← Good Bad Billionaire
Good Bad Billionaire
Masayoshi Son: High-tech gambler
00:44:47
Investor Masayoshi Son became notorious for making huge bets on technology companies
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- [00:00]
Simon Jack
This BBC podcast is supported by ads outside the UK.
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Zing Seng
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Simon Jack
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Zing Seng
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Zing Seng
Rewards points at US supermarkets, so I'll.
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Simon Jack
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Zing Seng
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Simon Jack
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Zing Seng
The American Express Gold Card. Learn more@americanexpress.com US Explore Gold terms and.
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Simon Jack
Points cap apply It's 1973 and a 16 year old boy is in McDonald's. He he's very animated and has some pretty specific demands. He doesn't want a Big Mac and fries and it's not a McDonald's. The boy has stormed into the head offices of the McDonald's Corporation in Japan. He's in reception and he's insisting on being allowed to see the boss of the entire company. He's been trying to speak to him for weeks. He's phoned and phoned and now he's even flown across Japan. From the southwesterly island he lives on to the capital Tokyo, Just just to get an audience with this famous businessman. The receptionist is doing her best to send him away, but eventually the boy will get exactly what he wants. And it won't be for the last time.
- [01:42]
Zing Seng
Welcome to Good Bad Billionaire from the BBC World Service. Every episode we pick a billionaire and we find out how they made their money.
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Simon Jack
Then we judge them. Are they good, bad, or just another billionaire?
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Zing Seng
My name is Zing Seng and I'm a journalist, author and podcaster.
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Simon Jack
My name is Simon Jack and I'm the BBC's business editor.
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Zing Seng
So that kid we were just talking about in McDonald's was Masayoshi son who goes by the name Masa.
- [02:05]
Simon Jack
He's now worth US$29 billion, but he was once, very briefly, the richest person in the world.
- [02:11]
Zing Seng
Not anymore though. But he still remains the founder, the CEO and the largest shareholder of a company called SoftBank. This is a Japanese conglomerate best known for investing in tech companies, many of which you all have heard of.
- [02:23]
Simon Jack
The 67 year old invested all controlled assets worth over a trillion dollars and has become famous for making some of the biggest and most profitable investments in history, as well as some of the most notorious losses.
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Zing Seng
Now he's quite Notorious for making very quick decisions on huge investments. And his nicknames, I love this, include the Unicorn Hunter for his investments, the Old Man Killer for his habit of befriending older businessmen as mentors, and the Bill Gates of Japan for his impact on the Japanese software industry.
- [02:56]
Simon Jack
He's not shy. He's compared himself to Napoleon, Genghis Khan for his empire building, and to Jesus. As Massa says, he too is misunderstood.
- [03:06]
Zing Seng
And Masayoshi Son has popped up in many of the billionaire stories we've told on this podcast, as we'll see. So it's about time we told his story. So let's take him from zero to a first million. Masayoshi Son was born in a shack his family shared with pigs on squatted land in August 1950. So he came from quite humble origins. Now, this was in the small city on Kyoshu, the southernmost island of Japan. And Masa was a third generation Zainichi, which means residing in Japan. It's applied to ethnic Koreans like Masa, whose family had moved to Japan before the Second World War, when Japan had annexed Korea and made it part of their empire in 1910. After World War II, the Japanese government actually no longer recognized them as Japanese citizens. They said they were foreigners residing in Japan, temporarily so resident, but not citizens. Exactly so kind of institutionalized discrimination, if you want to put it that way.
- [04:04]
Simon Jack
And like other Zainichi, Masa was born with two names. A Korean name Song Jung Yu and a Japanese name, Masayoshi Yasamoto. When he was growing up, though, he and his family would only ever use their Japanese surname, Yasamoto.
- [04:18]
Zing Seng
And his early childhood was pretty tough, as you can imagine. So he was the second of four boys with his family living on this squatted land next to a railway station. His dad, Mitsunori, worked 18 hour days raising pigs. Masa, however, remembers this as being a good childhood, despite its obvious hardship.
- [04:36]
Simon Jack
He does, however, recall one seminal incident from his youth when a group of Japanese children taunted him for living in the Korean ghetto. They threw stones, one hit his head and drew blood. He told his biographer, Lionel Barber, that gradually you start to realize that you're not a Japanese kid. You start to understand the nationality, the race, the discrimination. And Lionel Barber's book Gambling man has been a pretty useful source for this podcast.
- [05:00]
Zing Seng
Now, in spite of this discrimination, and thanks to the minimal business costs of raising pigs who were eating restaurant scraps on squatted land, Massa's father's hard work actually pulled the family out of poverty. So by the time he was Seven. The family had moved to a bigger city. And there his dad got out of the pig business. A dirty one, no doubt. And into another one, pachinko.
- [05:23]
Simon Jack
Another dirty one.
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Zing Seng
Well, I mean dirty in a different way. Have you ever played pachinko?
- [05:27]
Simon Jack
All I know about pachinko is that what you end up doing is collecting quite a lot of small bulbs. Bearings.
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Zing Seng
Yes.
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Simon Jack
For which reason I've never been quite sure.
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Zing Seng
Okay, so if you're wondering right now what pachinko is, it is sort of a mix between pinball and slot machines. And I remember when I went to Japan, you would just walk down the high street and you will see pachinko parlors lining the streets, you know, and they are bright, they're fluorescent. You can hear the pinging of the ping pong balls. It's quite a sight. It is a really popular hobby in Japan. Gambling actually is illegal there mostly. So when you win pachinko, you get these prizes that you almost always sell on for cash at neighboring stores to kind of circumvent these regulations around gaming.
