WEBVTT - Masayoshi Son's $100 Billion Bet to Conquer the Future 0:00:00.320 --> 0:00:02.840 Decrypted is brought to you by red Hat, whose broad 0:00:02.880 --> 0:00:06.240 portfolio of open source technologies for the enterprise helps you 0:00:06.280 --> 0:00:08.440 get from where you are to where you want to be. 0:00:09.280 --> 0:00:12.559 Red Hat the open technology to help you realize your vision. 0:00:13.000 --> 0:00:15.760 Learn more at red hat dot com slash open tech. 0:00:24.120 --> 0:00:29.200 It's Tokyo seven. A young, relatively unknown businessman is giving 0:00:29.240 --> 0:00:34.879 an interview to a local magazine. I always say this, 0:00:35.159 --> 0:00:37.760 It's a habit, maybe a kind of disease. I won't 0:00:37.800 --> 0:00:42.040 rest until I'm number one. His name is Masiyoshi Son. 0:00:42.360 --> 0:00:48.640 Outside of Japan, he's usually just known as Massa. I 0:00:48.720 --> 0:00:51.519 just hate not being first. People want to sleep well 0:00:51.560 --> 0:00:53.960 at night, but I lose sleep thinking why am I 0:00:54.040 --> 0:00:56.720 not yet number one? What do I have to do. 0:00:58.200 --> 0:01:00.360 At the time, it was easy to laugh at Loss's 0:01:00.440 --> 0:01:03.880 big dreams. After all, becoming the world's top company it 0:01:04.000 --> 0:01:08.520 seemed outlandish. Massa himself had just turned thirty and his company, 0:01:08.600 --> 0:01:11.120 soft Bank, was all of six years old. But today 0:01:11.160 --> 0:01:14.959 it's not so laughable. Over the years, Massa built soft 0:01:15.000 --> 0:01:18.000 Bank into a technology giant, and he's among the world's 0:01:18.040 --> 0:01:23.680 one hundred richest men. And now Massa is Onto, perhaps 0:01:23.720 --> 0:01:28.119 his biggest most during project yet talk about soft banks. 0:01:28.160 --> 0:01:31.920 Massa Yoshi Song has formally announced the first round of 0:01:31.959 --> 0:01:34.600 capital commitments for his tech investment fund that is worth 0:01:34.920 --> 0:01:40.160 more than billion dollars. It's called Vision Fund, and money 0:01:40.160 --> 0:01:43.920 has come in from Saudi Arabia, Abu Dhabi, Apple, Qualcom, 0:01:44.040 --> 0:01:47.000 and Fox Con. Massa's plans to increase the amount to 0:01:47.040 --> 0:02:00.760 a hundred billion dollars in the next few months. Hi, 0:02:00.880 --> 0:02:04.400 I'm Brad Stone and I'm Peter Lstrom. And this week 0:02:04.400 --> 0:02:07.360 on Decrypted, we have the story of Masa Yoshi Son, 0:02:07.720 --> 0:02:11.480 the eccentric Japanese billionaire who conceived of and willed into 0:02:11.520 --> 0:02:15.200 reality an enormous fund that has both odd and terrified 0:02:15.200 --> 0:02:19.120 the global technology industry. Venture capital firms are worried that 0:02:19.240 --> 0:02:22.520 so much new money will drive up valuations for startups, 0:02:22.760 --> 0:02:26.560 hurting returns for everyone. But no matter what happens, this 0:02:26.720 --> 0:02:29.280 fund has earned Massa place in the pantheon of the 0:02:29.320 --> 0:02:33.760 world's legendary investors. We'll speak to his biographer as well 0:02:33.760 --> 0:02:36.480 as his first employee, and we'll also play you some 0:02:36.560 --> 0:02:39.880 tapes of Massa as a young unknown businessman from thirty 0:02:39.919 --> 0:02:43.680 years ago that have never been released before. Massa has 0:02:43.680 --> 0:02:47.000 made an unlikely journey from being bullied as an outsider 0:02:47.040 --> 0:02:49.640 on the rural island of q Shu to becoming one 0:02:49.639 --> 0:02:52.120 of the wealthiest men in the world. And after all 0:02:52.200 --> 0:02:55.840 that success, he's risking it all now for even greater returns. 