Masayoshi Son: The Vision Fund and why spending money is harder than making it.

By Abi Tyas Tunggal 4 March 2018 13 min read

Masayoshi Son, or Masa Son as he is often called, is the CEO and founder of Softbank. The Japanese billionaire believes robots will inexorably change the workforce and machines will become more intelligent than people - an event referred to as the Singularity. So of course, Masa Son is on a mission to own pieces of every company that may bring this shift forward through artificial intelligence, transportation, food, work, medicine and finance.

To do this, Masa Son raised a $100 billion dollar fund he calls The Vision Fund, and while he may seem a bit eccentric, don’t let his smile and laugh fool you. Masa has a plan.

Every company he invests in has something in common: They are collecting vast amounts of data, data that is crucial for the machine learning algorithms for the machines that, in the future, will do more of our jobs.

Despite Softbank’s stock dropping 99% during the dotcom bubble, Softbank has stayed alive, and Masa has stayed true to his course. The company began in 1981 as a PC software distributor, today it’s more like Warren Buffett’s Berkshire Hathaway, except for technology.

This is my favourite interview with Masa. Oh and don’t worry about taking notes. Below the video is the transcript of interview. Enjoy.

The David Rubenstein Show: Masayoshi Son

Transcript

DAVID RUBENSTEIN: You are clearly one of the world's most successful technology investors, and one of the world's most successful businessmen. Let me start by asking you about a fund that you are now raising, the Vision Fund, it's supposed to be a fund of $100 billion?

MASAYOSHI SON: Yes.

DAVID RUBENSTEIN: Now, that would be the biggest fund ever raised. So when you told people you were going to raise a $100 billion fund, did they tell you were a little crazy?

MASAYOSHI SON: Well, some people said.

DAVID RUBENSTEIN: You had a meeting with a man who was the deputy Crown Prince of Saudi Arabia, who is now the Crown Prince of Saudi Arabia. And as I understand the story, you went in and in one hour, you convinced him to invest $45 billion.

MASAYOSHI SON: No, no. It's not true.

DAVID RUBENSTEIN: Okay.

MASAYOSHI SON: 45 minutes, $45 billion.

DAVID RUBENSTEIN: Okay, sorry. I apologise. In other words, if you had...

MASAYOSHI SON: One billion dollars per minute.

DAVID RUBENSTEIN: What could you have said that was that persuasive to get $45 billion in one meeting?

MASAYOSHI SON: Well, actually I said, "you came to Tokyo as a first time, I want to give you a gift. I want to give you a Masa gift. Tokyo gift. A trillion dollar gift. And he open up his eyes and said, "Okay, now it's interesting".

DAVID RUBENSTEIN: Alright.

MASAYOSHI SON: So I woke up him and said here is how I can give you a trillion dollar gift. You invest a $100 billion to my fund. I give you a trillion dollars.

DAVID RUBENSTEIN: But what is it that you told people, what was the vision that you actually gave them?

MASAYOSHI SON: So one vision, which is singularity. Singularity is the concept that the computing power, computer's artificial intelligence, surpass the mankind's brains.

DAVID RUBENSTEIN: So singularity is the concept. The word means that is the point at which a computer becomes smarter than a human brain.

MASAYOSHI SON: Yes. Today already, computer is smarter than mankind for chess or go, or weather forecast. For some expert systems, computer is already smarter. But in 30 years, [in] most of the subjects that we are thinking, they will be smarter than us. That's my belief.

DAVID RUBENSTEIN: Let's go back and talk about your upbringing a bit. So you are of Korean descent. Your grandfather came from Korea and moved to Japan many years ago. And your parents were born in Japan. Did you suffer discrimination growing up in Japan?

MASAYOSHI SON: Yes. I had some experience[s], but I feel now, it was good. That made me stronger to work harder so I had to prove that I am not different to any other guys. Not inferior, the same. I had to work harder to prove the value.

DAVID RUBENSTEIN: Your family adopted a Japanese name at one point.

MASAYOSHI SON: Well actually in Japan, there was some period where the Japanese government forced every Korean to change their name to a Japanese name. So it was not their intention. We had to.

DAVID RUBENSTEIN: You had to change.

MASAYOSHI SON: Had to change. That made me [work] even more harder because I was feeling that I was hiding something. It was even tougher.

