As the integration point of any value chain keeps moving with each innovation wave, it’s essential to keep up with it. Masayoshi san was already working on the next stage. In 1992 he was already describing his next move.
“The PC and PC software has 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.”An Interview with Softbank’S CEO, Masayoshi Son – HBR 1992
Son’s capacity to adapt, kill old businesses and move onto the next integration platform is remarkable.
He also realized, early on, that he couldn’t do everything himself. So the moment he had capital, he started investing in supporting ventures.
It shouldn’t be surprising seeing his track-record. Retail was moving, with the advent of the Internet, from brick & mortar to the browser. It stands to reason that the same principle he used to start SoftBank, applied here. Control the distribution channel and monetize it.
He pulled a similar move when he invested 338 million dollars in Yahoo, just before they went public. By mid-1999, the investment was worth 10 billion dollars.
The same principle is at work. Invest and control the distribution of the new currency, in this case, knowledge.
Son’s idea is to build a company that can survive the next 300 years. Everything he does, from investing, de-investing, rearranging organizations or even grooming his successor, he maps to this vision.
He also takes massive risks. He lost 70 billion dollars at the high of the dot-com bubble, in one day, and nearly bankrupted SoftBank in the process. He admitted he lost 99% of his net worth by 2000.
He’s human, and because he takes risks, he also gets it wrong. But that has never stopped him.
“After that, many people were laughing at me. They said that guy’s really dumb. He’s a nice guy but dumb. I said, OK, I’m dumb. But I’m going to keep at it, and someday, somebody will find out what I can do and what real software distribution means.”An Interview with Softbank’S CEO, Masayoshi Son – HBR 1992
SoftBank’s new Vision Fund isn’t the first time Masayoshi san uses such a structure. He’s been orchestrating similar joint-ventures for years.
In 1990 he created a joint venture to sell networking equipment with Novell.
“Novell owns 54%, NEC, Toshiba, Fujitsu, Canon, and Sony each own 4%, and we own 26%. […] It’s the first time in the industry that five competing hardware vendors have joined in one company—NEC, Toshiba, Fujitsu, Canon, and Sony all invested.”An Interview with Softbank’S CEO, Masayoshi Son – HBR 1992
The new Vision Fund displays a very similar structure. The Public Investment Fund of the Kingdom of Saudi Arabia (“PIF”) invested 45 billion dollars, SoftBank 28 billion dollars, Abu Dhabi’s Mubadala Investment Company 15 billion dollars and Apple, Foxconn, Qualcomm, Sharp and Larry Ellison’s Family Office, one billion dollars each.