Masayoshi Son: High-tech gambler

24:11And it was at this point that Japan had just deregulated the telecoms, the telecommunications market, by the mid-1980s. Similar thing was happening elsewhere in the UK, for example. and it meant there were now lots of different telephone companies vying for consumers' businesses. So Masa came up with an idea for a computer device capable of finding the best rate for users. If you like, this is a sort of proto version of price comparison websites that we see to this day. Yeah, but Masa was one of the first ones to think about it. So he filed a patent and he went out and got an engineer he knew to help build it.

24:44This engineer was actually a fellow liver patient he'd met at hospital who sadly died of his disease just a year later. and the product that he created called the NCC Box was a huge success. And the royalties from that actually helped to clear SoftBank's depths. Meanwhile, Massa carries on. In the late 1980s, he was back as chief executive of SoftBank, thinking of selling shares in the company. But if he was going to do that, he wanted SoftBank to be something much bigger than just a software seller. He wanted to expand into other areas of computing. So he decides to create this growth by investing some of SoftBank's profits into other tech ventures And Masa has spotted a US company called Novell.

25:24They've developed Netware, which is a computer operating system that was becoming hugely popular. Novell doesn't exist anymore. But at one point, they were the second largest maker of software for PCs in the world. They are Microsoft's biggest competitors, big player in computing. So Masa flew to Utah to meet the chief exec, Ray Norder. And he was in his 70s and wasn't particularly impressed by this young, enthusiastic Japanese guy who wanted to invest in his company. Yeah, probably one of the few people who wasn't entranced by Massa. But, you know, money talks. And Ray was impressed by how quickly Massa raised funds.

26:00So in 1990, SoftBank signed a joint venture to adapt and distribute Novell's netware in Japan. And this was a game changer. It really changed the course of SoftBank's future. The company went from being just a sort of software distributor, a reseller, if you like, to becoming a partner and networking business. And a SoftBank executive said, once we had this new technology, customers treated us differently. The Novell deal suddenly changed the way we were seen by foreign and Japanese companies. You're not just a trader, you're a principal. You've got something. Yeah. So in fact, up until this point, the company had been called SoftBank Japan.

26:34But in 1990, it officially changed its name to just SoftBank to reflect this new global outlook. And SoftBank's revenues were getting worldwide too. They grew to 350 million in 1991. That's roughly 50 % coming from American software distribution deals and partnerships. Even Novell's bitter rivals Microsoft started to want to do business with SoftBank. Massa famously met with Bill Gates in Japan in 1992 and convinced him that SoftBank should distribute Japanese versions of Microsoft Word and Excel. Other big US tech firms like IBM soon did deals with SoftBank as well. So SoftBank was riding high with the sales of software on the then cutting edge new technology called CD-ROMs, which you may be too young to remember, but essentially they were just CD-discs, computer discs.

27:221994 was the point where Massa was ready to start selling shares in this incredibly successful company. Now he does something a bit different than some of our other billionaires. We've talked often about the IPO, the initial public offering, which is where you basically sell shares to the general public. What they did was they sold shares on what's called the OTC market, that's over the counter. These are sales of shares that aren't facilitated by a stock exchange. Literally, you go into a shop and say, can you sell me this? And the prices don't have to be publicly disclosed. So they're basically trade directly between two parties rather than on a visible exchange.

28:01And is that part of the reason why this might have been attractive to Masa, the fact that it's not as visible as going public? I'm struggling to understand why he would do this because there's something about the IPO which gives you publicity and legitimacy in the eyes of the investing public. You think about Martha Stewart going public with her company in that big PR blitz. Yeah, you ring the bell. It's a market stall on the World Exchange. And OTC things, it says over the counter. Some people feel it's like a little bit under the counter, if you know what I mean, because it's not quite got the same razzmatazz.

28:37I don't know. I find it kind of odd. Well, Masa ended up keeping a 70 % stake in SoftBank. So he still retained complete control of the company. So the valuation of the shares he'd sold meant the stake he retained was worth$2.4 billion. So we can safely say at this point in 1994 that Masayoshi Son is comfortably a billionaire.

