Motley Fool Money - What Does Masayoshi Son Want?

Episode Date: February 1, 2025

The man behind SoftBank has now teamed up with OpenAI to invest up to $500 billion in American AI infrastructure over the next four years. Masayoshi Son has a vision for the future of the world. But what does that vision look like? Lionel Barber is the former Editor-in-Chief of The Financial Times and author of the book “Gambling Man: The Secret Story of the World’s Greatest Disruptor, Masayoshi Son.” Ricky Mulvey caught up with Barber to discuss: - Masa Son’s instincts as a salesperson and investor. - Why the founder is still driven by his roots. - Questions for anyone who’s tempted to put their life savings into SoftBank. Tickers mentioned: SFTBY, NVDA Host: Ricky Mulvey Guest: Lionel Barber Producer: Mary Long Engineer: Rick Engdahl Learn more about your ad choices. Visit megaphone.fm/adchoices

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It's a vision of a society transformed or soon to be transformed by artificial general intelligence. I think he's now talking about super intelligence where, I mean, frankly, the robots are going to be smarter than the human beings. And they're going to take over an awful lot of tasks. And what he wants to do is insert himself in the middle of this system. I'm Mary Long, and that's Lionel Barber. He's the former editor-in-chief of the Financial Times, where he worked for several decades. He's also the author of the new book, Gambling Man, a biography about Masayoshi-San, the storied founder and CEO of SoftBank. My colleague, Ricky Moldi, caught up with Barber for a conversation about what makes Masayoshi-San tick, his skills as a salesperson, life at the Vision Fund, and some important questions for anyone who's tempted to put their life savings into SoftBank.

Heads up that this interview was recorded in early January, before it was announced that SoftBank would be working to fund Stargate, the joint AI infrastructure venture between OpenAI, Oracle, and others. That announcement doesn't change any of the information shared in this conversation, but we think it does make it all the more relevant. We hope you enjoy fools. As we dive into your biography, there's plenty of current events to talk about with Masa Sun, but there's an easy place to start with your book because you describe him is a fool with the capital F is a jester. And for the fools listening, I know they'll be interested to hear why. It's something we take seriously here at the motley fools. You want to be foolish with the capital F. So why is Masa son a fool? Well, in the great King Lear tradition, the fool is the person who speaks truth to power. But also is the kind of the fly in the ointment.

And in Japan, which is a very hierarchical society, top down, they, They're very ordered. They don't like people who take big risks. Masa is the person who is running counter to the mainstream. And in that sense, and it was actually me quoting a top Japanese businessman who sort of said, you know, he is the jester. Joshi Doshoki, which is a terrible Japanese accent, to describe that role of the outsider who has got runs against the current.

So praise be the fool. And I think there is something interesting that changes in this because there is a part where he is the outsider and he is the fool where he's very little known. And then later he becomes someone comparing himself to Genghis Khan and even maybe Jesus Christ at which point I don't know if you can say that person is a fool anymore. You're definitely in the inside once you're making those comparisons to historical figures. Yeah, Napoleon. Let's not forget him. He was also small and he was also an outsider. Corsican, who became the emperor of France and the emperor of Europe. And Masa is an empire builder. I mean, remember, he's got businesses which stretch across the globe. He invested in Alibabaab in China. He invested in Yahoo in America. He built a computer publishing business. He's got big

assets in Britain. So this is a guy who really does see himself in historical terms. But also, He is somebody who loves to make sure that people underestimate him. And in that sense, casting himself as a bit of a joker and a fool is a good way to throw people off the scent. We'll go to the cover now of your book, which is that you give them this heavyweight title, the champion, the world's greatest disruptor. You could put a few people in that category. Steve Jobs, Walt Disney, Elon Musk, Nikola Tesla, Henry Ford. I'm sure I'm baiting you with some of those names, but why give him that heavyweight championship belt

of the world's greatest disruptor when this is someone, he built an empire, he got more money into a fund than anyone else before, but he didn't invent anything. He wasn't building electric cars. He wasn't bringing light bulbs to America or the world. Yeah, he's not Steve Jobs in that he didn't produce the Apple Mac or the iPhone and these fantastic products.

And he's not Henry Ford. the great manufacturing innovator. But you don't have to be that. You can be a middleman. You can be the gateway for technology to come into Japan, and then you can take on the colossus. You know, no mean thing. NTT telegraph was the most valuable company in the world in 2000 in Japan.

