TOKYO -- There can be little doubt that Masayoshi Son, chairman and CEO of Japan's SoftBank Group, was one of the most notable business people in Asia in 2017, given his bold decisions and far-reaching strategies.
Among other things, he successfully persuaded Saudi Arabia to provide money to help set up his $93 billion dollar Vision Fund to make investments in the technology sector and enable the next wave of innovation.
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He formulated a plan that nearly realigned the U.S. telecom industry, coming withing inches of engineering a merger between SoftBank subsidiary U.S. telecom carrier Sprint and rival T-Mobile US., a deal that ultimately fell though at the last minute.
He guided SoftBank into huge investments in rising star technology enterprises, including ride-hailing companies Didi Chuxing of China, and Uber Technologies of the U.S., as well as semiconductor maker Nvidia of the U.S.
Son has said he would create a "Berkshire Hathaway of the technology industry," referring to the renowned investment company led by billionaire U.S. investor Warren Buffett. Yet given the hardscrabble origins of his management style, one would hardly expect a Buffett, but rather, a different type of person entirely.
In a recent interview, Son said he was "feeling bright" after the collapse of merger talks between the Japanese tech giant's U.S. telecom unit, Sprint, and rival T-Mobile US in early November. Despite the setback, Son, 60, shows no signs of a slowing the pace of SoftBank's relentless business expansion, which he traces back to the influence of his father.
Masayoshi learned a great deal from the elder Son, Mitsunori, 81, who repeatedly started businesses throughout his life based on his own ideas. This willingness to keep adapting underlies Son's own management strategy, which continues to shape SoftBank's core businesses.
Timotheus Hoettges, chief executive officer of Deutsche Telekom
© Reuters
Failed talks at Son's home
In mid-October, a broad agreement had been reached to combine Sprint -- the fourth-ranked U.S. mobile provider -- with third-place T-Mobile, owned by Germany's Deutsche Telekom. But the deal ultimately came apart, as Son stuck to his position that management should be integrated under Sprint's leadership.
Son told Deutsche Telekom CEO Timotheus Hoettges by phone of the decision of SoftBank's board to end the negotiations. That prompted Hoettges to fly to Japan in a last-ditch effort to overturn SoftBank's decision.
Son invited Hoettges to his Tokyo home on Nov. 4, cancelling a plan to go to the Fukuoka Yahuoku! Dome ballpark in the southern city of Fukuoka to watch his SoftBank Hawks play the sixth game of the Japan Series baseball championship. The Hawks won the game to clinch the series, but in Tokyo, Son and Hoettges failed to iron out their differences, bringing the merger negotiations to an end.
Had it not been for his emergency meeting with Hoettges, Son would have watched the Hawks claim victory with his father, from whom he had learned so many business lessons.
Players of the Fukuoka SoftBank Hawks celebrate winning the Japan Championship Series at the Fukuoka Yahuoku! Dome on Nov. 4, 2017. (Photo by Masaru Shioyama)
A few months earlier on Sept. 2, the pair -- with their powerful father-son resemblance -- were in a VIP room at the stadium for a regular-season game. Turning over his thoughts, the younger Son grew serious, murmuring, "Ten trillion yen is not enough at all. I will manage 100 trillion yen."
His father was surprised.
The younger Son was apparently referring to SoftBank's $93 billion Vision Fund set up in May with backing from Saudi Arabia's sovereign wealth fund, with a focus on investments in artificial intelligence, including robots and autonomous vehicles.
The father was surprised that his son would be thinking of how to manage not just the 10 trillion yen in the fund, but 10 times that amount -- even as he was deeply involved in developments in the U.S. mobile industry. What made Masayoshi "have such a thought, though he has created a 10-trillion-yen fund by keeping the Saudi Arabian king's money," his father wondered.
Masayoshi had an answer.
"I will use up the 10 trillion yen in about two years at the current pace," he told the Nikkei, adding that he was looking to create more such 10-trillion-yen funds at a pace of every couple of years, quickly pushing total investments up to 100 trillion yen.
"What I am truly spending my time on is how to create a mechanism" for a 100-trillion-yen fund, he said. The targets of such investments would be "star candidates of a new economy that will redefine industry."
Worrisome debts
SoftBank's interest-bearing liabilities make many investors nervous, totaling nearly 15 trillion yen. In the fiscal year through March 2017, interest payments topped 460 billion yen. As the group expands, it has become increasingly difficult for investors to keep up with its business plans and operations. With debts roughly as large as the the budgets of some countries, negative developments, such as the failed U.S. mobile merger deal, arouse strong concerns.
