SoftBank The Investment Powerhouse

  • Mr. ACE 
SoftBank

SoftBank is a Japanese multinational conglomerate holding company headquartered in Tokyo. It was started in 1981 in Japan by Masayoshi Son a then-24-year-old as a wholesaler of PC software by the name of Japan SoftBank. It quickly expanded into publishing Oh! PC and Oh! MZ magazines. In the year 1990, it was renamed as SoftBank Corp.

Son was a third-generation Korean with Japanese citizenship. Before traveling to the United States to study in 1973, he repeatedly tried to meet Fujita Den, president of McDonald’s Company (Japan), Ltd., to seek his advice. Fujita advised Son to study computer science. Nearly 20 years later the two met again. By that time, Son had become a leading distributor of computer software and related publications in Japan and was president of Softbank Corp.

Son graduated from the University of California, Berkeley, in 1980 with a B.A. in economics. While in school, he and a group of other students developed a sound-translation device capable of converting Japanese into English and German. He sold the technology to Sharp Corporation and used the proceeds to establish the predecessor after his return to Japan in 1981.

“Son’s spectacular success brought him comparison to Bill Gates, co-founder of Microsoft Corporation. He differed from the others because he alone expanded his business by using aggressive merger-and-acquisition tactics. He financed mergers and acquisitions by issuing corporate bonds rather than obtaining loans from banks. Son defined his tactics as “diplomatic warfare” in which both Softbank and the firm sought to acquire gained something without having engaged in an all-or-nothing.”

The next big step was joining the Dotcom Bubble, in 1996 SoftBank had become the biggest shareholder of Yahoo, and it was a common strategy to invest in American companies then make their Japanese counterparts. Yahoo! Japan to this day is the most widely used search engine in Japan even though it’s now powered by Google. All these investments made seriously exposed SoftBank when Dotcom Bubble popped up it lost an estimated 75 billion yen ($748 million) in the dot-com crash of 2000.

SoftBank invested in Broadband and Telecom Companies such as Vodafone and $30 million to a then-fledgling Chinese Internet venture called Alibaba. This investment turned into $60 billion when Alibaba went public in September 2014, this stake is now estimated to be near $150 billion.

SoftBank Group has revenue of $82 billion as of 2018 making it 72nd Largest Company in the world and 7th Largest Company in Japan. Other noticeable Investments by SoftBank include Sprint Corp., Boost Mobile, and Virgin Mobile. UK-based microprocessor design company ARM for £24 billion, ARM has a 99% market share of Smartphone chips.

SoftBank is an avid investor in Robotics and Artificial Intelligence. Its founder Masayoshi Son believes that robots will outnumber humans in 30 years and is intent on investing in “emotional robots.” To that end, the venture capital firm paid $100 million in 2012 to acquire Aldebaran Robotics, a French robotics firm that designed Pepper, a humanoid robot. In 2017 Boston dynamics was acquired from Alphabet and then it bought Schaft, a less well-known robotics outfit.

SoftBank Group Companies
SoftBank Group Companies

SoftBank’s future approach is much longer-term; Son’s SoftBank has a famed 300-year plan, the core philosophies of which theoretically drive the investments behind his $100 billion Vision Fund. SoftBank aims “to continue to grow as a corporate group for the next 300 years”

 SoftBank Vision Fund, a subsidiary of SoftBank, invests $100 billion or more in growth stage leading companies. Sectors that the fund invests in include internet-of-things, artificial intelligence (AI), robotics, communications infrastructure, telecom, computational biology, biotech, cloud technologies and software, consumer internet businesses, financial technology, and mobile apps.

The Fund is designed to be a catalyst for technology progress in anticipation that it will expand SoftBank’s capabilities, accelerating progress towards SoftBank 2.0. Vision Fund has already invested in big players like Uber, Flipkart, Nvidia, Slack, WeWork, Waddle, etc.

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