By Peter Eavis and Michael J.
de la Merced
Through his Japanese conglomerate SoftBank and a $100 billion investment fund, Mr. Son plowed huge sums into these and other companies that aim to change how people work, travel and live. His investments enabled the young companies to throw caution to the wind and run up big losses as they expanded at a breakneck pace in recent years. Even in the start-up world, where idealism is abundant and losses are a badge of honor, Mr. Son’s approach and ambition stood out.
His early bet on the Chinese technology giant Alibaba earned a return of more than $100 billion and cemented his reputation as a farsighted investor. He has outlined a 300-year plan to make SoftBank a leader in artificial intelligence, robotics and other advanced technologies.
But this year, his grand designs collided with reality.
In what may turn out to be a reckoning for Mr. Son, Wall Street has started running from companies backed by SoftBank and its Vision Fund. The chief executive of
“I’m hoping this is the tipping point that brings more sanity into the capital markets,” said Len Sherman, a former senior partner at Accenture who is now an adjunct professor at Columbia Business School.
The prospect of such sizable losses has cast a cloud over SoftBank and raised doubts about Mr. Son’s investment style. And that, in turn, could undermine his effort to raise an estimated $108 billion for a second Vision Fund. SoftBank said in July that it expected Apple, Microsoft and other companies
Speaking to executives of companies backed by the Vision Fund last week at the Langham Hotel in Pasadena, Calif., Mr. Son said they needed to be able to bring in enough revenue to more than cover expenses within a few years of going public, according to a person who attended the event but was not authorized to discuss it.
Simply increasing sales is not sufficient, Mr. Son said in what people in the audience understood as an implicit reference to
Mr. Son, 62, built his business empire on huge bets and an unshakable belief in his own convictions. One frequently told story about him is that he once threatened to set himself on fire in the offices of a Japanese telecom regulator unless policymakers gave him what he wanted. He was one of the first corporate moguls to visit President-elect Donald J. Trump in 2016, promising to invest $50 billion and create 50,000 jobs in the United States.
Born to a family of Korean descent, he grew up in Japan and studied computer science at the University of California, Berkeley, where he made his first foray into business — creating an electronic translator that he sold to Sharp.
In 2000, Mr. Son put $20 million into Alibaba, a stake that is now worth nearly $119 billion even after SoftBank sold off some of its shares three years ago. That windfall also helped pump up Mr. Son’s personal net worth to an estimated $20 billion.
“You cannot think small,” he told analysts in May 2017. With the prospect of what he called a “gold rush” in the tech industry, now was the time to “open up our mind, open up our heart and think big.”
The Vision Fund has hit some home runs. The fund earned a roughly $1.5 billion return on its 2017 investment in Flipkart, an Indian e-commerce company, when Walmart acquired that business last year. Despite missteps like
“That said, when you invest at high valuations — as SoftBank is prone to doing — it puts a lot of pressure on the fund to generate truly outsized returns from the successful portfolio investments,” Mr. Nicholas said in an email.
Several of Mr. Son’s investments have been disappointments, including one of SoftBank’s biggest forays into the United States: the 2013 acquisition of a controlling stake in Sprint, the struggling wireless company.
Yet that promise remains just that. Excluding accounting changes that lifted Sprint’s earnings, the company’s bottom line has stayed roughly flat under SoftBank, said Craig Moffett, a research analyst at MoffettNathanson. Sprint has not only fallen further behind its bigger rivals, but also lost ground to T-Mobile, a smaller competitor.
Mr. Son tried several times to combine Sprint with T-Mobile. Only last year did SoftBank finally strike a deal by agreeing to sell Sprint to T-Mobile, a deal that 18 attorneys general are seeking to block.
That deal is crucial to Sprint’s survival, Mr. Moffett said. “There’s a very solid argument that Sprint’s equity is worthless if the merger doesn’t go through,” he said.
Several of SoftBank’s more recent investments have also struggled.
Analysts say one of the biggest problems for the company is that its enormous investments in
Another major flaw with SoftBank’s approach, critics say, is that it imposes few constraints on
Mr. Son’s chosen