DAVID RUBENSTEIN: Now, you did not grow up in Tokyo. You grew up in a relatively small town, in Japan. Is that right?

MASAYOSHI SON: Yeah in the south.

DAVID RUBENSTEIN: In the southern part of Japan. So at one point it is said you were very interested in meeting the head of McDonalds.

MASAYOSHI SON: McDonalds Japan.

DAVID RUBENSTEIN: Why were you interested in meeting the head of McDonalds, did you like McDonalds food? What was it?

MASAYOSHI SON: Well, he wrote a book. And that book became a bestseller. I was so impressed and said oh my God! This is great. And the guy who wrote about it must be great.

DAVID RUBENSTEIN: So how old were you when you wanted to meet him?

MASAYOSHI SON: Ah, 16.

DAVID RUBENSTEIN: 16. So you managed to get a meeting with him?

MASAYOSHI SON: I called his assistant, and long distance call, and back then it was so expensive. I had almost 100 calls. 60 calls. And said, this is my name, I'm a student, could you ask him to spend some time with me? Could you ask him? And she was like oh I will try but he is not going to meet with a student. I said well don't decide by yourself, let him decide. So I spoke with the assistant, different assistant so many times. And they don't give me the right answer. So I say, okay this is a waste of my telephone bill. So I flew into Tokyo and I said I came because the phone call becoming more expensive than air ticket.

DAVID RUBENSTEIN: So what happened?

MASAYOSHI SON: And I said, tell him exactly the way I said [it]. You don't have to look at me, you don't have to talk to me, you can keep on working, whatever you are doing. I just want to see his face. For three minutes, so I'm not bothering him. I [am] just so impressed and respect him, I want to see him. And if you tell him that I'm not going to bother him, time is money he says. I'm not going to damage his life. She actually asked and he said, okay. Actually he spend 15 minutes with me, talking face-to-face.

DAVID RUBENSTEIN: And he gave you some advice, which was to learn?

MASAYOSHI SON: Yeah, I asked him what business should I do? Hmm. Computer. That's the one. If I were you, at your age, at this time. Don't look at the past industry. Look at the future industry. That's the one, the computer industry that's the one you should focus on. If I were you, that's the one. I said, wow great.

DAVID RUBENSTEIN: Okay. So he gave you that advice. You're number one in your class and then you go to University of California, Berkeley. But when you were there, I understand that you weren't being a student so much. You were doing business on the side.

MASAYOSHI SON: Well, I was a good student. But I said, you know five minutes, I would allow other than study. I have to make money, I want to earn $10,000 per month, and I will allow me, myself five minutes a day. So, I ask my friends, isn't there a job job that I can earn $10,000 in five minutes a day? My friend said you are crazy, that's impossible. Do you want to sell drugs? No, no I don't want to do that. So I said, okay what is the best most efficient use of my time? It's invention and I have to file a patent. If I get the patent, five minutes, if I focus I can make some ideas. So I set the alarm clock for five minutes. Tick tick tick. In five minutes, I said come invention. So I did that.

DAVID RUBENSTEIN: And if worked?

MASAYOSHI SON: It worked.

DAVID RUBENSTEIN: You invented a machine that helped people translate languages?

MASAYOSHI SON: Yeah, that one was the electronic dictionary. The first electronic dictionary. Many students use electronic dictionary. The first one ever made was by myself.

DAVID RUBENSTEIN: The first electronic dictionary?

MASAYOSHI SON: Yes.

DAVID RUBENSTEIN: And you sold it to Sharp?

MASAYOSHI SON: Yes to Sharp.

DAVID RUBENSTEIN: And you made a lot of money.

MASAYOSHI SON: Yeah, $1.7 million.

DAVID RUBENSTEIN: So what did you do with $1.7 million then?

MASAYOSHI SON: Well, I used it to start Softbank. I did one more project and made another $1.5 million, so I made $3.2 million in 18 months, so that is better than $10,000 per month. I told that to my friend look I got $3.2 million and I kept working only five minutes a day as I promised you.

DAVID RUBENSTEIN: But then after you graduated you made these successful inventions, you moved back to Japan. Is that right? Why did you move back to Japan? Not that it's not a great place to move back to. But you're in Silicon Valley area, why not stay there?

