Analysis | SoftBank’s Shogun Has a Rare Moment of Contrition

Those are feelings Son clearly shared. “We’ve lost 6 trillion yen in six months,” Son said. “I too want to reflect on this, and have it serve as a reminder.” 

It was a rare moment of contrition from the SoftBank founder, who two years ago less wisely appeared to compare himself to Jesus Christ to defend himself against critics who misunderstood his strategies. His speech Monday was deliberately downbeat. He skipped cheerleading for the future initial public offering of chip designer Arm Ltd., and announced that he is in talks for someone to take asset manager Fortress Investment Group off his hands. The dancing golden eggs and unicorns flying over the “Valley of Coronavirus” of previous presentations were nowhere in sight.

He also issued an internal warning, announcing “unprecedented” cost cuts across SoftBank that may lead to “dramatic” job losses ranging from junior employees to senior, back office to front. He said there would be no sacred cows. 

Perhaps it’s the least that can be expected after a disastrous quarter. His Vision Fund posted a loss of 2.33 trillion yen. That followed what was then a record 2.2 trillion yen loss in the previous three months, as lofty tech valuations collapsed. His second Vision Fund is $10 billion in the red. 

Son announced a new policy of “heightened investment discipline” and said he’s resisting the urge the buy the dip, unlike Warren Buffett, who turned from a net seller of equities to a buyer in the most recent quarter with $3.8 billion in purchases. “We must above all avoid being wiped out entirely,” Son said. “I understand the desire to get impatient while prices are cheap, but if we do that we might suffer a serious wound that we can’t recover from.” 

Given his recent investing record, that might be wise.

What it means, however, is that Son is at risk of buying high and selling low. He announced Monday that he recently sold most of his stake in Uber Technologies Inc. and all of Chinese online property platform KE Holdings. New investments in the most recent quarter were just $600 million, down a jaw-dropping 97% from a year ago. 

There’s little need for new investments, Son said. With 473 portfolio companies, he already has plenty of golden eggs and perhaps one of them will finally grow to the level of an earlier SoftBank bet, Alibaba Group Holding. The future giants of the AI age are within that grouping, Son reckons, and he just needs one or two of them to succeed. He also bemoaned the recent tendency of startup leaders to overvalue their firms, hinting that the purse strings would remain closed until private valuations came down.  

The tale of Tokugawa Ieyasu is also one of redemption. After his painful defeat, he consolidated power, outlived most of his opponents and peers, and went on to win the decisive Battle of Sekigahara to become the ruler of a unified Japan. The Tokugawa Shogunate lasted 265 years, a similar timespan to Son’s 300-year vision. 

Of course, it took more than 25 years after defeat for Tokugawa to end up on top. But Son — at 64, only four years older than Tokugawa was when he became Shogun — reiterated his intentions to stay on as the leader of SoftBank in order to right the wrongs he says he has done to investors. 

If he can do that, it will be one for the history books. 

More From Bloomberg Opinion:

SoftBank’s Son Has Survived Bigger Disasters: Gearoid Reidy

The Eternal Optimism of Masayoshi Son: Culpan and Reidy 

Tiger and Sequoia Take SoftBank to the Cleaners: Shuli Ren

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Gearoid Reidy is a Bloomberg News senior editor covering Japan. He previously led the breaking news team in North Asia and was the Tokyo deputy bureau chief.

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