Masayoshi Son built SoftBank from a PC software distributor in a global conglomerate.
Masayoshi Son’s latest earnings briefing was among the darkest in recent memory. The generally irrepressible billionaire opened his doors by comparing the devastating impact of the coronavirus epidemic to the Great Depression. Son then explained why his SoftBank Group Corp. had just published the most significant losses of its 39 years of history. The company’s $ 100 billion Vision Fund lost nearly $ 18 billion by depreciating the value of portfolio companies, including WeWork and Uber Technologies Inc.
Son may have tried to argue that while some of his investments may fail, others will emerge stronger from the crisis. But the graphic ridiculed the press and social media. It didn’t help that a few hours later he complained of being misunderstood, like Jesus Christ.
His proclamations may be easy to laugh at, but they believe in a serious flaw: Son has trouble communicating his message. When SoftBank was largely a national player, Japanese audiences were used to its eccentric style – from statements about healing human sadness to SoftBank’s Pepper robot reading the financial results. But in recent years, global investors have been listening – to be baffled or worse by the sound presentations.
“That kind of quirk contributed to Son’s charisma. But the legendary investor halo he once had above him has slipped and now these things are working against him,” said Justin Tang, director of Asian research at United First Partners in Singapore.
The inner circle of Tokyo headquarters was surprised by the tough reception last month, but people familiar with Son’s approach say it won’t change anytime soon. They claim that it reflects the personal taste of the billionaire, with the aim of giving clear themes in the presentations, using simple representations that he thinks anyone can understand. Son likes to use metaphors to make difficult concepts more accessible, with at least one slide that he says captures the general message. In February, this meant a slide with the words “The tide is turning” and a picture of the ocean. In May, it was the analogy of the Great Depression. This week, he will deliver his next big theme at the annual SoftBank shareholders’ meeting.
Son built SoftBank from a PC software distributor in a global conglomerate by taking on debt to pay for bold acquisitions.
Son, 62, is closely involved in making the slides. According to former staff, he has a team of about half a dozen promising SoftBank employees in their late 20s and early 30s. They collect his statements throughout the year to use as fodder for projects that Son carefully examines, sometimes making last-minute changes that send staff out to work.
Indeed, the Coronavirus Valley was not an outlier. His has defied PowerPoint conventions for years. The following is a brief overview of his unconventional efforts.
Son built SoftBank from a PC software distributor in a global conglomerate by taking on debt to pay for bold acquisitions. He has always struggled to convince investors to credit SoftBank for his investments in tech startups, his stocks trading chronically at a discount relative to the value of his holdings. Over the years, Son has tried various visual metaphors to convince investors that his business is undervalued. In November 2014, he used the Aesop fable of the goose that laid the golden eggs.
“SoftBank is a goose with more golden eggs in its belly, even if it is too early to put them on the market,” Son told reporters and analysts during the briefing. “SoftBank is currently valued less than the sum of its golden eggs.”
Four years later, the “goose bonus” did not materialize and Son took a different approach, drawing on the raw power of mathematics.
The formula is the value of 25 trillion yen (234 billion dollars) of SoftBank’s assets at the time minus 4 trillion yen in debt, far from being equal to its market capitalization of 9 trillion yen. The shares were trading at a 50% discount from the company’s sum-of-pieces calculation, which includes the national telecommunications unit, Alibaba Group Holding Ltd., the US carrier Sprint Corp. and Yahoo Japan Corp.
Last November, SoftBank announced its first quarterly operating loss in 14 years after taking on a $ 4.6 billion charge for WeWork, whose dramatic implosion resulted in a $ 9.5 billion bailout of Japanese society. His went on stage to defend the investment and outline a very “hypothetical” path to profitability.
In February of this year, a quarter after the collapse of WeWork triggered a record loss for the Japanese company, Son proposed another riddle – one intended to take home how an object can look very different depending on perspective.
He urged investors to focus on the shareholder value of SoftBank, which would include its stake in Alibaba, rather than on operating profit, which is influenced by fluctuating stock prices in investments like Uber. “The only measure by which SoftBank, an investment company, should be assessed is whether shareholder value increases or decreases,” he said.
His often begins his presentations by asking the question: What is SoftBank? While the answer has continued to evolve over the years, some things remain constant: the sense of a great social mission and his obsession with being number one.
The billionaire presents himself as a true supporter of the information revolution, a supporter of the so-called singularity – the notion that one day computers will become part of the human brain and body. His appeals to these ideas whenever he needs to contextualize his latest adventure.
Son believes that no industry is immune to seismic and technological change and only the strongest will survive. This is why he sought to present SoftBank as dominant from the moment it was anything but.
But Son reserves his strangest and most sentimental ideas for SoftBank’s annual shareholders’ meetings.
Most of Son’s predictions about the future of technology are yet to come, but some have already come true. SoftBank’s operating profit reached 1 trillion yen in fiscal 2013. Last year, it posted a new record – a loss of 1.35 trillion yen.