- [06:07]
Simon Jack
Cash in your ball bearings for sort of real money.
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Zing Seng
Exactly. So sort of like a games arcade.
- [06:12]
Simon Jack
With the coupons and very interesting, because Japanese business culture is not a gambling one at all. It is salaryman. You work for the Same company for 50 years and then you go and retire. This guy is one of the ultimate gamblers we've ever seen on this podcast. Yeah.
- [06:30]
Zing Seng
It's interesting how that kind of family business maybe feeds into his later career, but there's.
- [06:36]
Simon Jack
There's a bit of the kind of ostracization, a bit of the prejudice going on here because pachinko very much associated with Koreans who often had trouble breaking into other industries. And it wasn't a hugely appealing business to be in and also could be quite dangerous. Some people know the word yakuza, Japanese mafia, who often use pachinko parlors for money laundering. Turf wars were common. Gambling places are brilliant for money laundering because no one knows how much you brought in, how much you leave with. But Masa's dad had made a success of it. It seems certain that Massa got some of his business acumen from his dad. Mitsunori's burgeoning empire was eventually generating a monthly revenue of half a million US dollars, although he was also supporting 20 members of an extended family.
- [07:21]
Zing Seng
But that extended family, there was no doubt that there was a singular golden child, and that was the second son, Massa. So Massa's dad always thought of him as being an absolute genius. He was told he was the best. He was number one. He was brilliant. And that, understandably gave him the belief that he was actually number one.
- [07:39]
Simon Jack
Now, his dad didn't want Massa to follow him into the pachinko world, where he'd found the life tough. He wanted his son to be a politician, dreamed of him one day being president of Korea. But Massa himself was not that keen on politics, or, as it turns out, on pachinko. He did, though, want to make lots of money. And he became obsessed with meeting a famous and eccentric Japanese businessman called Den Fujita to get advice on how to become rich.
- [08:06]
Zing Seng
Now, Fujita had gotten rich by introducing McDonald's to Japan. So the teenage Masa kept calling Fujita's office and asking for a meeting. And perhaps unsurprisingly, they said no to this teenager. But Masa kept calling. In fact, he called so much that he realized that buying a flight to Tokyo was cheaper than all the long distance phone calls. So that is exactly what he. He flew to Tokyo, the capital. He headed to Fujita's office and told the receptionist, tell Mr. Fujita, you don't have to look at me, you don't have to talk to me. You can keep on working, whatever you're doing. I just want to see his face for three minutes. So Fujita agreed to meet him, and Mahsa asked what business he should go into, and Fujita's answer was computers. He said, don't look at the past, look at the future. Industries, the computer industry. That's what you should focus on.
- [08:56]
Simon Jack
This is a crazy story, right?
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Zing Seng
I mean, it has the flavor of an apocryphal story.
- [09:01]
Simon Jack
It doesn't. It just. What I think is very interesting about this entire series is that massive confidence is rewarded. Now, we don't know how many massively confident people tried the same thing and didn't succeed. So we've got no kind of alternate hypothesis. We've got no control group, because, you know, a lot of the common denominator of our billionaires is incredible persistence.
- [09:24]
Zing Seng
Yeah, incredible persistence and some might say, overconfidence.
- [09:28]
Simon Jack
Well, Fujita also told Masa that he should learn English, so he immediately signed up for a summer language course at a private university in Oakland, California. And it's at this point that Masa stops using his Japanese name, Yasumoto, and uses son. He's just 16. He's really confident, clearly, about who he is and his future, because after he finished the summer course, he decided to continue his education in America rather than returning to Japan.
- [09:53]
Zing Seng
His parents protested about him staying in America. But he told them that graduating from an American university would elevate his status on returning to Japan. And then he enrolled in a Californian high school, but asked the headteacher or principal there if he could take the high school graduate exams after two weeks rather than two years.
- [10:12]
Simon Jack
Again, supreme confidence, but supreme ability, because the school agreed, gave him a bit of extra time to use a Japanese English dictionary, and he passed. So after two weeks of school, he's an American high school graduate, and he stays in California, and he goes back to that private university for a couple of years. And when he's 18, he transfers to the University of Berkeley, also in California. It's one of the top universities, a hotbed of early tech development. And he studied economics and computer science.
- [10:40]
Zing Seng
And while he's studying, Masa was determined to think of his next big business idea. So he would devote five minutes of each day to thinking of possible inventions and write them in a notebook. So he gathered around 250 of these. But, you know, Massa wasn't really an inventor. You know, these were just things he thought would make good inventions.
- [10:59]
Simon Jack
And he soon got what he thought was a good idea. A talking word, translator, something to translate spoken language. Now, I have to say, everyone thinks that's a good idea, right?
- [11:09]
Zing Seng
I mean, Star Trek thought this was a good idea.
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Simon Jack
Of course it's a good idea. But he had no idea how to make it. So he looked through Berkeley's directory of professors to find someone who could help him by designing a prototype. And he found a guy, Professor Forrest Moser. He'd helped design the prototype. And Massa also got physicist Chuck Carlson, who worked at the university space Sciences laboratory, to lead the team building it. Moses said that Massa didn't know any electronics, but it was clear from the very beginning he was an entrepreneurial genius. And key to that entrepreneurial genius, he's got a professor and a guy who's running the space lab involved when he's very, very young.
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Zing Seng
Yeah, I mean, he's an undergraduate, right? He's convincing these top professors from his uni to basically work for him.