Son, however, maintains that SoftBank is essentially debt-free. With more than 22 trillion yen in the value of its listed shareholdings, including those of Chinese e-commerce giant Alibaba Group Holding, Son may believe SoftBank could sell if necessary.
Moreover, SoftBank has equity stakes in a large number of unlisted companies. While the prices of unlisted shares are unknown, combined with its holdings of listed shares, that would leave SoftBank with a large surplus of funds after repaying its huge debts.
Sipping mud water
Asked about the origins of his unusual management style, Son unexpectedly cited the influence of his father.
"My father continued to change businesses one after another, experiencing a series of hardships as if he had to sip muddy water and roll about in pain to support his family," Son said. "With every change, he started from scratch."
The elder Son has avoided meeting reporters, and agreed to an interview only thanks to his son's persuasion. While he now lives a life of leisurely retirement in Fukuoka Prefecture with two dogs of the Akita breed, his life has been filled with hardship.
Mitsunori Son was born a second-generation South Korean resident of Japan in Tosu, Saga Prefecture, in a roadside area of squatters' huts with no specific address. His family had been living an obscure life under the Japanese name of Yasumoto.
When Mitsunori was a small child, the family returned to its hometown of Daegu, South Korea. But finding no work, they returned to Japan. Slipping back across the Sea of Japan by night, their boat had engine trouble and was swamped with water.
Masayoshi Son made up his mind from a young age to be become an entrepreneur, and recalls his father telling him to have "high aspirations for life." (Photo by Akiyoshi Inoue)
"I thought we would die there," Mitsunori recalled. But the family survived by paying all its money to a passing Japanese fishing vessel to tow it to Yamaguchi Prefecture.
Later, after graduating from junior high school, Mitsunori sold bootlegged shochu, distilled spirits, by pedaling around on his bicycle. "At that time, people gossiped that the spirits made by Koreans contained rat poison," he said.
Mitsunori dispelled concerns about rat poison by drinking the shochu he made with customers, even though he was a boy. When the shochu business seemed to reach its limit, he sought out the biggest drinker in each village, offering them a free bottle in exchange for selling two bottles.
Mitsunori gradually managed to save money even while suffering from discrimination against Korean residents. He began raising pigs with the residue of his shochu-making business. He jotted down the destinations of railroad freight cars carrying pigs when they stopped at a nearby station. From this, he found butchers in Tokyo that bought pigs at high prices.
Mitsunori then expanded his business to pachinko pinball parlors and consumer finance. When restrictions were imposed on the pachinko industry, Mitsunori opened a fishing pond on the premises of one parlor and advertised a 20,000 yen prize for catching a red carp.
"Red carp was cheaper than black, but no customers knew that," he said. "It was like killing two birds with one stone, because customers spent that 20,000 yen to play pachinko."
Free coffee
When Masayoshi was in elementary school, Mitsunori opened a cafe. Asked by his father for a tip on how to attract more customers, Masayoshi suggested he serve free coffee. After Mitsunori handed out vouchers for coffee to pedestrians, the cafe became packed with customers.
By the time Masayoshi entered junior high school, his father had built a comfortable life for his family.
From a young age, Masayoshi had made up his mind to become an entrepreneur, a dream his father could not fully pursue, having to change businesses frequently to support his family. In the same way, Son now says he will keep changing SoftBank's business to be a dominant player in the information revolution.
SoftBank workers in red uniforms offer free modems to pedestrians in Tokyo's Shinbashi district in 2003.
Half a century after the heyday of Mitsunori's business activities, in September 2001, the company started Yahoo! BB high-speed digital broadband telecom services. The service drew strong attention for its guerrilla-like strategy of SoftBank workers in red uniforms offering free modems to pedestrians in electronics retail districts such as Tokyo's Akihabara.
The younger Son also borrowed from his father's business playbook by selling smartphones for "zero yen" through an installment system -- an approach his father might have described as "losing a fly to catch a trout."
High aspirations
From his boyhood, Son clearly remembers his father drinking and telling him: "I have been working to earn money for the immediate needs to support my family, but that's not what I really wanted to do.
"Listen, Masayoshi, you, unlike me, must have high aspirations for life," Son recalls him saying. "Saying so, my father wept," he said, tears welling up in his own eyes at the recollection.
Yet despite all his son's success, in some ways the father still thinks of him as a boy.
"Masayoshi still retains the immaturity of a junior high school student and so has yet to blossom," Mitsunori said. "But he makes me believe he really has a future. He indeed amuses me."
The high-flying tech mogul may have his sights on a visionary future, but his father seems to believe in it, having played a key role in nurturing his son's ambitions to make it a reality.