29:04Having become a billionaire, he sets out on a spending spree and he makes some very big bets funded by bank loans in part. SoftBank pays$800 million for the Condex Group, which runs computer trade shows. He loves these trade shows, as we remember. He even made friends with a man called Steve Jobs at one in the 1985 show. he'll reappear in this story. He also spends$1.2 billion for an 80 % stake in the leading memory boardmaker Kingston and a whopping$3 billion for the Ziff Davis Group who run computer magazines and yet more trade shows. These high prices were raising eyebrows but Masa explained to the New York Times in 1995 that his plan was to make himself a key player in the infrastructure of the personal computer business not only in Japan but in America and by now Massa has a US arm, SoftBank Holdings, to invest in American companies.

30:00And he said, a year ago, we had five employees in America. Now we have 700. By the end of the year, we'll have 1 ,200. The New York Times calls him the Bill Gates of Japan, a phrase he is all too happy to repeat. Why wouldn't you be? And to fund some of these investments, he changes slightly his approach to financing. Now in the old days, he'd go for a bank, for a loan, but he starts issuing corporate bonds. So these are bonds you sell to anyone who'll buy them, but it's not a bank. And this led to a cheaper form of financing for him. Yeah, and understandably, the banks aren't really happy about this, right?

30:32So they see this as a real threat. They lobby the government. But because Masa is able to do this, thanks to a new law in Japan, the Ministry of Finance actually ends up siding with SoftBank. And suddenly SoftBank's fee structure could be reduced by up to 90 % because they're cutting out the middleman. Masa was able to start clearing those debts much more quickly. So he's basically in the vanguard of a movement which really changed the economic fortunes of Japan at that time. It was a big shift, but it put Masa in a prime position to invest in American companies because he could access public debt rather than private bank debt.

31:07He had cheap borrowing from the domestic bond market. And at that time in the 90s, the yen was still strong against the dollar. I remember being in Palm Springs, California, when every single hotel you went by say, owned by Japan, owned by Japan, golf course, owned by Japan. And it was huge at that time. A really massive seismic change in Japan's fortunes, right? Yeah. It meant Masa could now invest in US companies far more easily than even his US peers could. And this is where the legend of Masayoshi Son, for my money, begins. because that's when he starts making huge bets on startup companies, usually internet companies.

31:44He spotted that as the next big thing. And in some cases, these huge investments become spectacular. Yeah, first up is Yahoo. So in 1996, Masa wants to buy the whole company. He is, however, a little bit late. So this is a startup that's already making waves. It's got some big investors. But Masa being Masa, he still wants in. And of course, this being Masayoshi Son, he already knows one of the founders, a guy called Jerry Yang. So they're at a party sharing cold pizza. And Masa offers a cool$105 million for a 33 % stake in Yahoo. Yang actually takes the money. And he said most of us thought he was crazy and that putting$100 million in a startup in March 1996 was very aggressive.

32:29And, you know, it was. It's a lot of money. Yeah, but he went even further than that. He put another$250 million taking his total bet. to$355 million. As the price rose, SoftBank soon got back$450 million just by selling off some of those Yahoo shares. By 1999, they still had a 28 % stake and that alone was worth$8.4 billion. Now, Jerry Yang says that he doesn't think it was just luck on Masa's part. He actually believes that Masa looks ahead in 15 to 20 year chunks. Masa, because of investments like Yahoo, He gets a reputation as this kind of visionary. He becomes this hugely influential figure in Silicon Valley and he keeps making these big bets and starts a trend that other people will follow.

33:17He isn't the typical kind of venture capitalist who invests and shakes up the company. One man he's invested in has said Masa would place bets others shrink from and get out of the way to let the managers do the managing. So he's not a medley. Well, remember, he didn't actually know how to do any of the electronics. He just was an entrepreneurial genius, said one of his early collaborators. Exactly. So he has a habit of just getting out of people's way. And the same man said, Masa is a master of the internet universe. He has a clear vision of how technology is going to connect everyone globally in the next 50 years.

