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'I had a chance to invest in Amazon, Google and Baidu': SoftBank's Son

Billionaire 'embarrassed' by failures, but confident in Uber and WeWork

SoftBank Group chief Masayoshi Son, 62, fears that Japan could end up a forgotten island nation. (Photo by Kazusato Murata)

TOKYO -- SoftBank Group Chairman and CEO Masayoshi Son laments missed chances to invest in and Google while they were smaller players and says he is embarrassed by his businesses' paltry growth compared with the tech giants.

But the global technology investor is convinced that the future belongs to disrupters and expressed confidence in two of his more recent investments: Uber Technologies and WeWork.

Here are updated excerpts from a 90-minute interview with Nikkei Business magazine, in which Son talked passionately about his dreams and regrets.

Q: What is your ultimate goal?

A: Right now, I'm focusing on building a group of strategic holdings rather than growing my own business. Through the Vision Fund, I'm gathering like-minded entrepreneurs and vastly expanding our influence with a "cluster" strategy. Narrowly focusing on artificial intelligence as the source of growth, we are building up the group. We have only just started, but I feel this has enormous potential.

Q: So this cluster will lead the world in AI?

A: Yes. The world is undergoing a rapid change in industrial structure. Internet companies such as Amazon are replacing traditional players in retail and the media. As a bigger trend, I believe that we'll enter an era where AI will disrupt every other industry.

Q: It is becoming more difficult to name Japanese business leaders who are globally successful. How do you view yourself?

A: I am still far away from achieving results, so I'm embarrassed and flustered. I strongly feel that I have not done enough when I compare myself with the growth of American and Chinese companies. There were times when I was jealous of the size of the American and Chinese markets, but now there are many companies from smaller economies like Southeast Asia that have the fire and are growing rapidly. Japanese entrepreneurs, myself included, cannot make excuses.

Q: There are a lot of companies that you hold minority stakes in. Are you aiming for a loose confederation?

A: Yes. Take China's Alibaba Group Holding. We specifically did not take a majority stake even when we had the opportunity to. That's because Jack Ma and the corps supporting him should be the ones to make the decisions. And the Chinese government will be more comfortable supporting Alibaba if they are the leaders.

If SoftBank owned more than 51% and was the final decision-maker, do you think young Chinese people would want to join and pursue their careers? I don't think they would have succeeded if we had control of the company without understanding the country's culture or demand.

Lately, I've been telling entrepreneurs to "know your limits." Knowing your own limitations gives rise to endless possibilities. Because I understand that my abilities are limited, I've surrounded myself with entrepreneurs who are more talented than me, and by letting them take the lead, infinite possibilities come to light.

I believe that the information revolution will last 300 years -- from PCs to the internet and on to AI. How do I make SoftBank into a corporate group that will keep growing for 300 years? Understanding that an organization can't be sustained with just one technology, one business model or one leader will let it prosper for a long time.

Q: What would you consider your biggest failure to date?

A: The most painful battle for me was when I launched broadband with Yahoo BB. It lost 100 billion yen ($930 million at current rates) every year for four years. When the internet bubble burst, SoftBank's valuation dropped from 20 trillion yen to 200 billion yen. It was because I'd dared to go up against Nippon Telegraph & Telephone, the biggest player in Japan back then, at our most difficult time. I had strayed from Sun Tzu's cardinal rule of not picking losing battles.

Q: I can say this now, but securities brokers were talking about a SoftBank bankruptcy back then.

A: I thought the same thing myself. It wasn't just a rumor!

Earlier, during the internet bubble, there was a time when my personal assets grew by 1 trillion yen each week without my even making an effort, and, if only for a moment, I passed Bill Gates to become the world's richest person.

At that time, I suddenly got a lot more acquaintances. It was like everyone who so much as met my eyes would act like my friend and come over to me, all smiles. Was it for me, or for my wealth? I started to distrust people and become repulsed by money, and I spent more time thinking about donations rather than my business.

When the bubble burst and I hit rock bottom, that sense of pointlessness was blown away, and the fire of my competitive spirit was lit again. I decided to go up against NTT, the toughest opponent, and I was ready to destroy myself if I had to.

That was my biggest crisis, but at the same time, it was when I started to feel alive again.

Compared with those days, the small crises that pop up here and there today are mere child's play.

To be honest, when things got on track and I started to think about issues like succession, I started to lose that burning interest in the business, that heart-pounding excitement in fighting. It's painful to face a crisis or have to fight, but that may be when I feel like life is worth living.

