Tech Industry

Nobody's native Son

 

 
CNET News.com Newsmakers
October 2, 1996, Masayoshi Son
Nobody's native Son
By Tim Clark
Staff Writer, CNET NEWS.COM

Masayoshi Son doesn't look like a multibillionaire.

He is soft-spoken, a casual dresser, and he wouldn't be picked out of a crowd as a man who has spent $4.6 billion on a high-tech buying binge in the last 24 months. That's just on the big-ticket items: computer publisher Ziff-Davis, 80 percent of PC memory maker Kingston Technologies, and the Ziff and Comdex trade show groups. Add to that at least $200 million invested in 30-plus Internet start-ups to date, going to 50 by the end of this year.

Son-san, as associates call him, has a self-effacing manner that belies a toughness developed as a son of Korean parents growing up in Japan, where racial prejudice against Koreans is still widespread.

Son is no typical Japanese. Where Japan's business culture is bureaucratic and hierarchical, Son is an entrepreneur who runs a lean staff,

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a dealmaker who makes a $100 million investment over pizza with Internet twenty-somethings who have more passion than business experience. The billions he has poured into U.S. technology firms, all companies he sees as providing infrastructure for the digital information industry, have been channeled through a handful of U.S.-based advisers.

For all that activity, Son remains a shadowy figure to many. He went to high school in South San Francisco then attended the University of California at Berkeley, where he made his first million while in his twenties. Back in Japan, he founded Softbank at age 23 and built it into the nation's largest distributor of computer software, controlling some 50 percent of the market. Softbank, publicly traded in Tokyo, is the foundation for his high-tech and highly leveraged buying spree.

He knows the big players, having a major role in getting Cisco Systems a foothold in the Japanese market, serving as Microsoft's chief distributor in Japan, and owning 20 percent of Novell's Japanese subsidiary. Just last month he became the first outside investor in Asymetrix, fellow billionaire Paul Allen's first start-up post-Microsoft, now more than a decade ago.

Word inside Son's U.S. acquisitions is that he's an easy taskmaster, at least for the first year. Since most of his purchases are less than a year old, what happens after the honeymoon isn't clear, but the debt he's assumed to make those acquisitions will force him to squeeze profits out of mature properties.

NEWS.COM caught up to Son last month in Atlanta at the Networld+Interop networking trade show he owns through Softbank Expos.

NEWS.COM: You made your first million in your twenties. What do you gain or prove by continuing?
Masayoshi Son: I want to continue to grow a business. Softbank's mission is to become a very important company by providing infrastructure for the digital information industry.

Notice I did not say the PC or software industry. In the years to come, the digital information industry will evolve. The PC industry is a subset of that. We provide all kinds of infrastructure for the information industry: magazines, distribution, services, trade shows, media, and so forth.

NEXT: What drives him

 
Masayoshi Son

  Stats
Age: 39

Claim to fame: Spent $4.6 billion on U.S. high-tech firms in two years

Biggest splash: Bought Ziff-Davis Publishing in November 1995 for $2.1 billion, less than a year after coming up short with an earlier bid.

Business buddies: Rupert Murdoch, Bill Gates, Larry Ellison, Paul Allen, Scott McNealy

 
CNET News.com Newsmakers
October 2, 1996, Masayoshi Son
What drives him

On a personal level, what motivates you to do this?
I'm not doing this for my own satisfaction. What motivates me is not good food, clothing, cars, or a house. The extra satisfaction is if I see someone smile.

I don't have as much wealth as Bill Gates does, but I have enough to spend for my whole life. Money is not an incentive or a driving force. When I was 19, I did a 50-year plan. Now I am working on a 300-year plan.

With a 300-year span, you can wash out all kinds of things that are not critical. The products change completely. So do the accounts, the customers. So what is the mission, the philosophy for Softbank?

I believe that by providing infrastructure, I truly believe people will become happier. With the digital information revolution, you might be able to save someone's life or make them happier.

Business Week made a big deal about your growing up ethnic Korean in Japan. How much of a factor was that?
That probably has some truth, but that's not the cause of my passion. Even if I were born Japanese, I would have come out differently [than other Japanese].

I've been told you sealed a $100 million deal on a handshake and in less than an hour. How do you make those business decisions so quickly?
I look in their eyes to see if they are doing it as a duty to fulfill or doing it because of their passion. If you believe in their dreams or passions, you want to be a partner. It's almost for sure they will fail if the guys doesn't have as strong a passion as you do.

Without passion, you will fail or do a mediocre job. There are a bunch of smart, smart people in our industry. You have to identify the ones with passion. Of course, you have to have talent. As long as you do, look at the long term; that's the key part.

NEXT: Why he bought Kingston

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CNET News.com Newsmakers
October 2, 1996, Masayoshi Son
Why he bought Kingston

What about your recent acquisition of Kingston Technologies, which sells memory products for PCs?
The Kingston acquisition again surprised many people because people thought that Kingston is a hardware product company, which is away from our business.

In our definition of an infrastructure provider, Kingston fits in what we are trying to achieve. Kingston is a fabulous company, but they do not see themselves as a mere product company, but rather as a service company.

There are many, many memory chip vendors, including Toshiba, Samsung, NEC, and many other DRAM memory vendors. At the same time there are many PC system vendors, such as Compaq, IBM, Apple, and even Sun and so forth. In between is a need for the memory upgrade service, increasing the size of memory for those PC products.

Kingston provides 2,300 different SKUs of memory cards, designing all kinds of memory cards for different systems, and quickly changing prices. So they provide the service of procuring those memory products in a very timely manner.

Aren't you doing a satellite deal with Rupert Murdoch?
Just a couple of months ago we took an equity stake in a major network in Japan called Asahi National Broadcasting. And that was a surprise to everybody, too. We became the leading shareholder of that nationwide network.

We very quickly announced our real intent in Japan is to start a company called Japan Sky Broadcast, a sister company to British Sky Broadcasting, which is a very, very successful operation in the British market, to provide so many channels on TV.

What we are trying to do in Japan is provide 150 channels or so on regular TV via satellite, broadcasting digitally. That's one new initiative that we are very excited in making a huge investment. That's an extension of what we call our providing the infrastructure for the digital information industry and the revolution that we are facing.

NEXT: How he picks investments

 
 
CNET News.com Newsmakers
October 2, 1996, Masayoshi Son
How he picks investments

What about your other investments, especially on the Internet?
As you know, we became the largest shareholder of Yahoo and many other Internet start-up companies. We already have become the leading shareholder of more than 30 companies on the Internet. We are going to have investments in about 50 companies by the end of this year.

We always look for the number-one company in the Internet market. The Internet has broad services and products and technologies. In each of those areas, we are investing in the number-one company.

How big will Softbank get?
Last year we were at $1.7 billion, $1.6 billion. We're going to $3 billion this year. Next year we will be close to $6 billion. So we are growing very, very quickly and we hope to continue this growth.

 
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