0:02:56.200 --> 0:03:04.480 Stay with us, so, Peter. The tech industry has been 0:03:04.480 --> 0:03:07.240 bracing for a few months now for Massa's Vision Fund 0:03:07.280 --> 0:03:10.440 to close. It's a pretty heavy expression of optimism in 0:03:10.520 --> 0:03:13.400 the future of technology, not only for Massa but the 0:03:13.480 --> 0:03:16.400 other entities contributing to the fund, like Apple, Qualcomm and 0:03:16.440 --> 0:03:19.600 Fox count and the Saudi Arabian government. It's hard to 0:03:19.680 --> 0:03:22.440 think of anything we can compare it to. Well, there 0:03:22.480 --> 0:03:25.760 hasn't been anything quite like this before. I talked to 0:03:25.800 --> 0:03:28.240 a professor at the University of Chicago who made the 0:03:28.280 --> 0:03:31.919 point that Sequoia Capital could raise ten billion dollars tomorrow, 0:03:32.120 --> 0:03:35.600 but they don't. Why because it's dangerous. It's hard to 0:03:35.600 --> 0:03:38.720 find enough promising deals to investing with that much money. 0:03:38.960 --> 0:03:41.680 But Massa has never been a conventional investor, right, I 0:03:41.680 --> 0:03:44.320 mean he is. He He looks not only for startups 0:03:44.360 --> 0:03:47.560 but to invest in bigger companies, and his vision seems 0:03:47.600 --> 0:03:50.440 a little bit bigger and bolder than average. That's right. 0:03:50.480 --> 0:03:53.000 This is a man who speaks without irony about his 0:03:53.120 --> 0:03:56.960 three year plan. He looks for really big opportunities. He 0:03:57.000 --> 0:04:00.520 says he's interested now in artificial intelligence and based the 0:04:00.560 --> 0:04:03.960 Internet of things. And also this here's Mosses speaking to 0:04:04.080 --> 0:04:07.119 investors through a translator on an earnings call a few 0:04:07.160 --> 0:04:11.000 months ago. We saw a big man in PC, we 0:04:11.080 --> 0:04:14.160 saw a big man in the Internet, and I believe 0:04:14.240 --> 0:04:16.839 the next big then is going to be even bigger 0:04:17.960 --> 0:04:22.440 with IoT and Singularity. One of the futuristic dreams will 0:04:22.480 --> 0:04:25.719 be investing in will be the integration of computers and humans, 0:04:25.960 --> 0:04:30.480 known among enthusiasts the singularity. The chip is going to 0:04:30.560 --> 0:04:39.279 exceed human brains, uh intelligence, and that to be connected 0:04:39.760 --> 0:04:45.800 with wireless and connected in the cloud for super intelligence. 0:04:49.600 --> 0:04:52.880 Um okay. These are ideas once thought of, perhaps still 0:04:52.960 --> 0:04:55.400 thought of a science fiction. I kind of think there's 0:04:55.440 --> 0:04:59.760 still many technological, practical, and perhaps cultural barriers to the 0:05:00.000 --> 0:05:03.360 ship still though. In Japan, Massa Yoshi's son is one 0:05:03.400 --> 0:05:06.680 of these larger than life household names that everybody knows. Right, 0:05:07.160 --> 0:05:09.560 that's right. He's the second richest man in Japan. He's 0:05:09.560 --> 0:05:12.760 worth about fourteen billion dollars now. His company Soft Bank 0:05:12.839 --> 0:05:15.800 is a mobile operator, but also has a huge investment 0:05:15.839 --> 0:05:20.120 portfolio with stakes and hundreds of companies. He backed Yahoo 0:05:20.160 --> 0:05:23.560 were early on, along with a bunch of early technology companies. 0:05:23.960 --> 0:05:27.080 His biggest hits so far has to be Ali Baba. 0:05:27.360 --> 0:05:30.080 He put in an initial investment of about twenty million 0:05:30.160 --> 0:05:32.479 dollars and that's grown to be worth more than ninety 0:05:32.520 --> 0:05:39.039 billion dollars. You've had a keen eye or what might 0:05:40.000 --> 0:05:43.520 be a successful investment. Yes, this was Massa talking to 0:05:43.640 --> 0:05:47.640 Charlie Rose in two thousand fourteen. Yeahoo, Japan and this 0:05:47.680 --> 0:05:50.320 is the most recently Alive Baba. Alive Baba is gonna 0:05:50.320 --> 0:05:52.680 be a huge pay day for you. This it'll be 0:05:52.720 --> 0:05:56.279 one of the largest I pos around. Yeah. Yeah, we 0:05:56.360 --> 0:06:00.360 are lucky. Yeah, well yeah, you need that lack a 0:06:00.400 --> 0:06:06.479 lot of mass Ushi's son grew up on q Shoe, 0:06:06.560 --> 0:06:08.840 which sits at the southern end of the main islands 0:06:08.880 --> 0:06:11.840 of Japan. His family had come from Korea, and his 0:06:12.000 --> 0:06:15.320 heritage made his early years difficult. Right. For all its 0:06:15.320 --> 0:06:18.560 reputation for being such a polite country, Japan is also 0:06:18.600 --> 0:06:21.479 a really difficult