Motley Fool Money: What Does Masayoshi Son Want?

Episode Release Date: February 1, 2025

In this enlightening episode of Motley Fool Money, hosts Dylan Lewis, Ricky Mulvey, and Mary Long delve deep into the enigmatic world of Masayoshi Son, the visionary founder and CEO of SoftBank. Joined by esteemed guest Lionel Barber, former editor-in-chief of the Financial Times and author of Gambling Man, the discussion unpacks Son's ambitious ventures, investment strategies, and his overarching vision for the future shaped by artificial intelligence.

1. Introducing Masayoshi Son: The Capital 'F' Fool

Lionel Barber sets the stage by portraying Masayoshi Son as a modern-day fool—a role steeped in the tradition of speaking truth to power while challenging societal norms.

Lionel Barber [01:46]: "In Japan, which is a very hierarchical society... Masa is the person who is running counter to the mainstream... praise be the fool."

Barber likens Son to historical figures like Napoleon and Genghis Khan, highlighting his empire-building prowess and global investments spanning Alibaba, Yahoo, and ARM Holdings. This characterization underscores Son's unique position as both an outsider and a formidable leader in the tech investment arena.

2. Investment Philosophy and Major Achievements

Discussing Son's investment acumen, Barber emphasizes his knack for identifying and nurturing high-potential ventures, albeit with notable caveats.

Lionel Barber [05:41]: "He was the richest man in the world in February 2000 for three days... Take Alibaba, he spent $100 million, which turned into $130 billion."

Son's strategic investments in Alibaba and ARM Holdings exemplify his ability to foresee technological trends and capitalize on them. However, Barber also points out the volatility of Son's investment journey, contrasting his successes with significant setbacks, such as during the dot-com bubble and the COVID-19 pandemic.

3. The SoftBank Vision Fund: Structure and Challenges

A significant portion of the conversation centers around the SoftBank Vision Fund, a behemoth in the venture capital landscape, and its unconventional approach to returns.

Ricky Mulvey [11:44]: "The Vision Fund functions as a dividend stock, paying its limited partners a fixed 7% regardless of fund performance."

This guarantee diverges from traditional venture funds, introducing complexities in investment management. Barber critiques this model, noting that it leads to "craziness" and "ill discipline" within the fund's operations.

Lionel Barber [13:33]: "It means craziness. It means ill discipline... it was all done in a tremendous rush."

The Vision Fund's promise of stable returns attracts significant capital but also imposes rigid expectations, challenging the flexibility typically associated with venture investments.

4. Masayoshi Son's Vision for Artificial Intelligence

Foremost in Son's current agenda is his vision for artificial intelligence (AI) and the development of a superchip to rival industry giants like Nvidia.

Lionel Barber [15:27]: "There's going to be a lot of focus on logistics, autonomous vehicles, distribution, robotics... the development of a superchip to rival Nvidia's."

Son aims to position SoftBank at the heart of the AI revolution, investing in companies that will drive advancements in AGI (Artificial General Intelligence) and related technologies. This ambitious plan includes creating proprietary hardware to support the next generation of AI applications.

5. Personal Background and Motivations

Barber provides a poignant look into Son's personal history, shedding light on how his upbringing as a Korean immigrant in Japan fuels his relentless drive for success.

Lionel Barber [21:29]: "He came from a Korean immigrant family... there's still racial prejudice in Japan."

Son's experiences with discrimination have instilled in him a determination to prove himself and lead Japan's technological frontier. His time in America, particularly at Berkeley, served as a catalyst for his entrepreneurial endeavors, blending Eastern resilience with Western innovation.

6. Skills as a Salesperson and Fundraising Genius

Son's prowess extends beyond investments to his exceptional skills in fundraising and persuasion, exemplified by his ability to secure vast sums from influential figures like Mohammed bin Salman.

Lionel Barber [09:23]: "The secret to success can be summed up in four letters. Fomo, the fear of missing out."

Son leverages FOMO to attract investments, promising exclusive access to groundbreaking tech ventures. This strategy has enabled him to amass billions for the Vision Fund, positioning SoftBank as a key player in global tech investments.

7. Critique of Trading Practices and Financial Stability

While Son excels as an investor, Barber critiques his trading strategies, highlighting significant losses incurred during turbulent periods.

Lionel Barber [07:28]: "He makes 7 billion in a few weeks, and then he runs up losses of... SoftBank's very sensitive about this."

Son's foray into options trading during the COVID-19 pandemic resulted in substantial financial losses, underscoring the risks associated with aggressive trading strategies in volatile markets.

8. Advice for Potential Investors Considering SoftBank

Concluding the discussion, Barber offers candid advice to those contemplating substantial investments in SoftBank.

Lionel Barber [24:35]: "I'd say, how strong is your stomach?... you really do need a strong stomach to stay with Softbank."

He cautions potential investors about the inherent volatility and advises against placing all financial trust solely in SoftBank, despite the company's ambitious vision and past successes.

9. Broader Economic Insights: Europe and Indian Capitalism

Beyond SoftBank, Barber touches on broader economic themes, expressing concerns about Europe's potential stagnation in innovation and the evolving landscape of Indian capitalism.

Lionel Barber [26:08]: "As an engine of innovation and technological innovation and venture capital, deep capital markets, we are being left behind by a turbocharged America."

He also highlights the rise of the Adani empire in India and the shifting dynamics between private and public markets, suggesting significant transformations in global economic structures by 2025.

10. Final Thoughts and Recommendations

As the episode wraps up, Barber recommends his book Gambling Man to listeners seeking an in-depth understanding of Masayoshi Son's multifaceted persona and investment journey.

Mary Long [28:40]: "Happy to recommend it to listeners of Motley Fool Money."

Listeners are encouraged to explore the complexities of Son's strategies and the future trajectory of SoftBank as it navigates the challenges and opportunities in the rapidly evolving tech landscape.

Conclusion

This episode of Motley Fool Money offers a comprehensive exploration of Masayoshi Son's impact on the global investment scene, his visionary approach to technology, and the personal motivations driving his relentless pursuit of innovation. Through Lionel Barber's insightful analysis, listeners gain a nuanced understanding of both the triumphs and tribulations that define Son's illustrious career.