And look, he then smashed up the party in Silicon Valley, in the venture fund industry. Okay, you could say he was hosing away billions. and he lost away money. But in that sense, I think he deserves the title of the world's greatest recent disruptor, not least because he's not very well known. And that's the big secret about this book. He is someone who should be known by when we talk about great investors on the show,

we often go to folks like Warren Buffett or even Benjamin Graham. It's sort of that older school value investing style approach. You say that basically you write, I shouldn't say you say, basically, you write directly that, quote, his instincts as an investor were far superior to his skills as a trader. There's two questions there, Lionel. First, what made him, in your view, a great investor that deserves more attention in that regard? Well, he was the richest man in the world in February 2000 for three days. But he got to the top and he came back. And he's had several moonshots that had come off. Take Alibaba. He spent 20 million, then 80 million,

a hundred million dollar bet turns into 130 billion dollars. He didn't sell out like Goldman Sachs. He bought Arm Holdings, which is this, by the way, going to be the vehicle for developing the super chip to rival invidia's. Arm, he paid $32 billion. It's now worth $140 billion. Not bad. Similarly, Yahoo, he invested in early, and as a result, was able to invest during the dot-com bubble in 400 plus companies. So I think he has been a very good investor with a couple of caveats. I mean, we work. We're not going to skate over that. I don't. And also, just to be clear, I think he is not Warren Buffett. And Warren Buffett is a far superior investor, much more savvy and has not had these wild ups and downs that Masa has significantly, and I described this in detail, when Massa goes

all the way to Omaha to, on a Sunday, arrives there to see Warren Buffett and asked him to invest in the Vision Fund. Mr. Buffett says, no thank you after about 20 minutes. Yeah. Long way to go around the world. I want to get to his skills as a salesperson in a bit. One of the things that also that we we focus on here at The Fool is you want to be, you want to be good at investing, but you're not a trader. So we'll get to the trading side of this. What makes Masa's son a less great trader? Well, I mean, if you look what he did when he was trying to mount a comeback during the COVID pandemic, where he almost got wiped out, I mean, had the we work losses. He starts sets up this in-house hedge fund and starts trading billions.

on options trading, right? Futures, derivatives. By the way, he's just also sold out on Nvidia. He did have 5% of Nvidia back in 2017-18. He sells out in 19. He would have made a lot of money if he'd stuck with that. But this options trading, okay, he makes $7 billion in a few weeks, and then he runs up losses of, I don't know,

soft bank's very sensitive about this. some say as much as $9 billion. I'm going net. He's down $6 billion in a matter of months. That's pretty bad trading. Yeah. The thing that he is truly great out, and I want to make sure we stay on this for a bit,

is his skills is a salesperson. You mentioned that he was not able to get Buffett's attention when he flew out to Omaha. Warren Buffett, very polite, giving him a tour of the headquarters. I think he got to meet all 12 people at the Berkshire Hathaway office. I think he only met Mr.

Buffett who was there, especially there on a Sunday. I mean, nobody else was in the building, as far as I could tell. Yeah, my bad. However, he is able to get a lot of money from Muhammad bin Salman. So if I were, I'm not saying I am, this life might be kind of nice. I think it would be difficult, but it might be kind of nice. If I were royalty in the Gulf and Masa's son has come to meet with me to try to get me to give him billions and billions of dollars for the Vision Fund.

What's that meeting life? What's he telling me to give up those billions of dollars? The secret to success can be summed up in four letters, FOMO, the fear of missing out. And with the crown prince of Saudi Arabia, Mohammed bin Salman, that's what he does. He says, if you invest with me, I'm going to introduce you to all the significant movers and shakers in the tech ecosystem, you'll get in early with the likes of Uber and Lyft and all these companies growing up in Silicon Valley.

And Mohammed bin Salman, MBS as he's known, is desperate to modernize the desert kingdom, wean himself, wean the country off oil, and he wants to modernize. And he sees Masa positions himself as the modernizer. And if you don't give me the money, by the way, I am going to ask you for $45 billion. dollars, he thinks, he thinks, I'm going to miss out. I need, I'm prepared to spend that money.