place to be as an outsider, even 0:06:21.520 --> 0:06:23.800 more so if you come from China or Korea, which 0:06:23.880 --> 0:06:27.720 both have long troubled histories with Japan. They all met. 0:06:27.839 --> 0:06:30.960 Moss's classmates would sometimes pick on him. He was pelted 0:06:30.960 --> 0:06:33.640 with rocks and left bloodied. He talked about the challenge 0:06:33.640 --> 0:06:37.680 of being an immigrant in Japan with Charlie Rose. Japan 0:06:38.320 --> 0:06:43.279 is a homogeneous in a race country, one culture with 0:06:43.480 --> 0:06:50.640 one race, So if you are considered outsider, it's not easy. Nowaday, 0:06:51.600 --> 0:06:56.720 I stick up enough so people know that I am 0:06:56.760 --> 0:07:02.120 I am, you know, just myself. But one thing Massa 0:07:02.160 --> 0:07:04.599 and his two brothers had going for them was their father. 0:07:05.000 --> 0:07:07.640 He was the kind of man who praised his children endlessly, 0:07:07.960 --> 0:07:11.920 especially the young Massa, who was particularly precocious. Here's Massa 0:07:11.960 --> 0:07:19.240 talking about what his father would say to him, You 0:07:19.280 --> 0:07:22.200 are a genius number one in Japan. He would say, 0:07:22.560 --> 0:07:25.600 there's no one better in your age group, the smartest. 0:07:26.120 --> 0:07:29.080 You'll be a big shot. He keeps saying that like 0:07:29.120 --> 0:07:33.040 it's brainwashing me for any silly little thing. As a kid, 0:07:33.280 --> 0:07:36.400 even before I started elementary school, I started to think, 0:07:37.200 --> 0:07:41.040 maybe I'm actually the real deal boy Peter. I thought 0:07:41.040 --> 0:07:43.800 the conventional wisdom and parenting that was that you weren't 0:07:43.800 --> 0:07:46.400 supposed to overly praise your kid, I may have to 0:07:46.440 --> 0:07:49.680 start over with my kids. Here's how Atsuo in a 0:07:49.720 --> 0:07:53.040 way explained it. He wrote a biography of Massa called 0:07:53.080 --> 0:07:58.200 Aiming High. The secrecy of his success sounds success. I 0:07:58.200 --> 0:08:03.920 would say, from his days, how do phase up the Keiths? 0:08:04.640 --> 0:08:07.280 So that's why I would say he had American with 0:08:07.400 --> 0:08:14.800 a mind. Aso first met Maso when Atso was a 0:08:14.880 --> 0:08:18.280 journalist here in Tokyo. He interviewed Massa for a profile 0:08:18.360 --> 0:08:22.200 he wrote for a local magazine. Atso agreed to be 0:08:22.240 --> 0:08:25.080 interviewed for this episode, and when he stopped into our offices, 0:08:25.160 --> 0:08:27.680 he had quite a surprise. I love this. This is 0:08:27.720 --> 0:08:30.400 true internet history about to be made. I didn't know 0:08:30.440 --> 0:08:32.240 what to expect when I reached out to him. He 0:08:32.240 --> 0:08:34.760 showed up here in our Tokyo office. He's a dapper, 0:08:34.960 --> 0:08:39.000 older gentleman with long silver hair and impeccable manners. He 0:08:39.080 --> 0:08:41.360 was carrying a big black backpack and he started to 0:08:41.400 --> 0:08:44.679 pull all this stuff out of it. Oh my gosh. Well, 0:08:44.760 --> 0:08:47.720 he had magazine articles that he had written decades ago 0:08:47.760 --> 0:08:50.040 in Japanese. Of course, he had a new copy of 0:08:50.440 --> 0:08:53.160 the sown biography that he had just finished up. But 0:08:53.240 --> 0:08:55.520 the biggest surprise was when he pulled out a fistful 0:08:55.559 --> 0:08:59.000 of cassette tapes, old fashioned cassette tapes. He had brought 0:08:59.040 --> 0:09:01.640 in the recordings that he had done with Massa thirty 0:09:01.720 --> 0:09:03.880 years ago. He said that he had never shared them 0:09:03.880 --> 0:09:07.079 with anyone else before. Wow, the lost tapes of Masa 0:09:07.120 --> 0:09:09.840 Yoshi's son. It gives you a sense of what Massa 0:09:09.920 --> 0:09:12.520 was like at that age. Those clips of Massa at 0:09:12.559 --> 0:09:14.480 the very start of the show and that clip of 0:09:14.520 --> 0:09:17.439 Massa talking about his dad both come from these tapes 0:09:18.080 --> 0:09:20.880 more than anything, to help me understand how ambitious, how 0:09:20.920 --> 0:09:26.000 incredibly ambitious, this guy was from an early age. So 0:09:26.200 --> 0:09:31.439 that's why, Peter, So, I'm just brote the that's the treasure. Yeah, 0:09:31.640 --> 0:09:35.760 so I think it's I'm just suggested you could just 0:09:36.840 --> 0:09:41.160 rue part of you know, one minute or so. Uh, 0:09:41.360 --> 0:09:58.640 Younger boys, I don't know. Her family was very poor 0:09:58.640 --> 0:10:02.560 when I was young. Grandpa and Grandma came over from Korea. 