Son shining brightly

Author: Ricardo Tavares
Published: 2014-11-10

Masayoshi Son’s Softbank embodies what a mobile operator’s new business model should be: closely embedded with all-things Internet, integrating connectivity, content, e-commerce, new devices, and restlessly innovative.

Softbank started investing in the Internet in the mid-1990s.  A lot has happened since then, and Son’s focus has switched largely to the mobile Internet and mobile e-commerce.

Thanks to his early understanding of the importance of the Internet, Son made more money more quickly than anybody in Japanese history. Then when the Internet bubble burst in 2000/01, Son saw his net worth slump from $76 billion in 2000 to below $1 billion by 2002.  But he then made it all back again, and today Softbank is worth in the region of $100 billion by conservative estimates.

To understand this driven visionary, his upbringing as the child of Korean parents in 1960s Japan— where Koreans were regarded as second-class citizens—must be taken into account.  Unable to even get a bank loan in Japan because of his Korean name, at the age of 16 in 1973 he took his dream to the US, where he attended the University of California at Berkeley.

While studying he developed a pocket electronic Japanese/English/German translation device and sold the patent to Sharp Corp for $1 million on his return to Japan in 1981. He used the proceeds to start the predecessor to Softbank.

Innovation, investment and a tough combination of realism and risk taking were and are the characteristics of the Softbank business model. One of Son’s early Internet investments back in the 1990s was in a then-little-known company called Yahoo, and particularly a majority shareholding in Yahoo Japan. AHe set up Yahoo BB, the premium fixed-line Internet Service Provider in Japan, which overhauled market leader NTT.

Among the hundreds of investments Softbank made was a $20 million investment for a 35% holding in Chinese e-commerce company Alibaba.  The recent US listing of Alibaba, which now makes nearly all of its profits from mobile e-commerce, saw that stake’s worth valued at $75 billion.  Softbank has just invested $627 million in Snapdeal, India’s answer to Alibaba, in the belief a similar trend will emerge as 3G and 4G bring millions of buyers and sellers to the platform.

In mobile, Softbank made several acquisitions, including struggling Vodafone Japan, and then struck a deal with Apple to be the sole Japanese distributor of the new iPhone in 2008 (KDDI and DoCoMo were only able to break this monopoly years later).  From Vodafone’s 5% share of the Japanese 3G market in 2006, Softbank is now the second-ranked mobile operator with more than 30%.

Can Son repeat this success in the US market now that he owns Sprint? Fortunately for the Verizon/AT&T duopoly the FCC came to their rescue and blocked Softbank’s proposed acquisition of T-Mobile—which would have created a formidable competitor.  But don’t write off Masayoshi Son’s chances just yet—the duopoly certainly shouldn’t—as he will continue to innovate and invest in the US market.

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