And by the way, if you've got the public investment fund from Saudi Arabia, going public, and that's what you want to sell to investors, you're going to raise a couple of trillion, then maybe, maybe $45 billion is chump change. Maybe not quite. I would have a difficult time saying anything in the tens of billions is chump change. In the lower numbers of billions, sure, we can call that chump change. One of the things, though, is there are savvy players on both ends of this. And one of the things that the Vision Fund has is that it basically functions as a dividend stock, where it's paying its limited partners a fixed 7% regardless of fund performance.

And for those listening, a 7% dividend, you're talking about old school, companies. You're talking tobacco stocks. You're talking Verizon, Pfizer. These are these high-dividend companies, and you don't see a lot of high-growth tech companies paying out large dividends like this. There are tech companies paying smaller dividends now, but these large dividends are not paid out because a lot of these companies need room to run to make mistakes and to chase high-growth opportunities. Why is this promise put into the fund? Well, Ricky, you've actually nailed the key point about the Vision Fund, which is that even though the Saudis,

and by the way, also the Gulf States, UAE or United Arab Emirates, that's Abu Dhabi, better known as Abu Doshi, they want to get into the tech business and in these stocks, but they want some security. And that 7% coupon,

you know, dividend annually, guaranteed. I mean, that's their security. And anything else is on top of that. But second point, you know, he, he therefore is actually very quite stretched. And it also means that it's not a classic venture fund because venture funds don't give that guaranteed return.

It's supposed to be, you know, it either works or it doesn't. And that's the third difference is, guess what? We work that they invested in. He won't let it go bankrupt. When the IPO is called off, Massa says, okay, I'll make you sweet to the Gulf investors. So all this actually means that although he was competing force-feet with Silicon Valley venture funds and force-feeding these companies with cash, it wasn't at all.

all a classic venture operation. When you said it stretched the fund, what does that mean at a granular level for the lieutenants that are trying to make these investment decisions, it's soft bank, when they have to get this constant 7% yearly return for their investors? Very simply, it means craziness. It means ill discipline. It means that the investors, believe it or not, and I report this in the book, we're actually latterly being measured about how much money they were putting out through the door,

rather than looking at returns. It was all done in a tremendous rush, as one of the top soft bank vision fund people told me. And do you know something, and we're going to talk about this, what he's doing now? I think he has drawn some lessons from that hubristic period of the Vision Fund, sort of 2016 to 22? We can get to that because one of the things throughout Masa Sun's career that he is intensely skilled at is creating a vision and having people buy into that vision. Directionally, he's been correct on a number of very big things.

Mobile internet telecoms in Japan. The internet in his deals with Yahoo and creating, basically seeing what's going on in Silicon Valley and creating distribution deals in Japan. And then beyond that, even with computer trade shows, where he understands the perpity, like, overpaying for networking may not be overpaying if you're running the networking show. Now the vision is AI. He says, $100 billion is coming into the U.S.

You have our president, Donald Trump, saying, we'd like $200 billion. Why not negotiate that way? When you talk to him, you interviewed him for the book, to the best you can't, what is his vision for AI? What's the Masa Sun vision of AI over the next few decades? Well, I want to talk about AI, but let me just reinforce what you were saying, which is quite right, that he's ridden this technological wave, and he's been fundamentally right about the direction of technology, which has shaped modern societies, you know, irreparably. I mean, he's like, you know, we talked about him being the fool, but I would like, I think he's more a forest dump like character who's sort of there, always that, you know, either the microchip or the internet, mobile internet, and, you know, venture capital, turbocharging these companies with money. And now it's, it is AI. And in the conversation that I had with him in Tokyo, the fourth interview, he kind of sketched some of the vision. And really,

It's a vision of a society transformed or soon to be transformed by artificial general intelligence. I think he's now talking about superintelligence where, I mean, frankly, the robots are going to be smarter than the human beings, and they're going to take over an awful lot of tasks. And what he wants to do is insert himself in the middle of this system. So there's going to be a lot of focus on logistics. autonomous vehicles, distribution, robotics. I mean, he's investing in these companies all around the world, particularly in America, though.

And I think the other big play, which we're going to hear a lot about in 2025, is the development of a super chip to rival invidias. And we know that invidia has transformed in the last 10 years into a company worth, you know, three trillion plus dollars. I'm not saying that Masa will get to that scale, but he certainly wants to get into that business of superchips to power the AGI revolution.