0:10:03.160 --> 0:10:06.680 Both were very anti business. Buying something cheap and selling 0:10:06.679 --> 0:10:08.920 it at a higher price was a moral to them. 0:10:09.679 --> 0:10:12.080 Even as a young kid, I saw how hard my 0:10:12.160 --> 0:10:15.680 dad worked, how much he suffered. I remember thinking that 0:10:15.760 --> 0:10:24.240 I wanted to make him comfortable one day. Massa has 0:10:24.280 --> 0:10:27.480 made many surprising moves throughout his life, but the first 0:10:27.520 --> 0:10:29.600 one was moving to the United States when he was 0:10:29.679 --> 0:10:32.640 just sixteen years old. He had studied English there for 0:10:32.679 --> 0:10:34.959 a few months and then decided to quit school in 0:10:35.040 --> 0:10:38.080 Japan and move all together. From there, En ruled at 0:10:38.080 --> 0:10:41.480 the University of California at Berkeley, and that changed his life. 0:10:41.720 --> 0:10:43.960 He learned English, he met his wife, and he became 0:10:44.000 --> 0:10:46.440 an entrepreneur for the first time. Here he is with 0:10:46.520 --> 0:10:53.200 Charlie Rose again. I wanted to stop my own company, 0:10:53.880 --> 0:10:56.760 so when when I was a student at Berkeley at 0:10:56.880 --> 0:10:59.959 ninety years old, I only this that a small company 0:11:01.160 --> 0:11:05.000 and made the first electronic fictions and sold it to 0:11:05.240 --> 0:11:09.720 shop Yeah for one point seven million dollars for Ust 0:11:09.960 --> 0:11:16.000 ninete years old. Kids, it's it's not bad. I wanted 0:11:16.040 --> 0:11:18.480 to find out more about this period and how Massa 0:11:18.559 --> 0:11:21.319 got his start as an entrepreneur, so I tracked down 0:11:21.320 --> 0:11:23.520 the man he worked with while he was in California, 0:11:23.720 --> 0:11:26.080 a man by the name of Hong Lu. They met 0:11:26.080 --> 0:11:31.560 while Hong was managing an ice cream shop. My waitress 0:11:32.000 --> 0:11:34.800 was trouble a lot, and just by saying, Pong, we 0:11:34.880 --> 0:11:41.440 gotta we got a customer says if we do not 0:11:42.360 --> 0:11:45.720 do exactly what he wants, he would refuse to pay 0:11:46.440 --> 0:11:49.959 and said, oh my gosh. I said, you know, I've 0:11:49.960 --> 0:11:54.760 been working there for already four years already, and I 0:11:54.800 --> 0:11:57.359 have never run into that kind of a customer. I say. 0:11:57.760 --> 0:12:00.160 It turned out what Massa wanted was a particular They're 0:12:00.240 --> 0:12:03.040 kind of milkshake. Hong made it the way he wanted 0:12:03.120 --> 0:12:05.600 and the two started talking. They found out that they 0:12:05.600 --> 0:12:08.360 had both grown up in Japan and became fast friends. 0:12:09.200 --> 0:12:11.520 I met with Hong in Hong Kong, where he spends 0:12:11.559 --> 0:12:14.719 most of his time. He's tall, with wire rim glasses, 0:12:14.800 --> 0:12:17.720 who were jeans. We talked at the Shango Law Hotel 0:12:17.800 --> 0:12:21.480 in Kowloon. There was tight security around the hotel that day, 0:12:21.559 --> 0:12:24.480 an enormous fountain in the lobby. It turns out Hong 0:12:24.640 --> 0:12:27.079 was the first employee that Massa hired while he was 0:12:27.120 --> 0:12:31.840 still an undergraduate at Berkeley. He was Berkeley student. He 0:12:31.920 --> 0:12:35.040 lives in Oakland, So I went to his apartment. Are 0:12:35.080 --> 0:12:37.560 you asking me to do the next three years plan? 0:12:38.160 --> 0:12:41.360 I just say, why don't we start from what are 0:12:41.360 --> 0:12:43.080 we going to do for us? So I can make 0:12:43.160 --> 0:12:47.479 a plan. Massa always had big ideas, and he had successes. 