Lessons from Softbank and Masayoshi Son
- Emma Hsu
- Aug 10, 2019
- 7 min read
Masayoshi Son is an extraordinary long term and big picture thinker that we want to learn from.
Here are excerpts from interviews with Masayoshi Son about Softbank in its early days in chronolog.
Interview from Harvard Business Review 1992 Jan issue, after 10 years of operation: Japanese-Style Entrepreneurship: An Interview with Softbank's CEO Masayoshi Son
People usually compare the computer to the head of the human being. I would say that hardware is the bone of the head, the skull. The semiconductor is the brain within the head. The software is the wisdom. And data is the knowledge.
If you look at these carefully, you don’t think the skull has the most value. The brain is more valuable than the skull. But everybody has a brain. Inside the brain are wisdom and knowledge. Wisdom and knowledge are the most valuable things in the body.
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I came up with 40 new business ideas—everything from creating software to setting up hospital chains, since my wife’s father is a doctor and has a hospital. Then I had about 25 success measures that I used to decide which idea to pursue. One success measure was that I should fall in love with a particular business for the next 50 years at least. Very often, people get excited for the first few years, and then, after they see the reality, they get tired of the business. I wanted to choose one that I would feel more and more excited about as the years passed.
Another factor was that the business should be unique. That was very important to me. I didn’t want anyone else doing exactly the same thing. A third was that within 10 years I wanted to be number one in that particular business, at least in Japan. And I wanted to pick a business where the business category itself would be growing for the next 30 to 50 years. I didn’t want to choose a sinking ship.
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"The PC and PC software have gone through three stages of growth. The first stage was a game software business. PCs were used mostly for games and for hobbies. The second growth stage was business applications like word processing and spreadsheets. The third growth stage is here now—the networked company."
Read full interview here:
From Newsweek 1999 December article: Japan's Rising Son
The 42-year-old founder of Softbank will end the millennium as head of Japan's fifth largest firm--ahead of Honda, Mitsubishi and even Sony. He is the key player in what a recent Merrill Lynch study calls Japan's "Internet tsunami," a tidal wave of new Internet businesses. Led by Son, they are liberating a new generation of cybersavvy entrepreneurs who view Japan's economy as part of a global market.
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Consider the impact of his boldest move in 1999: Nasdaq Japan. Announcing a deal to create a Japanese sister for the tech-heavy Chicago bourse, Softbank for the first time has brought venture capitalists into play. The concept--offer start-up ventures a welcoming marketplace to go public and raise capital--challenged the Tokyo Stock Exchange's byzantine listing regulations so fundamentally that Tokyo hastily established a new market--Mothers--to aid start-ups. Overnight, listing requirements slackened, and the time horizon for taking new companies public dropped from decades to mere months. The new rules reward entrepreneurship and give venture capitalists a needed exit strategy. Says Mahendra Negi, a senior analyst at Merrill Lynch in Tokyo: "The risk-reward equation has improved 100-fold."
Read full article here:
From 2014 April Forbes article: After Buying Sprint, Softbank's Masayoshi Son's Vision: To Be The World's Number One Company
By means taking huge risks and aggressive buying and investing in start-ups (many of which crashed and burned, leading to huge losses dot.com bust of 2000), Son has built a Group comprising 1300 companies. Now, when addressing recruits, he proclaims his goal in the simplest terms: “To be the world’s Number One Company.”
In 2006 Son bought Vodaphone Japan (now SoftBank Mobile) from its British parent. In 2008 SoftBank Mobile entered a partnership with Apple to bring the iPhone (3G) to Japan. On July 10, 2013, Son closed his biggest ever acquisition, the $21.6 billion investment in 72% of the shares of Sprint Corporation (NYSE:S). (Son installed himself as chairman of the company with Robert Fisher, director of SoftBank and president of SoftBank Holdings Inc., as vice chairman.) Through subsequent purchases SoftBank’s ownership in Spring has increased to 80%.
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In an April 2 interview in Nikkei Sangyo Shimbun, posted on the April 12 on-line Nihon Keizai Shimbun, Son was asked why SoftBank was expanding business at such a torrid pace. His answer:
“A company’s value is determined by challenge and evolution. A company that only defends whatever it has achieved will not grow bigger and stronger; it will only sink below an evolving world above.”