33:49And he doesn't let daily, weekly or monthly fluctuations get in the way. He holds his nerve. So that man, by the way, saw Masa's$400 million investment in his company grow to$2.4 billion. dollars. So Massa sometimes does get it right. He had a bunch of smaller bets too. In 1999, Forbes magazine was reporting that SoftBank had invested 1.7 billion in more than 100 different internet companies. This, of course, was the peak of the internet boom. There was a massive sense of FOMO, fear of missing out. So you wanted to basically have a few bucks on every horse that was in the race. He was riding high.

34:26For three days in February 2000, he became the world's richest man, knocking Bill Gates off the top spot with his personal net worth estimated at$70 billion. But if you're looking at the timeline now and you're thinking 1999, 2000, you'll probably know what is happening next because after the dot-com boom comes the dot-com crash. So in 2000, markets around the world began a severe correction. The Nasdaq fell by more than 75 % between March 2000 and October 2002. It wiped out over$5 trillion in market value and SoftBank's share price plummeted. Masa actually ends up losing 96 % of his wealth, according to Lionel Barber's biography.

35:10Ouch, 96 % of your whole wealth. So that's pretty much the whole$70 billion gone. It's the largest personal loss in history at that time. He's still a billionaire, but this loss is enormous. And he decides then to refocus from software into digital telecommunications. But he takes some pretty desperate measures. Yeah, so there's this story, right, told by Masa to the Wall Street Journal and confirmed by the man in question of Masa storming into the Tokyo office of an official in Japan's telecommunications ministry. He's holding a cheap cigarette lighter and shouting, this is the end. If you don't help me, I'm going to pour gasoline all over myself right here and set myself on fire with his$1 lighter.

35:53And amazingly, he actually got the help he wanted, which was to successfully launch a broadband service. I mean, pretty high stakes. Again, he gets what he wants. And we've seen this time and time again with our billionaires against the odds. On his uppers, lost 96 % of his wealth. He then comes back and pulls a stunt like that and manages to get them to agree. But it was actually a deal he'd already done that, in fact, brought Massa back from the brink. Because back in 1999, as SoftBank was peaking, they'd arranged a speed dating event for Chinese entrepreneurs. And that was where Masa had met one of our other billionaires, a guy called Jack Ma.

36:30So Jack Ma's full story is in our episode. But in brief, Ma pitched his company called Alibaba, which he described as an electronic yellow pages matching buyers and sellers. So Masa offered him$40 million. Ma at first turned him down. He said he didn't need that much. But after a few months' pursuit, MA eventually accepted$20 million for 30 % of the company. And that investment single-handedly saved Masayoshi Son after that dot-com crash. Alibaba became profitable at the end of 2002. When it went public five years later in 2007, Masa's stake was worth a cool$10 billion. And at its peak, Masa's$20 million investment would be worth$72 billion.

37:15That's got to be one of the greatest investments of all time. That is the comeback of a century. I mean, it must have made him think he was absolutely invincible. Yeah. And a lot of these people do have that kind of unshakable self-belief. They are right. Right. And the rest of the world will realise that they're right at some point. I mean, maybe this is where the comparison to Jesus comes in, right? I mean, it's quite the resurrection. Yeah. So Massa's the richest person in the world at one point. Then he loses almost everything. I mean, still remains a billionaire. but he never stops making these big bets.

37:46So one of the things he did was to convince his old friend Steve Jobs to let him distribute the iPhone in Japan. And that, of course, was huge. Massa claims he tried to show Jobs a sketch of an iPod connected to the internet, something very like the iPhone, at a mil three years before the iPhone launched. Jobs, so we understand, threw it back in his face but later offered him the chance to distribute the iPhone when it launched in 2008 because Masa had asked first. But you know, distributing the iPhone is huge, right? The world's most successful consumer electronics product of all time. And I think Masa knew this because he spent a lot of money on making sure it was a success.

38:25He spent$17 billion on Vodafone Japan to enable him to provide a phone network for the iPhone. And the iPhone established SoftBank Mobile as the number one operator in Japan. It actually paved the way for them to acquire a controlling stake in a US mobile operator called Sprint in 2013. Sprint is, of course, massive. That then merged with T-Mobile to become one of the three leading mobile companies in the US. SoftBank still holds a 24 % stake in it. So when you think about it, he's a huge guy in US telecoms as well. Absolutely massive in US telecoms. Massa also set up something he called his Vision Fund.