0:12:47.800 --> 0:12:51.160 Besides selling an early translation machine to Sharp, he got 0:12:51.160 --> 0:12:57.560 into game machines. Space Invaders became a big hit in Japan, 0:12:57.800 --> 0:13:00.960 and Massa wanted to bring that idea to the United States. 0:13:01.000 --> 0:13:03.000 So he bought one of the machines from Japan and 0:13:03.000 --> 0:13:04.880 he put it into the ice cream shop where home 0:13:05.000 --> 0:13:09.640 used to work in the late nineteen seventies. And then 0:13:09.960 --> 0:13:12.160 my boss called me as to say, wow, your machine 0:13:12.320 --> 0:13:17.800 was broken. I said, okay, broke, and then then I 0:13:17.960 --> 0:13:23.560 went into two to see it wasn't broken. The money 0:13:23.679 --> 0:13:27.319 was overthrown and it could not put it in anymore. 0:13:27.760 --> 0:13:32.320 It was. It was very successful. So Space Invaders took off. Yeah, 0:13:32.440 --> 0:13:34.320 became a hit in the US like it had been 0:13:34.360 --> 0:13:36.520 in Japan. It was a sign of things to come. 0:13:36.960 --> 0:13:40.600 Massa saw opportunities and businesses that generated a steady stream 0:13:40.640 --> 0:13:45.640 of cash when we were running the game Marque. The 0:13:45.679 --> 0:13:48.400 reason he likes it is because you can't get the 0:13:48.480 --> 0:13:52.520 cash every every day, and so he always believed in 0:13:52.840 --> 0:13:56.840 the cash cow business. He repeated that approach as he 0:13:56.880 --> 0:14:01.360 moved into software distribution, magazines, then broad band and wireless service. 0:14:01.960 --> 0:14:06.000 So you always telling me that his dream is in 0:14:06.040 --> 0:14:10.600 the future to run the infrastructure business. So I said, 0:14:10.640 --> 0:14:13.440 what is the infrastructure? What? What do you what? What 0:14:13.520 --> 0:14:16.000 kind of business in victuals? And he said, it's a 0:14:16.280 --> 0:14:20.920 you know, a rear road or or the highway or gas, 0:14:21.040 --> 0:14:26.320 water and etcetera. So so those are infrastructures and and 0:14:26.320 --> 0:14:31.400 and so he he always have a very early stage 0:14:32.160 --> 0:14:35.360 vision of what he wants to do, and so later 0:14:35.360 --> 0:14:41.400 on he became UM the broadband operator. Monster's entry into 0:14:41.440 --> 0:14:44.560 the broadband and mobile world marked a significant new chapter 0:14:44.640 --> 0:14:47.280 of growth and success in his career. But it came 0:14:47.320 --> 0:14:50.240 after a serious fall. We'll get into that right after 0:14:50.320 --> 0:14:54.840 this word from our sponsor. You know where you want 0:14:54.880 --> 0:14:58.160 to be. Red Hat has the broad portfolio of open 0:14:58.200 --> 0:15:01.840 source technologies to get you there. Meet your evolving business 0:15:01.920 --> 0:15:05.760 challenges head on with secure solutions for the enterprise, including 0:15:06.160 --> 0:15:12.080 Linux platforms and containers, hybrid cloud infrastructure, application integration and development, 0:15:12.520 --> 0:15:16.840 operations management, and beyond. Visit red hat, dot com slash 0:15:16.880 --> 0:15:20.880 opentech to learn more. Red Hat the open technology to 0:15:20.920 --> 0:15:31.680 help you realize your vision. Okay, we're back. So Masa 0:15:31.760 --> 0:15:34.800 Yoshi Son as a young man with huge dreams. He's 0:15:34.840 --> 0:15:36.720 been to the U S sold his first company to 0:15:36.800 --> 0:15:40.400 the major Japanese electronics maker Sharp and is writing a 0:15:40.440 --> 0:15:43.760 wave of success after taking the Space Invaders video game 0:15:43.840 --> 0:15:46.760 to the US. Peter what came next? Well, he was 0:15:46.800 --> 0:15:49.360 in business with Hung in California, but he ends up 0:15:49.400 --> 0:15:52.720 moving back to Japan after college. He founded his company's 0:15:52.760 --> 0:15:57.000 soft bank in one It began as a software distributor, 0:15:57.120 --> 0:15:59.480 and that was just the start. Here he is from 0:15:59.480 --> 0:16:05.400 most tape thirty years ago. My dream isn't to be 0:16:05.520 --> 0:16:09.640 number one in PC software sales. My dream is information 0:16:09.720 --> 0:16:13.040 industry with PC at the center. Going forward, there will 0:16:13.080 --> 0:16:16.680 be no difference between a PC and a mainframe absolutely. 