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Simon Jack
He has clearly got the gift of the gab. And by the age of 20, he's engaged to a Japanese American woman called Masami Ono, two years older than him. But he's dedicated to his work, perhaps a bit more than his relationship. In fact, on the morning of his wedding in 1978, he went to the lab to see a test of the latest translator prototype. Professor Carlson did a demonstration that excited him. He typed in an English phrase and clicked the translate button and boom, A German translation appeared on the screen. Breakthrough. They done it. But in the meantime, he missed his own wedding.
- [12:29]
Zing Seng
Oh, you'd be in a doghouse for that one. And Masa, understandably, had to apologise to his tearful wife. They ended up rearranging the wedding for a week later. And then a week later, guess what? Massa was late again because he was at the lab. This time, however, the courthouse judge just agreed to marry the couple, even though they were late for their own slot. I don't know, but if I was Masa's fiance, I would have said, second time's not the charm, darling. I think it's off.
- [12:56]
Simon Jack
We've had some pretty patient partners on this podcast, haven't we? James Dyson's wife, Deidre, springs to mind another level, though. This. His obsession with work, however, paid off pretty fast for the couple. In 1979, he sold his patent for this translator thing to the big electronics company Sharp. Massa often says he sold it for $1 million. Sharp actually paid $423,000. Either way, Massa kept a fair chunk of whatever it was for himself.
- [13:24]
Zing Seng
That's because Massa actually told Moser that professor, that Moser wasn't due any money at all as paid wages to all the engineers who had worked on the prototype. And while Moser has admitted that, you know, they did only have a gentleman's agreement, he was a little bit bitter about it. He said, I was his first business partner and on his first business deal, he lied and cheated me. So not exactly a resounding endorsement.
- [13:47]
Simon Jack
Yeah, hold that thought for when we come to judge Masayoshi Son. But he was very quick to move on, though. He started another business that imported arcade machines, like things like Space Invaders from Japan. Now, he paid over the odds to get his games flown to the US rather than shipped over, which means they arrived in days rather than weeks, and gave him an edge on his competitors. I can get these Space Invaders here faster than anyone else, but, you know.
- [14:12]
Zing Seng
Within six months, Masser was pretty successful. Him and his partner had imported 350 machines. They made a profit of around $200,000. And again, Masser often claims he actually made a million. And he may be talking about turnover rather than profits, but. But, you know, it's a profit of 200,000.
- [14:30]
Simon Jack
Yeah, he's a big talker, but he's not quite, at our first milestone, a million yet, especially at this time. He did split the money from that business with his partner.
- [14:39]
Zing Seng
So Massa went back and he finished his degree, but he'd promised his mother he'd return to Japan. So just before graduating in 1980, he flew home with his wife. He'd already made quite a lot of money, but he wanted to do something big that would excite him. So he had a list of his 40 best ideas, all in different fields. So, you know, not exactly a specialist, our guy. He created this matrix of 25 measurements. He drew up a table, he scored each idea in each category, and the idea that came out top overall led him to start a company called SoftBank.
- [15:11]
Simon Jack
SoftBank, an incredibly famous institution. Now, this is the company that will make Massa a billionaire. In 1981, he starts SoftBank to fill a very simple gap in the marketplace. He could see that the personal computer, the PC, it was going to be big news. But in Japan, there was no kind of shop catalog where consumers could get the latest software available. So he started SoftBank to provide Japanese PC consumers with software.
- [15:38]
Zing Seng
And Masa had just returned from America, right. So he was enthused by the startup culture he discovered while he was in California. Japan had basically nothing like this, you know, this idea that you could quickly build a hugely valuable company from literally nothing. And he wanted to be the one person who changed that.
- [15:56]
Simon Jack
But he had some problems convincing anyone else that that would work, even his own employees. When he started SoftBank, he hired two men whom he decided to inspire about the company's future. He stood on a tangerine box, apparently in the middle of their office, and told them that profits will have to be 10 billion yen in five years, 50 billion yen in 10 years, and eventually I want to be able to count profit in trillions of yen. Now, these two employees both quit two weeks later. So the inspirational speech didn't work.
- [16:24]
Zing Seng
Yeah. And understandably, Masayoshi Son started looking elsewhere. So he moved to Tokyo. He got Japan's Management Research institute to invest $43,000 of startup capital in SoftBank. So clearly, some people were kind of impressed by him. And a few weeks later, he booked a booth at a big annual consumer electronics trade show in Osaka. He called all the software suppliers, and he offered them space in his booth for free. They said yes, but they were a bit confused over how Massa would make any money himself from this.
- [16:53]
Simon Jack
And Masa himself didn't seem to have much of a plan, to be honest. In fact, he spent 80% of that money that he got and only sold $3,000 worth of software products.
- [17:03]
Zing Seng
Now, at the time, Massa was saying that people were actually laughing at him. But he did get a call from a top Japanese electronics chain who were about to open a computer megastore. Massa almost refused this meeting. But then he did meet them and he asked for an exclusive deal to provide software for the store. He told them, I have no evidence, but I strongly believe in myself. And he got the deal.
- [17:25]
Simon Jack
I think it's pretty unusual just to sort of say, I don't know, but I think I'm great.
- [17:30]
Zing Seng
It is in many ways more akin to the startup culture in California than it is in Japan.
- [17:36]
Simon Jack
And getting this deal with a top company led to more exclusive deals with software vendors. But he now needed some cash, both to fulfill the orders and because he wanted to buy out the Management Research Institute stake in Softbank bank. They wanted 130,000 for their $43,000 investment. So he borrowed 200,000 from his family, which begs the question, why didn't he borrow from them in the first place? But he also wanted a Bank loan of $450,000 as well.