Asked how one can keep “challenging and evolving” Son replies:
“In my own work, I have practiced a few secrets. One is: ‘Think until your brain seems to be coming apart.’ When I was about 19 and studying in the U.S., I practiced the discipline of every day devoting five minutes to coming up with a new concept. In one year I produced 250 ideas for which I could apply for patents. One of them was a audio-response multi-language translation device of which I went as far as developing the prototype and earning JPY 170 million ($1.1 million).
“This evening, take a stop watch and clock five minutes to conceive of something new in the world. A new type of water faucet, a new type of automobile windshield wiper, anything is okay. Think until it seems your brain will come apart. Even if your ideas cannot be turned into products, you can be sure that the idea will be useful to you in your life.
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To students, Son has offered advice that can be summarized as:
“Do not limit yourself to thinking in the present. Think above and beyond. Do not be bound by this age; aim to create a new age that will delight people throughout the world.”
Read full article here: https://www.forbes.com/sites/stephenharner/2014/04/14/after-buying-sprint-softbanks-masayoshi-sons-vision-to-be-the-worlds-number-one-company/#4c18a89c8020#4c18a89c8020
From 2015 November article in The Economist: Here comes the Son.
On October 22nd Mr Son riffed at length on how the world will change in the era of the Singularity, when artificial intelligence will exceed the human kind—by around 2055, he reckons.
Mr Son described how SoftBank will reinvent itself well before then from an old-line, pre-Singularity Japanese telecoms company into SoftBank 2.0, a superior, global and web-enabled being with a lifespan of 300 years or more.
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He takes chances, and gears up SoftBank’s balance-sheet: with a ratio of net debt to operating earnings of around 3.5 times, it is one of Japan’s most heavily indebted firms, and is highly leveraged by global standards.
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That setback has not deterred Mr Son from his world-altering ambitions. To help fulfil them, he has brought into SoftBank Nikesh Arora, Google’s former chief business officer. In May he effectively named Mr Arora as his successor and gave him the title of president. In Japan the median level of pay for bosses of big firms is around $1m, so Mr Arora’s pay for his first six months’ work, of nearly $140m, made headlines. According to an adviser to some of SoftBank’s investors, they were taken aback to see Mr Arora paid a sum equivalent to around a third of the total dividends SoftBank paid for the entire financial year.
Read full article here: https://www.economist.com/business/2015/11/12/here-comes-the-son
Lessons from Softbank Academia
Strategy
One: Must be by far the number one
Must own the specific market. You only make long-term profits if own the market and are far ahead of number two. If you are ahead by only a littile, it will probably me only a matter of time before you lose all profits. This is even more true in the technology space. Only if you are number one, you will be able to build a platform and define the de facto standard. Examples of platform that he mentions are: Microsoft's Windows, Intel's CPU, Google, Amazon, Yahoo.
The company must have a #1 culture. You must always strive to become number one. A culture that starts to become comfortable of not being number one is a very negative culture, it's very bad. Son says he has always been number one since elementary school. He just can't sleep if he is not number one.
Wave: Do not go against wave
Don't go agains the wave. Get the direction right. Which OS should you choose? Of course the one who will become most used. Do not choose a niche.
An entrepreneur who succeeds in a niche is not a successful entrepreneur. The successful entrepreneur succeeds in the mainstream market, that might as well be an orthodox way. Softbank does not invest on niche markets, it invests on markets that will become big in the future.
There is no meaning in winning a small market. If you choose to pursue a niche market because you are afraid to fight in the main market, then you are a loser.
Read more notes here: https://medium.com/@han4wluc/masayoshi-son-s-thinking-framework-softbank-academia-first-open-lecture-2011-175f7ec309d3
From July 2016 article in The Guardian: SoftBank's ARM deal shows Masayoshi Son is in no rush to retire
While declaring his determination to devote the rest of his career to AI and the “internet of things”, Son has specialised in the acquisition of things since he founded the company 35 years ago. In the years leading up to what was supposed to be his retirement, just over a year from now, he has overseen an array of overseas investments, culminating in the agreed takeover of ARM, SoftBank’s biggest acquisition, on Monday.
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Son took a $20m stake in Alibaba, founded by Jack Ma in 1999. The bet paid off handsomely, with the value of SoftBank’s stake soaring to $65bn after Alibaba’s record IPO in the US in 2014.
However, as recently as last month, corporate Japan had been readying itself for his exit, as he prepared Nikesh Arora to lead the company into the next information revolution.
Arora’s shock resignation in June, nearly two years after he moved to SoftBank from Google, came after Son indicated that he was going to renege on an agreement to hand over the reins on his 60th birthday next year.
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