0:16:17.800 --> 0:16:20.840 From there, he moved into magazine publishing, first in Japan 0:16:20.880 --> 0:16:23.720 and then globally. He bought Ziff Davis, the publisher of 0:16:23.720 --> 0:16:26.880 titles like PC Magazine in PC Week. He bought the 0:16:26.920 --> 0:16:29.840 Condex Trade Show, and he used those businesses to gather 0:16:29.920 --> 0:16:33.800 more intelligence on the up and coming companies in technology, 0:16:33.840 --> 0:16:37.320 and he began investing in startups. That's right. He backed 0:16:37.360 --> 0:16:39.960 more than eight d companies during the dot com boom, 0:16:40.000 --> 0:16:42.480 and he saw his share price soar along with THEIRS. 0:16:42.920 --> 0:16:45.120 At one point he was closing in on Bill Gates 0:16:45.240 --> 0:16:49.560 is the world's richest person. And then the crash his 0:16:49.600 --> 0:16:54.160 stock fell. He lost more than sixty billion dollars on paper. 0:16:55.080 --> 0:16:58.400 So maybe he was a little humbled by all that. Maybe, 0:16:58.600 --> 0:17:01.720 but not gun shy. In two thousand and six, he 0:17:01.720 --> 0:17:04.880 announced his decision to buy Vota Phone in Japan, which 0:17:04.960 --> 0:17:07.840 was the third largest carrier at the time. What people 0:17:07.880 --> 0:17:10.560 didn't know back then was that Massa had already talked 0:17:10.560 --> 0:17:14.000 with Apple about making his company the only carrier for 0:17:14.040 --> 0:17:17.640 the iPhone. Later on, even before he bought the carrier. 0:17:17.960 --> 0:17:22.200 Here's Massa talking with Charlie Rose again. So I said, 0:17:22.359 --> 0:17:27.200 you know, if I would enter into the mobile business, 0:17:27.440 --> 0:17:30.840 you know, mobile carrier business, I need a weapon and 0:17:30.920 --> 0:17:33.399 the fool can create the best weapon in the world. 0:17:33.680 --> 0:17:36.879 I said, it's only one guy, Steve Jobs. I called 0:17:36.960 --> 0:17:39.600 him up and went to see him, and I brought 0:17:39.680 --> 0:17:46.280 my little drawing of iPod with you know mobile, and 0:17:46.400 --> 0:17:50.320 I gave him my drawing and Steve says, Massa, you 0:17:50.400 --> 0:17:53.200 don't give me, Massa, you don't give me, you a 0:17:53.359 --> 0:18:00.920 going I have my own, don't give me your drawing post. 0:18:02.600 --> 0:18:05.280 I said, well, I don't need to give you my 0:18:05.640 --> 0:18:10.280 you know daddy paper. But once you have your own products, 0:18:11.480 --> 0:18:15.520 give me, give me for Japan. He said, Massa, you're crazy. 0:18:15.600 --> 0:18:19.199 You know, we have not talked to anybody, but you 0:18:19.359 --> 0:18:22.040 came to see me as a first guy I give 0:18:22.160 --> 0:18:25.000 to you. Is that right? So you walked away as 0:18:25.040 --> 0:18:28.040 the carrier in Japan that would be affiliated with the 0:18:28.080 --> 0:18:30.960 iPhone before I acquired bot Um Japan, before you got 0:18:31.280 --> 0:18:34.119 upon Japan. Yeah. So, so I said to him, you know, 0:18:34.480 --> 0:18:38.040 if you can give me exclusively for Japanese market, that 0:18:38.119 --> 0:18:42.760 would be fantastic, right, And so I said, writing down, 0:18:42.800 --> 0:18:47.359 signed for me. He said no, Massa, Massa, I'm not 0:18:47.480 --> 0:18:51.720 gonna sign for you because because you don't even get 0:18:51.720 --> 0:18:56.760 mobile carrier yet. I said, well, look, Steve, you probably 0:18:56.840 --> 0:19:02.439 can you give me your bore I bring you. Know. 0:19:02.520 --> 0:19:05.080 Our colleague and co host Akiedo used to work out 0:19:05.080 --> 0:19:07.399 of the Tokyo office, and I remember her telling me 0:19:07.480 --> 0:19:09.920 that she signed a soft Bank contract in her first 0:19:10.040 --> 0:19:13.240 year of Bloomberg back in two thousand nine, specifically because 0:19:13.280 --> 0:19:16.080 she wanted an iPhone, even though her editors told her 0:19:16.080 --> 0:19:17.919 to go with one of the bigger carriers that had 0:19:17.960 --> 0:19:21.119 better signal range. She probably wasn't the only one willing 0:19:21.160 --> 0:19:23.280 to make the leap to soft Bank for the iPhone. 