More recently, I feel that fighting spirit well up again because I am thoroughly convinced that an AI revolution is afoot. By bringing together many players to make a coordinated push, we can compete seriously. Maybe this time around, I can conquer the field.

When the internet revolution happened, I failed to conquer. Yes, I had some small success, but I was merely one among many others. The clear winners are Google, Amazon, Apple and Facebook. Compared with them, I feel so embarrassed at how small a presence we are.

Q: You also had the chance to invest in Amazon.

A: Yes. I was in talks with Amazon founder and CEO Jeff Bezos. I don't really like talking about it, because I feel bitter about letting the fish get away. Back then, I had also thought of building a cluster of internet companies, but this was after the internet bubble burst, and I just didn't have the war chest. The strategy was there. I was thinking of building an online conglomerate.

Although I say that I didn't have the money, it's true that I was spending over 100 billion yen a year on Yahoo BB. If I had put that money into an internet company ...

I managed to catch Alibaba, but I also had the chance to invest in Amazon, Baidu, eBay, Facebook and Google, all while they were still privately held or had just listed on the stock market. This was right after the bubble burst, and with several hundred million dollars I could have taken a 30% stake in each!

Q: You also attempted to buy broadcaster TV Asahi and Nippon Credit Bank [now Aozora Bank].

A: In building an online conglomerate, I thought I needed content and online securities as pieces of the puzzle. But the profound lesson I learned was that it is extremely difficult to take a company that lives in the old world and repaint it for a new era.

It is much better to go all in on a company of the times, even if it doesn't have much in terms of customers, cash flow or a brand. It's better to disrupt yourself than to be disrupted.

This is why for AI, I haven't invested much in conventional companies. People criticize Uber Technologies and We Co. for their losses and other things, but I think they'll be generating significant profits in a decade.

Q: You have been looking at many companies abroad. What do you think of Japan's business environment today?

A: It's extremely dire. The biggest problem is that entrepreneurial spirit is fading compared with the days before and after World War II, or at the end of the Edo period. Some say that it's OK if Japan settles for a small but beautiful country. I say that businesses are doomed once we begin to think like that. A balanced contraction is still just a contraction. Which would be fine if things could stay contained within Japan, like during the isolationism of the Edo period.

Meanwhile, the world is changing rapidly. The U.S.'s technological evolution marches on, China is now a giant, and Southeast Asia is expanding quickly. But young businessmen here in Japan are no longer interested in venturing overseas. The number of students studying abroad has also plunged. Japan's businessmen have become herbivores, and they lack vitality. I think education and ideology play a significant role in this.

Until the 1980s and the '90s, Japan was a global leader in electronics. It has since lost all of that momentum, and the number of fields where Japan leads the world has shrank. There's just a handful left, in parts and autos. It is as if Japan has completely faded away as a technological leader.

At the same time, China was once considered a producer of cheap knockoffs of Western and Japanese items. But now it is one of the world's top players in terms of technology and has far surpassed Japan. I think this is a huge problem in terms of Japan losing its competitiveness.

Japan also used to be the top player in semiconductors but has since completely lost that position. In that sense, Japan's economy has seen zero growth, especially in the last 30 years, which is an extremely bad place to be. Aiming for a small peace in a small village is fine, but then you get left behind by the rest of the world. I feel that Japan could end up as an island nation completely forgotten by the world.

Q: Why do you think Japanese people no longer hunger for success? Are they already too satisfied?

A: At one point, Japan's businessmen were working so hard that they were criticized for it. Such voices have almost convinced the public that it is a virtue not to work. The rise and fall of Japan's bubble economy also spread this image of debt and investment as evil things. Semiconductors, for example, are a capital-heavy industry, but investments screeched to a halt. In other words, people became exhausted with the very act of maintaining a competitive attitude, and such views have spread to society as a whole.

Back during the internet bubble of the 2000s, a young entrepreneur came under the spotlight and was heavily condemned for saying that you can buy anything with money. Young people were finally looking interested in a growing industry, but this scared everybody away. Instead, Japan's most-sought-after occupation became civil servant. I'm not saying working for government is bad. Still, if that is the most popular option, and if young people stop entering growing industries, then that automatically means that industry as a whole stops growing.

Q: Once your AI cluster strategy is complete, what will your relationships with companies like Amazon and Google look like?

A: Companies that took the lead in the era of the personal computer didn't stay there in the internet age. Similarly, we don't know whether companies that flourished in the internet age will succeed in the age of AI. For example, they may not necessarily succeed in industries like medicine, transportation, construction and real estate. New young heroes will appear one after another in the new era. I am placing my bets on that.

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