Neumann, who had a grandiose vision for the future of office work. The concept was called WeWork. They drove 38 blocks north before Masa arrived — and in that time he sketched out a deal on an iPad. Neumann stepped out of the car with a promise of $4.4 billion in investment. The valuation placed on WeWork — then a small but promising concept — was the same as the entire Hilton hotel chain. The following year the two men met again in Japan. Over dinner Masa told an anecdote about a fight between a smart person and a crazy person — the crazy one always wins. Neumann agreed. But, said Masa, “you’re not crazy enough.” The episode is revealing about Masa’s need to push limits. A SoftBank colleague says in the book that encouraging Neumann to be crazier was like “giving alcohol to a monkey.” The result was catastrophic. Together they built to a plan to take WeWork to a valuation of 10,000 billion kronor — roughly a third of the entire US stock market. It did not happen. Conflicts between the two led to Masa ultimately buying Neumann out of WeWork entirely for the tidy sum of $1.7 billion — and shortly afterwards the company began to collapse. In November 2023 WeWork filed for bankruptcy protection in the United States after its share price crashed. Masa’s total investment of around $16 billion had gone up in smoke.
Masayoshi Son is now 67 years old but shows no clear signs of slowing down. Quite the opposite — he has found his next thing: AI. He has just announced plans to invest $100 billion in the United States in this area within the next four years alone. At the end of November the Financial Times also reported that SoftBank intended to buy shares in OpenAI for $1.5 billion — not an investment in the company itself, but purchases of shares from employees. History appears to be repeating itself. Masa goes in early, big — and at high valuations. When asked whether he sees any problem in his strategy of extreme risk-taking, which among other things led him to sell Nvidia too early, he simply says: “Timing-wise, we may have been a little too early.” There appears to be no self-criticism of the method itself. Everything points instead to SoftBank and Masayoshi Son heading into another round — as funder and chief risk-taker for the world’s most important technology companies.