- [18:04]
Zing Seng
Now, in Japan, the size of this loan was unheard of at the time. Especially if you're looking at everything, you know, a three month old company run by someone so young and inexperienced, it wasn't really the done thing. So Massa asked a Japanese mentor he'd met in California, who happened to be the head of research at Sharp Electronics, to vouch for him. So this guy was obviously another one charmed by Masa because he not only vouched for him, but he offered up his own house as collateral. Now, I find this truly wild. I don't know, maybe this is where he gets that old man killer nickname from.
- [18:37]
Simon Jack
I think it's nuts. Either Masa's got some serious dirt on this guy, or he is such an amazingly charismatic fundraiser that you think this guy is going places. And to be honest, the story so far leads you to believe that everyone thinks that, from his parents to just about everyone else. Anyway, he got that loan. He then launched two computer magazines to help sell his software. Sales started pretty slowly, but when he redesigned the magazine, Softbank started to take off. And this was really because of the boom of PCs worldwide. 1982 was the year that Time magazine swapped their their man of the Year for Machine of the Year and put a computer on its front cover.
- [19:17]
Zing Seng
Wow. So Masa was really perfectly placed to ride that wave.
- [19:20]
Simon Jack
Yeah, right place, right time.
- [19:22]
Zing Seng
Exactly. So by that year, SoftBank had 75 employees. They had a turnover of 2 billion yen, or around $8 million. So while Masa often Claims that he was a millionaire by the age of 19. 1982 when he's 25 is the point. We can confidently say that Masayoshi Son is definitely a millionaire.
- [19:40]
Simon Jack
But just as he's becoming really successful, something else comes along. Sickness threatens to take all of that away.
- [19:58]
Zing Seng
Packages by Expedia. You were made to be rechargeable. We were made to package flights, hotels and hammocks for less. Expedia made to travel. How many great bosses have you had? Try counting them on your fingers. Your hand may well remain balled into a fist. It doesn't have to be this way. From the Economist, I'm Andrew Palmer and I'm back with a second season of Boss Class.
- [20:29]
Simon Jack
We've gathered management tips from the world's.
- [20:31]
Zing Seng
Best performing companies, from Levi's to Lego to Google.
- [20:35]
Simon Jack
To hear all of Boss Class, you'll need to be a subscriber. Search Economist podcasts plus for our best.
- [20:41]
Zing Seng
Offer Packages by Expedia. You were made to be rechargeable. We were made to package flights, hotels and hammocks for less. Expedia made to travel so in May 1982, just as SoftBank is taking off, Masayoshi is told he has just two to five years to live. He's diagnosed with a serious illness, Hepatitis B. And by now him and his wife have one daughter and she's pregnant with their second child. So the family genuinely feared for their future.
- [21:20]
Simon Jack
He had to be hospitalized to receive treatment and by 1983 he was so sick he had to give up his chief executive role at Softbank, leaving an older businessman in charge.
- [21:30]
Zing Seng
Now he did continue to attend meetings, but only because he was afraid the banks would foreclose on their loans if they knew just how ill he was.
- [21:38]
Simon Jack
But he also work to find a way of making himself better. He researched hepatitis treatments and found a doctor trialing an experimental treatment. And he discovered it was having a 70 to 80% success rate. He got himself on the program in.
- [21:51]
Zing Seng
Early 1984 and after just four months of being on this treatment, his illness started to turn around. We can't say for sure it was a treatment that saved him, but in two years he made a full recovery. While Massa's life was saved, he found that his business was now in a weakened state. The company was starting to make losses. So Massa once again started started brainstorming.
- [22:12]
Simon Jack
New ideas and it was at this point that Japan had just deregulated the telecoms that had a communications market. By the mid-1980s, similar thing was happening elsewhere in the UK, for example. And it meant there were now lots of different telephone companies vying for consumers businesses. So Masa came up with an idea for a computer device capable of finding the best rate for users, if you like. This is a sort of proto version of price comparison websites that we see to this day.
- [22:39]
Zing Seng
Yeah. But Massa was one of the first ones to think about it. So he filed a paper and he went out and got an engineer he knew to help build it. This engineer was actually a fellow liver patient he'd met at hospital who sadly died of his disease just a year later. And the product that he created, called the NCC Box, was a huge success. And the royalties from that actually helped to clear SoftBank's debts.
- [23:01]
Simon Jack
Meanwhile, Massa carries on. In the late 1980s, he was back as chief executive of SoftBank, thinking of selling shares in the company. But if he was going to do that, he wanted SoftBank to be something much bigger than just a software seller, to expand into other areas of computing.
- [23:17]
Zing Seng
So he decides to create this growth by investing some of SoftBank's profits into other tech ventures. And Masa has spotted a US company called Novell. They've developed netware, which is a computer operating system that was becoming hugely popular.
- [23:31]
Simon Jack
Novell doesn't exist anymore, but at one point they were the second largest maker of software for PCs in the world. They were Microsoft's biggest competitors. Big player in computing. So massive flew to Utah to meet the chief exec, Ray Norder, and he was in his seventh 70s and wasn't particularly impressed by this young, enthusiastic Japanese guy who wanted to invest in his company.
- [23:52]
Zing Seng
Yeah, probably one of the few people who wasn't entranced by Masa. But, you know, money talks. And Ray was impressed by how quickly Masa raised funds. So in 1990, SoftBank signed a joint venture to adapt and distribute Novell's netware in Japan.
- [24:07]
Simon Jack
And this was a game changer. It really changed the course of SoftBank's future. The company went from being just a sort of software distributor, a reseller, if you like, to becoming a partner, a networking business. And a SoftBank executive said, Once we had this new technology, customers treated us differently. The Novell deal suddenly changed the way we were seen by foreign and Japanese companies. You're not just a trader, you're a principal. You've got something.