And what's interesting is he doesn't want to do that by investing in a public company that may be doing that already in Vidiya. It reminds me of a story when he wanted to invest in Yahoo in the earlier internet days. And Jerry Yang is trying to turn him down. Masa Son wants to overpay. And basically he says, you know what, if you don't want me to invest in your company, I'm going to bring up this other company and just try to kill you.

And I wonder, looking at his history and seeing what's going on with this next super chip, do you think a little bit of that's going on with him trying to create the new chip for artificial superintelligence if he's not investing in Nvidia? Well, you have to remember, Ricky, that the big vision in 2018-19, was to merge Nvidia with arm holdings, which was the designer, the British-based, where it's got a big operation in California, designer of huge numbers of different chips

supplied to the likes of Apple, Qualcomm, and he wanted to merge the design skills of Invidia with the kind of technical superpower state qualities of, sorry, he wanted to, to merge the design expertise of Arm, which was a supplier to all the major big tech companies with Nvidia that have these advanced graphics chips. So it was a sort of horizontal and vertical integration play. When regulators block that, he's now saying, okay, I'm actually going to compete. But I think he's also a frenemy of invidia. He's never going to

to go head to head. He likes the frenemy game. You mentioned that you interviewed Masiyosha Shai son four times. You've interviewed a number of world leaders. And one of the things you like to do when you're interviewing a big dog is you got to get their attention. You want to unlock them and you want to get their attention. One story I've heard you tell before is you interviewed Vladimir Putin and you started speaking to him in German because he was he was a KGB agent in Germany and you knew that he spoke German and he took it with stride. He wasn't surprised he was just able to handle it. When you're talking to Masayoshi, son, how are you getting his attention? Well, the first time I turned up in Tokyo, I was told he was too busy to see me. And initially,

I took that as a bit of fronted. But then I said, you know, get over it. You're not the editor of the FTA anymore. And, you know, use the time to your own advantage. So what I was able to do was, I said to the softbank people, I'm going to Kyushu and where he was born. And remember, it's crucial to understand that he came from a Korean immigrant family. He is an outsider. This is all about where he gets his motivation. So by walking around Kyushu for two days, and by the way, I would have gone by car, but I didn't have a foreign driver's license. And then I found out my researcher, who's Korean-Japanese, didn't have a foreign driver's license.

foreign a driving license. So I wore out a pair of shoes in Kusuf. But crucially, when I did the first interview, I was able to immediately say, I went to your school. And I remember here in Kuma, Karumai, and that got his attention. Like this guy, this foreigner, has bothered to actually examine my roots. And I think that helped to unlock him. How do you think his roots? How do you think his roots are still driving. He's pushing tens of billions of dollars into high-tech companies. He still has this background of, and I've heard you bring up the book Pachinko before, which is appropriate. It's a Korean immigrant to Japan, family opening a Pachinko parlor. And slot machine parlor, yeah. But even in these later years, how are you seeing that sort of tough upbringing driving him?

You have to remember that the Japanese corporate establishment, regards this guy with great suspicion. They don't particularly like him because he's a disruptor, but they also don't like him because he's Korean. He comes from a Korean immigrant families. His grandfather came over in 1917. His grandmother, whose very influential figure, came out in the late 20s. And this was a time when Korea was a colony of Japan, imperial Japan.

So, I mean, there's still racial prejudice in Japan. And even though he's made his money and he's as rich, maybe sometimes the richest guy in Japan, sometimes it's Mr. Uniclo, the fast retailer. So that's really why he wants to drive home. That, you know, I've seen the prejudice. I suffered it as a kid. The only way I escaped it was to go to America.

where he did spend five years plus six years, five to six years as a student, latterly at Berkeley, where he did a degree and he majored in economics. And that's where he set up his first business. And for America was a great liberation to it. But guess what? He went back to Japan because he wanted to essentially stuff those Japanese. I'm actually going to show that I'm going to be the big guy. And I think he really still wants to be that.

you know, the great global figure in Japan still feels probably a little bit underestimated given his role, I think. And that's a big motivation. I want to be number one. He kept saying it to me. The old adage goes, it isn't what you say, it's how you say it, because to truly make an impact, you need to set an example and take the lead. You have to adapt to whatever comes your way. When you're that driven, you drive an equally determined vehicle, the Range Rover Sport. The Rangerover Sport blends power, poise, and performance. Its design is distinctly British and free from unnecessary details, allowing its raw agility to shine through. It combines a dynamic sporting personality with elegance to deliver a truly instinctive drive.

