Daily Management Review

SoftBank's 300-year plan breaks rules of the venture market


Japanese telecom giant SoftBank once again shocked markets by investing $ 4.4 billion in WeWork, an American start-up company for renting offices.

As a result of such a large-scale investment, the startup’s capitalization has grown to $ 21 billion.

This is not a first shocking amount that SoftBank invests in another startup. As a rule, venture funds invest one or several hundred million dollars, but not billions. SoftBank has made several multi-billion investments since the beginning of this year.

In May, it became known that SoftBank, a member of the Japanese holding SoftBank Group Corp, entered into a definitive agreement on purchase of two manufacturers of robots Boston Dynamics and Schaft, owned by Alphabet Inc.

Amount and details of the transaction were not disclosed, but the fact of sale was confirmed in both Boston Dynamics and SoftBank. Japanese SoftBank’s message says that the deal is fully consistent with the "strategy of investing in revolutionary technologies" and "the idea of stimulating the next wave of intelligent robotics."

"To date, there are still many issues that cannot be solved by human efforts. Intellectual robotics will become the main driving force for the next stage of the information technology’s development, and Boston Dynamics’s team is an obvious leader in the field of advanced dynamic robots," said Masayoshi Son, chairman of SoftBank Group , welcoming joining of the Boston Dynamics team to the Japanese company.

In parallel with the purchase of Boston Dynamics, the Japanese holding also agreed on acquisition of Japanese company Schaft. This firm is engaged in development of two-legged, including anthropomorphic, robots.

In February 2017, it became known that SoftBank Group acquired American company Fortress Investment Group, which manages wealthy clients; the deal amounted to about $ 3.3 billion in cash.

In December 2016, Donald Trump said that SoftBank agreed to invest $ 50 billion in the US economy to create 50,000 new jobs. It was assumed that the investment will come from SoftBank Vision Fund.

All these investments fit into Masayoshi Son’s strategy and forecast of, which he made back in 2010. According to his expectations, the "epoch of singularity" will come in the next 30 years, and that is why it is necessary to hurry with investment of funds in revolutionary technologies and development of artificial intelligence.

The 300-year plan

In the same year, he outlined a plan for the next 300 years. To begin with, he invests in 5,000 companies by 2040, giving his still unborn successors a base for further work. Son's ambitions made him one of the richest people in Japan, and his fortune is estimated at $ 14.5 billion, according to Bloomberg’s billionaire index. He is a shareholder of Yahoo! Inc., Alibaba Group and Zynga.

Now, Son is trying to expand the scope of activities, including through the purchase of assets in the United States.

"He is buying one company after another," said an analyst at Iwai Cosmo Securities, "He is very brave and very at risk for expanding Softbank's business."

In his 300-year plan, 55-year-old Son compared business with living organisms, and he expects 99.98% of companies to cease to exist in their present form over the next 30 years. He vowed that Softbank will survive. "As a creator, I played my part in creating Softbank’s DNA," Son said during his 2010 report on the company's vision for the next 30 years. He noted that with the right approach, the company's high growth rates can be maintained for more than 30 years and it is necessary to have a vision of development even for the next 300 years.

The first stage of Son’s plan assumes that by 2040 the company's capitalization will reach 200 trillion yen, which will make it possible to enter the top-10 world companies in terms of capitalization.

"A person's life ends at 50, 100 years old," said Son. "But the company lives through the people it consists of, and Softbank will survive even after I leave."

Son bets on high-tech companies and suggests that Softbank will become a company that people around the world will need. He believes that computers will eventually bypass their creators and, while maintaining current trends, the number of transistors in circuits will exceed number of human brain cells by 100 times by 2040.

In 300 years, according to the plan of Softbank’s founder, computer technology and the human brain will achieve symbiosis, which will lead to emergence of telepathic communication. It's easy to assume that Son intends to make his company a leader in this field, that's why high-tech assets will be acquired in the coming years. The world’s largest telecommunications company is only the first stage in achieving the ambitious Japanese billionaire’s goal.

source: cnbc.com