- [24:32]
Zing Seng
Yeah. So, in fact, up until this point, the company had been called SoftBank Japan. But in 1990, it officially changed its name to just SoftBank to reflect this new global outlook.
- [24:42]
Simon Jack
And SoftBank's revenues were getting worldwide too. They grew to 350 million in 1990. That's roughly 50% coming from American software distribution, deals and partnerships. Even Novell's bitter rivals Microsoft, starts to want to do business with SoftBank. Massa famously met with Bill Gates in Japan in 1992 and convinced him that SoftBank should distribute Japanese versions of Microsoft Word and Excel.
- [25:07]
Zing Seng
Other big US tech firms like IBM soon did deals with SoftBank as well. So SoftBank was riding high with the sales of software on the then cutting edge new technology called CD ROMs, which you may be too young to remember, but essentially they were just CD disks, computer discs. 1994 was the point where Massa was ready to start selling shares in this incredibly successful company.
- [25:30]
Simon Jack
Now he does something a bit different than some of our other billionaires. We've talked often about the ipo, the initial public offering, which is where you basically sell shares to the general public. What they did was they sold shares on what's called the OTC market. That's over the counter. These are sales of shares that aren't facilitated by a stock exchange. Literally, you go into a shop and say, can you sell me this? And the prices don't have to be publicly disclosed. So they're basically trade directly between two parties rather than on a visible exchange.
- [26:02]
Zing Seng
And is that part of the reason why this might have been attractive to Masa, the fact that it's not as visible as going public?
- [26:10]
Simon Jack
I'm struggling to understand why he would do this. Because there's something about the IPO which gives you view publicity and legitimacy in the eyes of the investing public.
- [26:21]
Zing Seng
You think about Martha Stewart going public with her company in that big PR blitz.
- [26:25]
Simon Jack
Yeah, you ring the bell. It's a market stall on the world exchange, an otc, things it says over the counter. Some people feel it's like a little bit under the counter. If you don't, I mean, because it's not quite got the same razzmatazz. I don't know, I find it kind of odd.
- [26:41]
Zing Seng
Well, Massa ended up keeping a 70% stake in SoftBank, so. So he still retained complete control of the company. So the valuation of the shares he'd sold meant the stake he retained was worth $2.4 billion. So we can safely say at this point in 1994 that Masayoshi son is comfortably a billionaire.
- [27:06]
Simon Jack
Having become a billionaire, he sets out on a spending spree and he makes some very big bets funded by bank loans. In part, SoftBank pays $800 million for the Comdex Group, which runs computer trade shows. He loves these trade shows. As we remember, he even made friends with a man called Steve Jobs at 1 in the 1985 show. He'll reappear in this story. He also spends $1.2 billion for an 80% stake in the leading memory board maker Kingston, and a whopping $3 billion for the Ziff Davis Group, who run computer magazines and yet more trade shows.
- [27:42]
Zing Seng
These high priced were raising eyebrows. But Massa explained to the New York Times in 1995 that his plan was to make himself a key player in the infrastructure of the personal computer business, not only in Japan, but in America. And by now, masa has a US arm, SoftBank holdings, to invest in American companies. And he said, a year ago we had five employees in America. Now we have 700. By the end of the year we'll have 1200. The New York Times calls him the Bill Gates of Japan, a phrase he is all too happy to repeat.
- [28:15]
Simon Jack
Why wouldn't you be? And to fund some of these investments, he changes slightly his approach to financing. Now, in the old days, he'd go for a bank for a loan, but he starts issuing corporate bonds. So those are bonds you sell to anyone who'll buy them, but it's not a bank. And this led to a cheaper form of financing for him.
- [28:31]
Zing Seng
Yeah, and understandably, the banks aren't really happy about this. Right. So they see this as a real threat. They lobby the government. But because Masa's able to do this, thanks to a new law in Japan, the Ministry, Ministry of Finance actually ends up siding with SoftBank. And suddenly SoftBank's fee structure could be reduced by up to 90% because they're cutting out the middleman. Masa was able to start clearing those debts much more quickly.
- [28:54]
Simon Jack
So he's basically in the vanguard of a movement which really changed the economic fortunes of Japan at that time. It was a big shift, but it put Massa in a prime position to invest in American companies because he could access public debt rather than private bank debt. He had cheap borrowing from the domestic bomb market. And at that time in the 90s, the yen was still strong against the dollar. I remember being in Palm Springs, California, when every single hotel you went by, say, owned by Japan, owned by Japan, golf course, owned by Japan. I mean, it was huge at that time.
- [29:26]
Zing Seng
A really massive seismic change in Japan's fortunes, Right?
- [29:30]
Simon Jack
Yeah. It meant Masa could now invest in US companies far more easily than even his US peers could. And this is where the legend of Masa Yoshi Son for My money begins because that's when he starts making huge bets on startup companies, usually Internet companies. He spotted that as the next big thing. And in some cases, these huge investments become spectacular.
- [29:52]
Zing Seng
Yep. First up is yahoo. So in 1996, Masa wants to buy the whole company. He is, however, a little bit late. So this is a startup that's already making waves. It's got some big investors. But Masa being Masa, he still wants in. And of course, this being Masayoshi Son, he already knows one of the founders, a guy called Jerry Yang. So they're at a party sharing code pizza, and Masa offers a cool $105 million for a 33% stake in Yahoo. Yang actually takes the money, and he said most of us thought he was crazy and that putting $100 million in a startup in March 1996 was very aggressive. And, you know, it was, It's a lot of money.