MASAYOSHI SON: I created a company and my employees asked me to stay. But I said no, I promise to my mother when I decided to come study in the States. She was crying in the airport and I said no don't cry mum, after I graduate from the school. I come back. I promise. She said no you don't come back. This is forever. Farewell. No I promise you, don't worry. I promise you, so I kept my word.

DAVID RUBENSTEIN: Recently, you did the biggest investment you've ever made in a company called ARM.

MASAYOSHI SON: They have 99% market share for any smartphone that you have in your pocket. I think the company is going to be more valuable than Google.

DAVID RUBENSTEIN: Alright, so you move back to Japan and then you start a company called Softbank. What was SoftBank's purpose? What kind of business were you in?

MASAYOSHI SON: So that was the beginning of the time of the personal computer. There was hardware but not enough software. So I aggregate all kinds of software from the small software houses. And I wholesale to the PC stores, so it's like a bank. It's a software bank. It's not the money bank, it's a software wholesale, storing in my warehouse. So it's like a concept.

DAVID RUBENSTEIN: So, it was very successful. SoftBank is going up and then you decide at some point, to start investing. One of the investments you made is considered to be the most successful investment of the history of mankind. You invested roughly $20 million in Alibaba, and at the time it went public it was worth roughly $90 billion. So $20 million to $90 billion, is a return of about 4,500%. Now, Jack Ma is a very distinguished individual now, now one of successful entrepreneurs in the world. What is it that made you feel this was worth putting in $20 million?

MASAYOSHI SON: Well, he had no business plan. And zero revenue. Employees, maybe 35-40 employees. But his eyes were very strong. Strong eyes, strong shining eyes. Um, I could tell from the way he talk. The way he look at me. He has charisma, he has leadership. So, his business model was wrong. It's the way he talked, the way he can bring young Chinese people to follow him.

DAVID RUBENSTEIN: Before Yahoo was so famous, you made an early investment in it. Which was spectacularly successful, how did you hear of Yahoo?

MASAYOSHI SON: Yahoo US was still private, 15 employees and I convinced Jerry Yang to take $100 million of our investment. So at the time we negotiate, we agreed that grew from 15 to 35 people. And we invest $100 million to own 35%, and when it IPOed it made a great return. And at the same time, I convinced him to start a joint venture, Yahoo Japan. Where we put $1.2 million and they put $0.8 million, $2 million startup capital. We own 60%.

DAVID RUBENSTEIN: Now let's talk about one big mistake you made overall. Obviously you're very successful in almost everything you've touched, but you were making a lot of internet investments around the turn of the century. Around year 2000, 1999, 2001. The market went down in the tech crash and it is said, that you personally lost $70 billion of net worth. The greatest lost that human being has ever suffered financially. So how did you feel losing $70 billion of net worth?

MASAYOSHI SON: One year before that, actually my net worth, my personal net worth was increasing $10 billion per week. For three days, I became richer than Bill Gates.

DAVID RUBENSTEIN: Wow. Did that upset him? Or?

MASAYOSHI SON: No before I talked to anybody else. Our stock start crashing. Haha. So in six months after that, our share price went down 99%. So we almost went bankrupt and somehow I survived.

DAVID RUBENSTEIN: You rebuilt your business. And among the things you did, was you bought some well known companies. So you bought Vodafone's mobile telephone business in Japan.

MASAYOSHI SON: At that time I said, now is the time to go next stage which is the internet will become mobile internet. So I had to either get the license from the government for the spectrum or acquire Vodafone Japan. And first I applied for the license to the government, and the government said no, there is no more spectrum. So I actually sued the government. And for one year, it was a big fight. But then Vodafone Japan became available. $20 billion, I had $2 billion. So $18 billion short.

DAVID RUBENSTEIN: So where'd you get the money?

MASAYOSHI SON: So I convinced the bank that Vodafone Japan I'm going to turn around and it will become successful and become great cash flow. Believe me and lend me money.

DAVID RUBENSTEIN: And they did?

MASAYOSHI SON: They did.

DAVID RUBENSTEIN: And it turned out to be very successful. Recently, you did the biggest investment you've ever made in a company called ARM, which is a semiconductor manufacturing based in London. Why did you spend $31 billion buying a semiconductor manufacturer, when many people think that's not the future?