0:19:23.600 --> 0:19:26.399 The deal was instrumental in making soft Bank the carrier 0:19:26.440 --> 0:19:29.440 that it is today in a household name. But soft 0:19:29.440 --> 0:19:31.159 Bank has grown to be so much more than a 0:19:31.200 --> 0:19:34.119 mobile carrier like we talked about earlier and now with 0:19:34.280 --> 0:19:38.160 stakes and hundreds of companies, including it's hugely successful steak 0:19:38.200 --> 0:19:40.560 in Ali Baba. Even in the way that he talks 0:19:40.600 --> 0:19:43.960 about his decision to invest in Ali Baba, Massa clearly 0:19:44.000 --> 0:19:47.600 revels in making himself an outsider, someone who directly goes 0:19:47.640 --> 0:19:50.600 against what everyone else is doing, which might not seem 0:19:50.600 --> 0:19:52.679 that unusual for our listeners in the US, but you 0:19:52.720 --> 0:19:54.760 really don't hear a lot of people talk that way 0:19:54.840 --> 0:19:57.679 in Japan. Here he is on an earnings call from 0:19:57.720 --> 0:20:03.160 earlier this year, speaking through a trance later. Sixteen years ago, 0:20:03.280 --> 0:20:09.600 I invested into Ali Baba sixteen years ago. At the 0:20:09.760 --> 0:20:14.680 time in making that investment, at the time in Japan, 0:20:19.560 --> 0:20:25.720 the top leaders as the business circles in Japan. When 0:20:25.720 --> 0:20:28.359 I sat, I invested in Chinese company Ali Baba, What 0:20:28.560 --> 0:20:33.000 is that company with the name of a Robbert? You 0:20:33.040 --> 0:20:37.240 can at trust China. You will feel if you're invested 0:20:37.280 --> 0:20:42.760 in China. So many people cautioned me. But at the 0:20:42.880 --> 0:20:47.040 time I said, no, I don't agree. Just a year ago, 0:20:47.119 --> 0:20:49.840 Massa was talking about retiring. He had brought in a 0:20:49.880 --> 0:20:52.800 former Google executive as president and named him heir apparent. 0:20:53.200 --> 0:20:55.439 Massa didn't end up stepping down, of course, and that 0:20:55.480 --> 0:20:59.040 didn't surprise Atsu, the biographer. That's what had sent Massa 0:20:59.080 --> 0:21:01.160 an email on his day a couple of years back, 0:21:01.440 --> 0:21:04.919 and Moss's reply was telling. He wrote that he's ashamed 0:21:04.960 --> 0:21:07.000 he hasn't been able to do more in his career, 0:21:07.440 --> 0:21:10.080 that even now he hasn't been able to accomplish even 0:21:10.200 --> 0:21:21.400 one percent of what he hopes to do. It's hard 0:21:21.440 --> 0:21:24.600 to take in the full scale of Masayoshi's ambitions with 0:21:24.640 --> 0:21:27.600 the Vision Fund. Here in the US, the CEOs who 0:21:27.680 --> 0:21:30.040 run the biggest companies are always looking for ways to 0:21:30.080 --> 0:21:33.600 make their shareholders richer today. But Massa is a long 0:21:33.720 --> 0:21:36.800 term guy. I mean seriously long term. Here he is 0:21:36.840 --> 0:21:41.000 talking about PCs back in in his conversation with the 0:21:41.080 --> 0:21:49.000 journalist Atsu. In the past twenty years, the capacity of 0:21:49.040 --> 0:21:52.720 computer is doubling for the same price. This will continue 0:21:52.720 --> 0:21:55.199 in the next twenty years, which means more than a 0:21:55.320 --> 0:21:58.800 millionfold increase in power. That computer will be more powerful 0:21:58.840 --> 0:22:02.719 than a supercomputer now out and he was right. And 0:22:02.760 --> 0:22:05.480 now he's thinking long term again. Here's what he said 0:22:05.480 --> 0:22:08.440 in an earnings called earlier this year. What happened to 0:22:08.560 --> 0:22:14.359 this quota? It's not really the focus, but rather we 0:22:14.440 --> 0:22:16.600 are focusing on a ten years later. How are we 0:22:16.680 --> 0:22:21.320 gonna form our company ten years later, thirty years later? 