- [30:32]
Simon Jack
Yeah. But he went even further than that. He put another $250 million, taking his total bet to 355 million. And as the price rose, SoftBank soon got back 450 million just by selling off some of those Yahoo shares. By 1999, they still had a 28% stake, and that alone was worth $8.4 billion.
- [30:55]
Zing Seng
Now, Jerry Yang says that he doesn't think it was just luck on Massa's part. He actually believes that Massa looks ahead in 15 to 20 year chunks. Massa, because of investments like Yahoo, he gets a reputation as this kind of of visionary. He becomes this hugely influential figure in Silicon Valley, and he keeps making these big bets and starts a trend that other people will follow. He isn't the typical kind of venture capitalist who invests and shakes up the company. One man he's invested in has said Massa would place bets others shrink from and get out of the way to let the managers do the managing. So he's not a medley.
- [31:31]
Simon Jack
Well, remember, he didn't actually know how to do any of the electronics. He just was an entrepreneurial genius. Said one of his early collaborators.
- [31:38]
Zing Seng
Exactly. So he has a habit of just getting out of people's way. And this same man said Massa is a master of the Internet universe. He has a clear vision of how technology is going to connect everyone globally in the next 50 years. And he doesn't let daily, weekly, or monthly fluctuations get in the way. He holds his nerve. So that man, by the way, saw Massa's $400 million investment in his company grow to $2.4 billion. So Massa sometimes does get it right.
- [32:06]
Simon Jack
He had a bunch of smaller bets, too. In 1999, Forbes magazine was reporting that SoftBank had invest 1.7 billion in more than 100 different Internet companies. This, of course, was the peak of the Internet boom. There was a massive sense of fomo, fear of missing out. So you wanted to basically have a few bucks on every horse that was in the race. He was riding high for three days. In February 2000, he became the world's richest man, knocking Bill Gates off the top spot with his personal net worth estimated at $70 billion.
- [32:39]
Zing Seng
But if you're looking at the timeline now and you're thinking 1999, 2000, you'll probably know is happening next, because after the dot com boom comes the dot com crash. So in 2000, markets around the world began a severe correction. The NASDAQ fell by more than 75% between March 2000 and October 2002. It wiped out over $5 trillion in market value. And SoftBank's share price plummeted. Massa actually ends up losing 96% of its wealth. According to Lionel Barber's biography.
- [33:11]
Simon Jack
Ouch. 96% of your whole wealth. So that's pretty much the whole 70 billion DOL dollars gone. It's the largest personal loss in history at that time. He's still a billionaire, but this loss is enormous. And he decides then to refocus from software into digital telecommunications. But he takes some pretty desperate measures.
- [33:32]
Zing Seng
Yeah, so there's this story, right, told by Massa to the Wall Street Journal and confirmed by the man in question of Massa storming into the Tokyo office of an official in Japan's telecommunications ministry. He's holding a cheap cigarette lighter and shouting, shouting, this is the end. If you don't help me, I'm gonna pour gasoline all over myself right here and set myself on fire with his $1 lighter. And amazingly, he actually got the help he wanted, which was to successfully launch a broadband service. I mean, pretty high stakes again, he.
- [34:02]
Simon Jack
Gets what he wants, and we've seen this time and time again with our billionaires. Against the odds on his uppers lost 96% of his wealth. He then comes back and pulls a stunt like that and manages to get them to agree. But it was actually a deal. He'd already. That in fact brought Massa back from the brink, because back in 1999, as SoftBank was peaking, they'd arranged a speed dating event for Chinese entrepreneurs.
- [34:27]
Zing Seng
And that was where Massa had met one of our other billionaires, a guy called Jack Ma. So Jack Ma's full story is in our episode. But in brief, Ma pitched his company called Alibaba, which he described as an electronic yellow pages matching buyers and sellers. So Massa offered him $40 million. Ma at first turned him down. He said he didn't need that much. But after a few months pursuit, Matt eventually accepted $20 million for 30% of the company.
- [34:55]
Simon Jack
And that investment single handedly saved Masayoshi son after that dot com crash. Alibaba became profitable at the end of 2002. When it went public five years later in 2007, Massa's stake was worth a cool $10 billion. And at its peak, Massa's $20 million investment would be worth 72 billion. That's gotta be one of the greatest investment investments of all time.
- [35:20]
Zing Seng
That is the comeback of a century. I mean, it must have made him think he was absolutely invincible.
- [35:25]
Simon Jack
Yeah, and a lot of these people do have that kind of unshakable self belief. They are. Right, Right. And the rest of the world will realize that they're right at some point.
- [35:34]
Zing Seng
I mean, maybe this is where the comparison to Jesus comes in. Right. I mean, it's quite the resurrection.
- [35:38]
Simon Jack
Yeah.
- [35:39]
Zing Seng
So Massa's the richest person in the world at one point, then he loses almost everything. I mean, still remains a billionaire, but he never stops making these big bets. So one of the things he did was to convince his friend Steve Jobs to let him distribute the iPhone in Japan.
- [35:54]
Simon Jack
And that of course was huge. Massa claims he tried to show Jobs a sketch of an ipod connected to the Internet, something very like the iPhone at a mill three years before the iPhone launched. Jobs, so we understand, threw it back in his face, but later offered him the chance to distribute the iPhone when it launched in 2008. Because Maza had asked first.
- [36:16]
Zing Seng
But you know, distributing the iPhone is huge, right?
- [36:18]
Simon Jack
The world's most successful consumer electronics product of all time.