Inside, you'll find true modern luxury with the latest innovations in comfort. Use the cabin air purification system alongside active noise cancellation for all new levels of quality and quiet. Whether you prefer a choice of powerful engines or the plug-in hybrid with an estimated range of 53 miles, there's an option for you. With seven terrain modes to choose from, terrain response to fine-tuned your vehicle for the roads ahead. The Range Rover event is on now. Explore enhance offers at Rangerover.com. As we wrap up this part of the conversation on SoftBank and Masa's son, a lot of people have put a lot of money into SoftBank. His longtime confidant, Ron Fisher, put his entire family's net worth into SoftBank when he just got started working there.

that ended up working out fabulously well for him for a number of reasons. But that was a while ago. Let's talk about today. Let's say I'm considering a similar move. Maybe not my whole family's net worth, but let's say half. I want to give half my family. I'm thinking about giving half my family's net worth to Masayoshi's son because he's going to invest it for the next five to 10 years.

You've researched this investment organization. You've researched Masayoshi's son for a while. This is enough to make me sweat. if it all goes poorly. I could, my life could be changed if it goes downhill. What would you say to me? I'd say, how strong is your stomach? Have you got iron filings in the stomach mixed with maybe a little bit of a milk?

Because you really do need a strong stomach to stay with soft bang. You've got to go through what I describe in the title as the wild ride in this company. I mean, you're going to have real gyrations. You're going to have the highs. the deep lows. So stick with it. Over time, you're probably not going to do much better than the S&P, maybe a little bit worse over, say, the last 10 years. I would buy on the dip. I mean, that's what he told everybody, by the way, when he lost 97% of his wealth in 2000, he actually seriously went out to Japanese investors and said, you know, now's the time to buy.

it would have been a good buy. Amazing to me how Japanese retail investors have stuck with him. He's got a lot of loyalty. Maybe that's partly because he's got that joker quality that you described at the beginning.

People like him. But, you know, I wouldn't put all my savings, but I might put some. Okay. I want to move on to a few other topics while we have a little bit of time as we wrap up here. You mentioned something earlier

when we were talking before the interview. One of your concerns is as we move over across the Atlantic Ocean over to Europe, is that you're concerned that Europe is a museum. Is Europe a museum? I'm hoping you can expand on that question and where it comes from for you. Well, I'm using a phrase that was around in the Clinton administration in the Treasury at the time, sort of Bob Rubin, Larry Summers.

And I think that's how they described it. And, of course, we've got great museums, the Louvre, Bufizi, British Museum. but we do have a few other things. The reason that we call it or risks become a museum is that as an engine of innovation and technological innovation and venture capital, deep capital markets,

we are being left behind by a turbocharged America and the industrial policy adopted by the Biden administration offering billions of subsidies, that's drawn European companies to shift operations into America. And also now the drill baby drill philosophy, when Europe still's committed to net zero, climate change,

we take very, very seriously. You know, we're going to therefore be at an energy disadvantage. I mean, this is the danger of why we might become a museum. We're not quite yet, though. Is there any great pieces of financial journalism or great stories that have been on your radar that you've been thinking about lately? First great story is the future of Indian capitalism

and the Adani Empire to rival Mukeshambani, who created the, you know, he's a huge multi-billionaires in energies and mobile internet and everything. But Adani was a great beneficiary of the Modi government. He's in big, time in public sector infrastructure. But that report by Hindenburg, which devastated the share price, has rocked Adani.

And now the stock markets fall in life for a little bit in India and the growth may be tailed off. Big question about India in 2025. I think the other story which I would just focus on more and more is just the role of private markets and the eclipse of public markets. It's really being seen in the city of London. You're seeing people migrating to New York. And just writing more about private markets would be something I would focus on. Lionel Barber, book Gambling Man, happy to recommend it to listeners of Motley Full Money well researched. And it's going to give you a great look at, as you said,

an investor that maybe hasn't gotten enough attention. Thank you for your time, for your insight, and for joining us on Motley Fool Money. As always, people on the program may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and are not approved by advertisers. The Motley Fool only picks products that it would personally recommend two friends like you.

I'm Mary Long. Thanks for listening. We'll be back on Monday.