39:02So this was an investment fund for the future that Massa wanted to be worth around$100 billion. Now, that is a lot of money. The average venture capital fund in Silicon Valley raises a maximum of$5 billion each round. So, you know, this is very ambitious, but, you know, very typical for Massa. So Massa needed some very rich investors indeed. So he went to one of the richest, Saudi Arabia's leader, controversial figure, Mohammed bin Salman, but has billions, billions, some would say trillions of petrodollars to invest. Bin Salman's aides weren't convinced that Massa was very reliable. The Saudi Minister of Commerce telling him, you went from hero to zero to hero.

39:42How do we know you won't go back to zero again? Massa replied, how many people come back after losing 96 % of their wealth? After an hour or two, the two men were taking photographs together. A meeting was set up with Bin Salman. So once again, he managed to talk his way through this. Now, that meeting is now one of Mas' favourite stories. He's told it first to Bloomberg. He's repeated it since. He met with MBS for just 45 minutes and left with a$45 billion investment in his Vision Fund. One of the most lucrative meetings of all time, maybe? 45 minutes. 45 minutes for 45 billion. I can barely do a gym workout in 45 minutes.

40:20Exactly. The Vision Fund was also backed by Apple, by the way. Investors in Abu Dhabi had a slice and it reached that 100 billion target of the fund in 2016. And it is still to this day the largest fund of its kind in history. And it also goes against the typical venture capitalist playbook. They usually put small amounts into startups at the beginning. And then as you grow, you get more money. But instead, Masa just puts big money into startups much later on. But here's the real thing. It hasn't been that much of a success. It put massive investments into companies that didn't necessarily need it.

40:57Some of them focused then on growth at any cost rather than developing their ideas. And, you know, some failures along the way. Yeah, some big failures of due diligence. So some companies were selling themselves to softbank as tech companies when they really weren't. So the most famous example of this is WeWork. Adam Neumann, another story that we've told on the podcast. Neumann famously showed this idea of WeWork being a tech company. Really, it was an office space company. He was a commercial landlord. It all blew up in Adam Neumann's face. But there were also other companies that weren't goers.

41:29There was WAG, an apt to find dog walkers. Is that to exist? I need that. Well, maybe you should approach the Vision Fund and say you're ready to put in a quid or two. Will you take my call? Well, there's also another app. Maybe you're interested in this. Zoom, a company that uses robots to make pizzas. I mean, robots to make a car, for sure. But I think I can tackle a pizza. Decisions like this cost the Vision Fund a lot of money. He came across with an investment in Wirecard. This is a payments giant. It collapsed in 2020. It was Germany's biggest post-war fraud scandal. There was another company called Greensill.

42:04This was a supply chain finance business that collapsed in 2020 amid a massive lobbying scandal. So as he approaches his 70s, I don't know, where do we think he is? There is talk that Masa is investing in AI. He's still looking to the future. Crucially, he's also still worth a lot of money. He's worth$29 billion. If at the end of the day, I make a few bets and I end up with$29 billion, I will consider that a good betting pedigree. Well, Simon, I think on that note, it is time to judge Masayoshi Son.

42:45So now we judge our billionaires by things like wealth, villainy, philanthropy, their power, their legacy. And we score them in these categories 0 to 10. and we start with wealth and there are two ways of looking at this one is absolute wealth and the other one is sort of you know how far they've come from where they started so he's 29 billion dollars puts him around 60th richest person was once the very richest for a few days he's also had some of the biggest losses ever but for my money this guy who grew up with pigs right literally growing up on land that his family squatted. It is quite the amazing journey, isn't it?

43:26For my money, he's a nine. I think he's a nine for sure. I mean, he has been the richest man in the world for a time. Okay, so wealth, nine each, villainy. He wasn't the best business partner to one of his first business partners? No, he didn't pay that early collaborator at Berkeley. He's also had a kind of gambling, high stakes approach to some of his investments. Some people criticised him for over-inflating prices leading to crashes. I do find what the new statesman said about him interesting. They basically said by pushing more cautious investors out of the market he's reshaped the tech investment landscape convincing both his backers and entrepreneurs that companies like Uber and WeWork can scale in the same way as businesses which manage software and data but only if they take enough of his money.