- [36:22]
Zing Seng
And I think Masa knew this because he spent a lot of money on making sure it was a success. He spent $17 billion on Vodafone Japan to enable him to provide a phone network for the iPhone. And the iPhone established SoftBank Mobile as the number one operator in Japan. It actually paved the way for them to acquire a controlling stake in a US mobile operator called Sprint in 2013. Sprint is of course massive, huge. That then merged with T Mobile, become one of the three leading mobile companies in the U.S. softBank still holds a 24% stake in it. So when you think about it, he's a huge guy in US Telecoms. As well.
- [36:59]
Simon Jack
Absolutely massive in US Telecoms.
- [37:01]
Zing Seng
Massa also set up something he called his Vision Fund. So this was an investment fund for the future that Masser wanted to be worth around $100 billion. Now that is a lot of money. The average venture capital fund in Silicon Valley raises a maximum of 5 billion each round. So, you know, this is very ambitious, but, you know, very typical for Mass.
- [37:22]
Simon Jack
So Massa needed some very rich investors indeed. So he went to one of the richest, Saudi Arabia's leader, controversial figure Mohammed Bin Salman, but has billions, some would say trillions of petrodollars to invest. Bin Salman's aides weren't convinced that Mahassa was very reliable. The Saudi Minister of Commerce telling him, you went from hero to zero to hero. How do we know you won't go back to zero again? Massa replied, how many people come back after losing 96% of their wealth? After an hour or two, the two men were taking photographs together. A meeting was set up with Bin Salman. So once again he managed to talk his way through this.
- [38:00]
Zing Seng
Now that meeting is now one of Massa's favorite stories. He's told it first to Bloomberg, he's repeated it since he met with MBS for just 45 minutes and left with a 45 billion dollar investment in his Vision Fund.
- [38:13]
Simon Jack
One of the most lucrative meetings of all time.
- [38:16]
Zing Seng
Maybe 45 minutes.
- [38:17]
Simon Jack
45 minutes for 45 billion.
- [38:19]
Zing Seng
I can barely do a gym workout in 45 minutes.
- [38:22]
Simon Jack
Exactly. The Vision Fund was also backed by Apple, by the way. Investors in Abu Dhabi had a slice and it reached that 100 billion target of the fund in 2016. And it is still to this day the largest fund of its kind in history.
- [38:36]
Zing Seng
And it also goes against the typical venture capitalist playbook. They usually put small amounts into startups at the beginning and then as you grow, you get more money. But instead Mass just puts big money into startups much later on.
- [38:50]
Simon Jack
But here's the real thing. It hasn't been that much of a success. It put massive investments into companies that didn't necessarily need it. Some of them focused then on growth at any cost rather than developing their ideas. And, you know, some failures along the way.
- [39:06]
Zing Seng
Yeah, some big failures of due diligence. So some companies were selling themselves to softbank as tech companies when they really weren't. So the most famous example of this is WeWork. Adam Newman. Another story that we've told on the podcast. Newman famously sold this idea of WeWork being a tech company. Really. It was an office space, he was a commercial landlord. That it all blew up in Adam Neumann's face. But there were also other companies that weren't goers. There was wag, an app to find dog walkers.
- [39:34]
Simon Jack
Does that still exist? I need that.
- [39:36]
Zing Seng
Well, maybe, maybe you should approach Division fund and say you're ready to put.
- [39:39]
Simon Jack
In a will you take my call?
- [39:42]
Zing Seng
Well, there's also another app. Maybe you're interested in this. Zoom, a company that uses robots to make pizzas.
- [39:48]
Simon Jack
I mean robots make a car for sure, sure, but I think I can tackle a pizza.
- [39:52]
Zing Seng
Decisions like this cost the Vision Fund a lot of money.
- [39:55]
Simon Jack
He came across with an investment in Wirecard. This is a payments giant. It collapsed in 2020. It was Germany's biggest post war fraud scandal. There was another company called Greensill. This was a supply chain finance business that collapsed in 2020amid a massive lobbying scandal. So as he approaches 70s, I don't know where are we think he is.
- [40:16]
Zing Seng
There is talk that Massa is investing in AI. He's still looking to the future. Crucially, he's also still worth a lot of money. He's worth 29 billion.
- [40:24]
Simon Jack
If at the end of the day I make a few bets and I end up with $29 billion, I will consider that a good betting pedigree.
- [40:31]
Zing Seng
Well Simon, I think on that note, it is time to judge Masayoshi Son.
- [40:41]
Simon Jack
Foreign. So now we judge our billionaires by things like wealth, villainy, philanthropy, their power, their legacy. And we score them in these categories, naught to 10. And we start with wealth. And there are two ways of looking at this. One is absolute wealth and the other one is sort of, you know, how far they've come from where they started. So he's $29 billion, puts him around 60th richest person. Person was once the very richest for a few days. He's also had some of the biggest losses ever. But for my money, this guy who.
- [41:19]
Zing Seng
Grew up with pigs, right, literally growing up on land that his family squatted, it is quite the amazing journey, isn't it? For my money, he's a nine.
- [41:28]
Simon Jack
I think he's a nine for sure. I mean he has been the richest man in the world for a time. Okay, so wealth nine each. Villainy. He wasn't the best business partner to one of his first business partners.
- [41:41]
Zing Seng
No, he didn't pay that early collaborator at Berkeley.
- [41:44]
Simon Jack
He's also had a kind of gambling, high stakes approach to some of his investments. Some people criticized him for overinflating prices leading to crashes.
- [41:53]
Zing Seng
I do find what the New Statesman said about him interesting. They basically said by pushing more cautious investors out of the market, he's reshaped the tech investment landscape, convincing both his backers and entrepreneurs that companies like Uber and WeWork can scale in the same way as businesses which manage software and data, but only if they take enough of his money. So really, he's kind of changed the game.