MASAYOSHI SON: It's actually $34 billion. It's not a manufacturer, it's a design house. They design all the chipset. They have 99% market share for any smartphone that you have in your pocket. ARM has 99% market share. In the next 20 years, they're going to ship one trillion chips. Design one trillion chips. So, I said this is the company. Nobody can live on the Earth anymore without chips. Chips are everywhere, in the car, in your refrigerator, everywhere. So, if chips are something everybody needs, and if there is one company that has 90% market share, there must be a value. They're monetising well enough, but if I own it, we can monetise much better. So that's my belief. So I think the company is going to be more valuable than Google. It's not available, it's a private company now.

DAVID RUBENSTEIN: Now in the future, you are a big believer in robots. It is your view, I guess, that artificial intelligence is a good thing and ultimately, will not hurt humanity, is that correct? So, you don't worry that robots could become so smart that they could wipe out humanity, as some people worry?

MASAYOSHI SON: Yeah, there is a danger of that. There is a danger. But if you look at mankind's history, people were killing each other with many battles among different tribes, races, and so on. But today's world, we don't have that kind of thing as part of everyday life. We are more civilised. So when the robot super intelligence goes beyond mankind's intelligence and they say well, fighting is not an efficient way of living, harmony is better, it's more social, so we going to live in harmony. They will think about us, they help us and they try to amuse us and have a good love with each other.

DAVID RUBENSTEIN: What gives you the greatest pleasure in the world?

MASAYOSHI SON: The thing is I have a vision, I have a vision of singularity that's really coming. So we created a Vision Fund. We go and change the world together and create a better world. Better world for human living. So that excites me. What is the future, how can we change people's lives for the better? For better humanity. So people don't need to die for unnecessary reasons like having an accident, or having a disease, or having a disaster. To protect humans from all those sadness, is a good thing. Imagining those things and investing and creating a group, having great product, great solution is exciting.

DAVID RUBENSTEIN: Now today, you've come back and you have enormous net worth by any human standards, one of the richest men in the world, what do you do with all this money?

MASAYOSHI SON: Well, I haven't decided what to do.

DAVID RUBENSTEIN: You haven't decided, but you're 60 years old now, you've got to decide at some point.

MASAYOSHI SON: Deciding how to spend with respect is more difficult than making money. That was a headache I had when I became so rich.

DAVID RUBENSTEIN: You were the richest man in the world, you had that headache. Then you lost that headache, now you've got it again. Do you have any plans to keep doing this for another ten years, or twenty years?

MASAYOSHI SON: Yeah, in my age of 19 I created a 50 year life plan. And in my age of 60s, between 60 and 69, I would decide my successor and have my successor keep on running it. So in my next ten years I have to do that. But even after I find a successor and give him a baton to run as a captain of the ship. I would probably stay working with him, coaching him and as long as I live probably. I cannot forget about this excitement.

DAVID RUBENSTEIN: Your parents are still alive, they must be extremely proud of you.

MASAYOSHI SON: Well they're actually very proud of me, and they are very happy. We are a happy family, and we don't live together but they call me occasionally. And my dad is a funny guy, he has unique ideas, crazy ideas and he always calls me and says "Masa, I got an idea. You have to do this." He knows everything I'm doing and he is very creative, very smart and he talk about business to me all the time.

DAVID RUBENSTEIN: Now, you are Japanese but you're of Korean descent. But you're different than most Japanese business people who are very consensus oriented not maybe as entrepreneurial as you are. Has that been a challenge for you in building up your business in Japan?

MASAYOSHI SON: Yes, lots of challenge, but the uniqueness is actually good. If the pack of other people are this way, I am unique. I have more opportunity. The difficulty flipped becomes the advantage.

DAVID RUBENSTEIN: So final question, if you could live your life over, an extraordinary story, is there anything you would do differently than you've done?

MASAYOSHI SON: I may but this is the life I'm enjoying so much, that I would love to do it again. I was so lucky, I was so close to falling off the cliff. So I don't know if I can do it twice. But this is definitely an exciting life, I'm having fun.

Header image credit: Kiyoshi Ota/Bloomberg.

Masayoshi Son: The Vision Fund and why spending money is harder than making it.