Masayoshi Son, founder of Softbank

While media attention remains focused on Silicon Valley, with the spotlight on the browser war between Microsoft and Netscape; Masayoshi Son, founder of Softbank, is slowly buying the on-ramps, overpasses and lanes of the information highway.

Often referred to as “Japan’s Bill Gates“, the self-made billionaire wants to take control of the Internet – by owning it. His mission is to be the premier infrastructure provider to the computer industry by which the leading software developers, hardware manufacturers, and service providers can display, explain, and distribute their products. No secret, and easy for a man whose company is worth over $4.5 billion.

27189v1-max-450x450Often referred to as “Japan’s Bill Gates”, the self-made billionaire wants to take control of the Internet – by owning it. Son founded Softbank, in 1981, in Japan, at the age of 24. Fifteen years later, he’s the president and CEO of Japan’s largest distributor of computer software and peripherals, and that country’s largest publisher of computer- related magazines (over 2.5 million readers) and books. With a 50 per cent share of the Japanese software distribution market, with nearly 25,000 outlets and over 2,500 suppliers in his pocket, the mogul saw the Net as the next goldrush; but it was exploding in the other hemisphere.

Last year Softbank amazed the computer industry with an $800 million buy-out of the Boston-based Interface Trade Show Group for the worldwide Comdex franchise. The next big purchase came in February, 1996, when Softbank shelled out $2.1 billion for the takeover of Ziff-Davis, the world’s largest publisher of computer magazines. The acquisition included the Networld+Interop shows, a division which recently launched a one-stop web resource for the networking community (www.interop.com). Check out Softbank’s events calendar at www.sbexpos.com and you’ll see why it’s called an Expo, to say the least.

In today, out tomorrow?

Son’s U.S. buying spree is an expensive habit, but he believes his investments will pay off. Today’s trends in California are next year’s moneymakers in Tokyo. “It’s a time- machine strategy,” says Son, who never misses an opportunity.

Few people in Japan use the Net, mostly due to the lack of Japanese-language search- engine software. Son came to the rescue by investing in Yahoo! ($63.75 million), now holding a 37 per cent stake in the company. Yahoo! quickly produced a Japanese version of its popular search engine. At the Softbank Corporation site, visitors can also read PC Week, LAN Times and MacUser in Japanese. Next, Softbank along with Japanese company Dentsu, established the first advertising company in that country, know as Cyber Communications, to exclusively serve the Internet advertising market; a market Son knew was about to erupt. Softbank holds a 49 per cent share in Dentsu.

Son relies heavily on his predictions, and seeks out tomorrow’s key players. Realizing China’s Internet market was about to boom, he invested $30 million into UTStarcom, a five-year-old private company in the U.S.; then put $10 million into China’s state-owned Ji Tong Communications. UTStarcom and Ji Tong partnered to create CHINANET; the first large Internet Service Provider in China. Son also has a 30 per cent stake in Unitech, a California software supplier that is developing Internet service software for China.

Son also joined forces with Rupert Murdoch who heads News Corporation of Australia. The two made a successful $385 million bid for a 21.4 per cent stake in Asahi National Broadcasting, Japan’s fourth-largest commercial television stations. A deal, Son said, that would, “Open up the communications industry.”

Microsoft has also been asked to tango with Softbank. The two companies announced a joint venture last March to promote Microsoft’s Back Office software in Japan. They plan to expand the sales channel as well as their business partners through the established Solution Bank Division.

Cash or credit?

Son pays in cash. The value of his acquisitions are said to be in ‘goodwill’; the difference between the purchase price and the firm’s net assets. Softbank then spreads out the acquisition costs over 30 years which helps the company earnings while profits show up immediately. And management of all newly acquired companies is never changed. Son says the success of his company depends on remaining vendor-neutral.
Son’s U.S. buying spree is an expensive habit, but he believes his investments will pay off. Today’s trends in California are next year’s moneymakers in Tokyo. “It’s a time- machine strategy,” says Son, who never misses an opportunity.

“I was educated in the States myself. I am much more familiar with the culture. I communicate with my American CEO’s every day via the Internet. My office is in Tokyo, but I am virtually in the U.S.,” says Son.

Other investments in U.S. companies include a 12 per cent stake in Nihon Cisco Systems, the Mac Daddy of networking equipment; a 25 per cent stake in Novell, leader in networking software, and US$1.5 billion into Kingston Technology, world’s largest supplier of add-on memory boards for PC’s. Over one million went into USWeb, and $15 million into CyberCash – a company that will finally allow companies to turn profits through the Internet by making it a cheap distribution channel. Other strategic investments include infrastructure companies USWeb, Agents Inc., I/Pro and OnLive! Technologies.

Though born in Japan, Son is a Korean who worked hard in a nation that frowned upon foreigners and individualism. A graduate of UC at Berkeley (BA in economics), Son invented and patented the prototype of what was to become the Sharp Wizard for $1 million. When he opened his Softbank office, he had two employees who quit within two weeks despite the game plan he had shared with them: “In five years I’m going to have 10 billion yen in sales. In five years, I will be supplying 1,000 dealer outlets and we’ll be Number 1 in PC-software distribution.”

In the past year alone, Son has spent three billion buying into high-tech companies,

and is currently talking with over 50 Internet-related companies. Son has a 60 per cent stake in the only company on the Tokyo stock market to have an Internet interest, which puts him in the same league as Bill Gates. Basically, he’s got his fingers in everyone’s pies. The access Son has to databases, company profiles, research and development, and blueprints for the Net’s future will surely help him in his quest to own the cyber infrastructure.

Although you may not read much on this silent partner, his long-term planning investments in a network of key building block companies might just make him the only player in town.