- [42:15]
Simon Jack
Massa himself said he's actually a bit embarrassed by some of his past approaches. He said, when we were turning out big profits, I became somewhat delirious. And looking back at myself, now, I'm quite embarrassed and remorseful. Interesting.
- [42:29]
Zing Seng
Yeah, you don't get a lot of our billionaires expressing remorse.
- [42:32]
Simon Jack
Remorse is a new one. I don't think we've ever used the word remorse on this program ever before, have we?
- [42:36]
Zing Seng
No, we need a word cloud before the word we have.
- [42:39]
Simon Jack
Confidence, arrogance. Remorse has not really come up that often.
- [42:42]
Zing Seng
Yeah, I rate him highly for saying that. I mean, villainy. It's hard, isn't it?
- [42:47]
Simon Jack
Don't think he's ever been seen as a kind of villain. I'm gonna give him a two on villainy. I can't find too much to complain about him.
- [42:54]
Zing Seng
If your first ever business dealing ends up with you stiffing your partner, I feel like maybe you should rank a little bit higher. So I'm gonna give him a three out of ten.
- [43:02]
Simon Jack
Okay. Two for me, three for you. Philanthropy. Now, what do we know about that?
- [43:06]
Zing Seng
So he has a charitable foundation that, in its words, supports youth with high aspirations and exceptional talents. But it's actually not very clear how much money he gives to individuals or organizations. So really not a lot of information out there about very skinny.
- [43:21]
Simon Jack
The information on his philanthropy. You've got a feeling that if there was more of it, we'd hear more about it. Because he's not exactly a shrinking violet when it comes to most things.
- [43:30]
Zing Seng
No, he is a talker. So I think I would score him quite low on this.
- [43:33]
Simon Jack
I'm going to give him a 1 out of 10 for philanthropy.
- [43:36]
Zing Seng
I think a 110 out of out of 10 is works for me. I mean, he's got a foundation. We just need more information about it.
- [43:41]
Simon Jack
Okay. And then power and legacy. So this is, you know, what have they done to influence the world? Have they changed it, what we remember them for? What do you make of that one?
- [43:49]
Zing Seng
Now, this is really interesting because Massa actually has connections with Trump. So he stood alongside Trump and pledged to invest 50 billion in American companies and create 50,000 jobs in 2016. So this goes quite a way back in 2024, he pledged to invest 100 billion in the US over four years. So he's clear a mover and shaker in the political landscape.
- [44:11]
Simon Jack
He might have done that anyway.
- [44:13]
Zing Seng
True. Regardless of who was in the White.
- [44:15]
Simon Jack
House given his massive investment in U.S. companies. But aside from politics, he has had a real influence on how technology and business interact. Perhaps the biggest legacy is just how many other billionaire stories that we've covered. He appears in as an investor. His story is like a greatest hits of good bad billionaire. He's so integral to the billionaire culture we talk about. He's in all.
- [44:37]
Zing Seng
He's like the invisible hand guiding the fortunes of all these other billion dollar companies.
- [44:42]
Simon Jack
He's not Bill Gates, he's not Bezos, but he's kind of in the crowd.
- [44:49]
Zing Seng
Yeah, he's in the room when it happens.
- [44:51]
Simon Jack
He's in the room. He's in the room. So I'm gonna give him a seven for power and legacy.
- [44:55]
Zing Seng
I think it is interesting. He has really leapfrogged from his country of origin, his heritage to becoming someone massive on the investment stage, on the global stage.
- [45:04]
Simon Jack
Yeah. Okay, I'm gonna up upgrade my 7 to an 8.
- [45:07]
Zing Seng
I think I'm gonna agree with you. 8 out of 10.
- [45:09]
Simon Jack
Okay, we agree and then we gotta decide. Good, bad or just another billionaire.
- [45:14]
Zing Seng
I think for my money, he's just another billionaire. Yeah, he makes billionaire moves. He makes risky investments that sometimes don't pay off. He changes the investment landscape. Some people say for the better because you need big money to be ambitious. Some people say for the worse because you should be cautious when it comes to spending loads of cash. It kind of works out evenly.
- [45:35]
Simon Jack
I'm with you. I think he's just another billionaire. Sometimes that overweening confidence, that incredible belief can lead you to great riches. But I bet there's someone just like that who didn't make great riches. So I'm just going to call him just another billionaire because he didn't invent anything, right?
- [45:49]
Zing Seng
No, he didn't. He just is very good at spending money. So Masayoshi son, you are officially just another billionaire.
- [45:57]
Simon Jack
So who do we have? Have next episode we have the king.
- [46:00]
Zing Seng
Of the court himself. A man who at 6 foot 9 is a literal giant of the sport.
- [46:05]
Simon Jack
Yeah. Broken just about every record and was the heir apparent for a whole generation who are looking for someone to succeed and fill the shoes, the very, very lucrative shoes of Michael Jordan. The heir to air Jordan, LeBron James.
- [46:21]
Zing Seng
That's on the next episode of Good Bad Billionaire.
- [46:24]
Simon Jack
Good Bad billionaire is a BBC World Service podcast. It's produced by Mark Ward with additional production by Tamsin Curry. Paul Smith is the editor and it's a BBC Studios audio production for the BBC World Service.
- [46:36]
Zing Seng
The senior podcast producer is Cat Collins and the commissioning editor is John Minow. And if you enjoyed it, do tell a friend. Packages by Expedia. You were made to be rechargeable. We were made to package flights, hotels and hammocks for less. Expedia. Made to travel.