44:11So really he's kind of changed the game. Massa himself said he's actually a bit embarrassed by some of his past approaches. He said, when we were turning out big profits, I became somewhat delirious. And looking back at myself now, I'm quite embarrassed and remorseful. Interesting. Yeah, you don't get a lot of our billionaires expressing remorse for anything. Remorse is a new one. I don't think we've ever used the word remorse on this programme ever before, have we? No, we need a word cloud of all the words we use most. We've had confidence, arrogance. Remorse has not really come out that often, has it?

44:41Yeah, I rate him highly for saying that. I mean, villainy, it's hard, isn't it? Don't think he's ever been seen as a kind of villain. I'm going to give him a two on villain. I can't find too much to complain about him. If your first ever business dealing ends up with you stiffing your partner, I feel like maybe you just rank a little bit higher. So I'm going to give him a three out of ten. OK, two for me, three for you. Philanthropy. Now, what do we know about that? So he has a charitable foundation that, in its words, supports youth with high aspirations and exceptional talents. But it's actually not very clear how much money he gives to individuals or organisations.

45:15So really not a lot of information out there. Very skinny, the information on his philanthropy. You've got a feeling that if there was more of it, we'd hear more about it because he's not exactly a shrinking violet when it comes to most things. No, he is a talker. So I think I would score him quite low on this. I'm going to give him a one out of 10 for philanthropy. I think a one out of 10 works for me. I mean, he's got a foundation. We just need more information about it. OK. And then power and legacy. So this is, you know, what have they done to influence the world? Have they changed it? What we remember them for?

45:46What do you make of that one? Now, this is really interesting because Masa actually has connections with Trump. So he stood alongside Trump and pledged to invest 50 billion in American companies and create 50 ,000 jobs in 2016. So this goes quite a way back. In 2024, he pledged to invest 100 billion in the US over four years. So he's clearly a mover and shaker on the political landscape. He might have done that anyway. True, regardless of who was in the White House. Given his massive investment in US companies. But aside from politics, he has had a real influence on how technology and business interact.

46:21Perhaps the biggest legacy is just how many other billionaire stories that we've covered he appears in as an investor. His story is like a greatest hit of good, bad billionaire. He's so integral to the billionaire culture we talk about. He's in all the selfies. He's like the invisible hand guiding the fortunes of all these other billion dollar companies. He's not Bill Gates. He's not Bezos. But he's kind of in the crowd. Yeah, he's in the room when it happens. He's in the room. He's in the room. So I'm going to give him a seven of the power and legacy. I think it is interesting. He has really leapfrogged from his country of origin, his heritage, to becoming someone massive on the investment stage.

47:02On the global stage, yeah. Okay, I'm going to upgrade my seven to an eight. I think I'm going to agree with you. Eight out of ten. Okay, we agree. And then we've got to decide, good, bad, or just another billionaire? I think for my money, he's just another billionaire. Yeah. He makes billionaire moves. He makes risky investments that sometimes don't pay off. He changes the investment landscape. Some people say for the better because you need big money to be ambitious. Some people say for the worse because you should be cautious when it comes to spending loads of cash. It kind of works out evenly.

47:33I'm with you. I think he's just another billionaire. Sometimes that overweening confidence, that incredible belief can lead you to great riches. But I bet there's someone just like that who didn't make great riches. So I'm just going to call him just another billionaire because he didn't invent anything, right? No, he didn't. He just is very good at spending money. So Masayoshi-son, you are officially just another billionaire. So who do we have next episode? We have the king of the court himself, a man who at six foot nine is a literal giant of the sport. Yeah, broken just about every record and was the heir apparent for a whole generation who are looking for someone to succeed and fill the shoes, the very, very lucrative shoes of Michael Jordan, the heir to heir Jordan, LeBron James.

48:19That's on the next episode of Good Bad Billionaire. Good Bad Billionaire is a BBC World Service podcast. It's produced by Mark Ward with additional production by Tamsin Curry. Paul Smith is the editor and it's a BBC Studios audio production. For the BBC World Service, the senior podcast producer is Kat Collins and the commissioning editor is John Manel. And if you enjoyed it, do tell a friend.

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49:18Thank you.