0:22:23.320 --> 0:22:28.399 So I am seriously thinking to sustain the company or 0:22:28.440 --> 0:22:32.000 a group towards a three hundred years so that the 0:22:32.000 --> 0:22:36.119 way you would like to sit such the foundations to 0:22:36.400 --> 0:22:43.320 sustain three hundred years. Wow, So he's planning for three 0:22:43.320 --> 0:22:46.240 centuries into the future. That's the mental hoy you that 0:22:46.280 --> 0:22:48.600 he's applying here. Peter, do you know where the idea 0:22:48.720 --> 0:22:51.360 for the fund came from? Well, it came together as 0:22:51.359 --> 0:22:54.439 it began to bump up against the limitations for soft 0:22:54.440 --> 0:22:56.760 Bank on its own. Soft Bank is one of the 0:22:56.800 --> 0:22:59.760 most heavily indebted companies in Japan and last year he 0:22:59.800 --> 0:23:01.879 went out and he agreed to pay thirty two billion 0:23:01.920 --> 0:23:05.720 dollars for chip maker arm Holdings. His shareholders sort of 0:23:05.720 --> 0:23:09.080 freaked out. This was outlandish even by his standards. And 0:23:09.119 --> 0:23:12.480 then a Saudi prince came to town. That's right. Massa 0:23:12.520 --> 0:23:16.280 met the Saudi Arabian Deputy Crown Prince last September. At 0:23:16.320 --> 0:23:19.440 the same time Massa was looking for capital, Saudi Arabia 0:23:19.520 --> 0:23:22.760 was hunting for ways to diversify its economy beyond oil. 0:23:23.040 --> 0:23:25.280 They met for about forty five minutes and they came 0:23:25.280 --> 0:23:27.680 away with a handshake deal. Then it took a long 0:23:27.720 --> 0:23:31.359 time to finalize the fundraising. So what happened, well, partly 0:23:31.480 --> 0:23:33.520 was the sheer scale. You had a huge amount of 0:23:33.520 --> 0:23:36.280 money at stake, Apple and qual Calm and the others 0:23:36.320 --> 0:23:39.840 had to negotiate their pieces. In addition, the Saudis wanted 0:23:39.880 --> 0:23:42.440 more than just financial returns. They wanted to learn about 0:23:42.480 --> 0:23:44.959 the technology industry. They didn't want to be seen as 0:23:45.040 --> 0:23:47.240 just dumb money. So what did they end up getting. 0:23:47.560 --> 0:23:50.119 It's not clear how active the limited partners will be 0:23:50.160 --> 0:23:52.680 in the Vision Fund, but the head of the Saudi 0:23:52.760 --> 0:23:55.600 Sovereign Wealth Fund was just named a soft bank's board 0:23:55.680 --> 0:23:59.200 last week. Let's talk about the fund itself. How does 0:23:59.280 --> 0:24:01.879 the rest of the ven our capital community feel about this. 0:24:02.200 --> 0:24:05.760 There's a lot of concern already. Venture capital and private 0:24:05.800 --> 0:24:08.679 equity firms have record amounts of money just looking for 0:24:08.720 --> 0:24:12.200 good investment opportunities. So the idea of another hundred billion 0:24:12.200 --> 0:24:15.320 dollars is a serious concern, right. And the reason too 0:24:15.440 --> 0:24:17.800 much money moving around the industry can be a problem 0:24:17.880 --> 0:24:20.000 is because there's a risk too many startups will get 0:24:20.040 --> 0:24:23.720 funded in venture investors will see their returns get crushed. 0:24:24.160 --> 0:24:27.200 I've already heard from rattled vcs who sees soft Bank 0:24:27.240 --> 0:24:30.800 pushing up valuations for startups and they're worried. Remember, there's 0:24:30.800 --> 0:24:33.159 already a lot of investors with cash doing tons of 0:24:33.200 --> 0:24:36.840 deals in the tech industry, and yet Massa is already 0:24:36.880 --> 0:24:40.080 being pretty aggressive. He led the five point five billion 0:24:40.080 --> 0:24:43.320 dollar funding round a d D, the largest venture fundraising yet, 0:24:43.600 --> 0:24:46.880 and he's put big slugs of money into India's Paytm, 0:24:47.160 --> 0:24:51.080 grab in Southeast Asia, Improbable Worlds in the UK, and 0:24:51.119 --> 0:24:54.600 the satellite startup one Web in the US. So, Peter, 0:24:54.720 --> 0:24:57.000 I've got to ask, does all this mean we're heading 0:24:57.040 --> 0:25:01.080 for another dot com crash? Well? I talk with David Brophy, 0:25:01.200 --> 0:25:04.240 a finance professor at the University of Michigan, and he 0:25:04.359 --> 0:25:06.439 made the case that having such a large pot of 0:25:06.480 --> 0:25:09.359