Can Masayoshi Son go the full Warren Buffett?
Japan’s most lauded investor has bet big and won many a time. Now, he is following in the footsteps of the most famed investor in the game
Masayoshi Son may be about to answer the Warren Buffett question. It is a query that is raised with every move the SoftBank billionaire makes. Is he Japan’s answer to the “Sage of Omaha?” Or is he a dupe overpaying for deals?
The question is legitimate. Son, after all, has taken heavy flak for – allegedly – single-handedly inflating tech-industry valuations, making him a one-man bubble machine.
Now Son is taking the Buffett-esque step of seeking a 25% stake in Swiss Re AG, paying somewhere between US$9 billion and $10 billion. The idea is to diversify Softbank’s holdings with a stable cashflow – not unlike how Buffet’s Berkshire Hathaway operates. After all, Buffett’s stake in reinsurer General Re has been a stabilizing force for his empire.
Only time will tell whether any of Son’s three big deal-related news items this week alone actually work out.
First came his win with Grab, the once-obscure Singapore ride-booking company in which he invested in 2014. Grab just sent the mighty Uber scurrying out of Southeast Asia. Son, who owns pieces of both companies, profits all around.
A day later, SoftBank supersized its partnership with Saudi Arabia – with the globe’s biggest solar-power project.
Then, news broke that Son’s Swiss Re plans may be coming together.
For now, though, let’s marvel at a man reinventing the venture capital scene before our eyes – and offering Japan Inc. a roadmap back to global prominence.
Son, with his $100-billion SoftBank Vision Fund, is the poster-child of what Prime Minister Shinzo Abe envisioned five-plus years ago. Abe’s own grand plan was to reinject Japan’s 1980s mojo into today’s veins. Starting in December 2012, he pledged to rekindle innovation, catalyze a startup boom, prod companies to create jobs, encourage greater risk-taking, nudge executives to think more internationally and free Japan’s long-dormant animal spirits.
All these are things Son is doing more than anyone else in this nation of 127 million people.
Man of tomorrow
In a 2016 Nikkei Asian Review interview, Son said: “I haven’t invented anything earth-shattering. If I could be said to have one noteworthy ability compared with the average person, it’s that I have a keen interest in reading the direction and timing of paradigm shifts. I think I’m better than others at sniffing out things that will bear fruit in 10 or 20 years while they’re still at the seed stage, and I’m more willing to take the risks that entails.”
Son proved those “sniffing out” skills in 2000 when he handed $20 million to an unknown Chinese man with a dream. The man was Jack Ma, the dream was Alibaba. By 2014, that investment was worth $50 billion.
Son’s 2014 bet on Grab further proved the “willing to take the risks” ethos. His gut feeling about co-founder Anthony Tan drove Son to hand Grab $250 million, a ridiculous move considering how Uber was dominating the market.
Well, now that bet looks ingenious. Grab proved a Southeast Asian upstart can best a Silicon Valley juggernaut, and then some.
“I think I’m better than others at sniffing out things that will bear fruit in 10 or 20 years while they’re still at the seed stage, and I’m more willing to take the risks that entails”
When asked about posterity, Son likes to say he hopes he’s remembered as “a crazy guy who bet on the future.” Surely, the frenetic pace of big SoftBank news this week ensures that epitaph. The same goes for Son’s very-out-of-character-for-a-Japanese-CEO Vodafone deal in 2006 and his $22 billion bet on Sprint Nextel seven years later. In 2016, Son caused jaws to drop again by betting $32 billion on UK designer ARM Holdings.
Since then, a blizzard of multi-billion nibbles on Uber, China’s Didi Chuxing, US chipmaker Nvidia, Fortress Investments, India’s Ola and myriad others has made Son the most coveted venture capital benefactor.
These feats are all the more impressive considering Japan’s rather quiet startup and funding scene.
Given this seemingly scattershot approach to decorating the SoftBank balance sheet, value investors are probably heartened to see Son going the Buffett route with Swiss Re. Amid questions about whether Son is courting ruin by spreading his cash so far and so wide, the deal could offer its own insurance dynamic for SoftBank.
Again, only time will tell how all this will go. In the meantime, if only the prime minister could bottle some of Son’s “crazy” and share it with the rest of Japan Inc., Abenomics would be producing more wins.