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Son also rises

2010-11-30 07:44:05

Face value: Softbank's Masayoshi Son

A rare, self-made business leader wants to revitalise Japan through telecoms

Softbank s hard-charging leader

THEY are the losers in battle. When you meet with them, they give all kinds of excuses. They blame the government; they blame the weather! Masayoshi Son, the founder and boss of Softbank, Japan s third-biggest telecoms operator, has little patience for the risk-averse managers of the country s sluggish industrial behemoths. Entrepreneurs like him don t give excuses for how tough the battle is, and how tough the handicap is we always fight.

Japan is unfriendly to entrepreneurs. Like the rest of Japanese society, its businesses have traditionally placed a premium on harmony, which in practice has meant propping up weak firms and making it harder for new, more efficient competitors to rise. Though some stragglers have been allowed to go to the wall, this insiderish ethos still lingers. As a result Japan has the lowest rate of start-ups among rich countries: one-third of America s rate and half of Europe s.

Mr Son s outspokenness is as rare in Japan as his enterprising spirit. He is the nearest thing the country has to American tech bosses such as Bill Gates and Steve Jobs (who are his long-time friends and business partners). His brashness means he is less welcome in some Japanese circles than a man whose worth is estimated at $8 billion might expect to be.

He is used to being an outsider. Although his family has lived in Japan for two generations, he is of Korean-Chinese descent, and has thus had to suffer having doors slammed in his face. At 16 he moved to America to finish high school; he then studied at Berkeley, which in the late 1970s was abuzz with the silicon revolution. Mr Son says he vowed to devise one computer-related business idea each day. This paid off when he patented a translation system and sold it for around $1m.

He set up Softbank in the 1980s, initially as a software distributor. Soon it became a vehicle to take stakes in American information-technology firms that were entering Japan. Mr Son acquired nearly 40% of Yahoo! when it was still a tiny operation, along with a gaggle of other dotcoms. By the late 1990s his firm was worth $180 billion. But the dotcom crash wiped out 98% of its market value (and Mr Son s wealth).

Since then he has resurrected the company by buying telecoms businesses, emerging as the most feared competitor of NTT, the dominant, formerly state-owned telecoms operator. To get there he took on heroic amounts of debt and braved criticism over the accounting policies he adopted at the firms he acquired.

Now he is risking the establishment s ire once more with a radical idea to break NTT in two, arguing that this would be the best way to boost the take-up of broadband and help Japan create new online businesses. Broadband speeds in Japan are among the world s fastest, but access is costly. So although 90% of Japanese households have access to high-speed connections, only 60% subscribe, compared with 96% in South Korea.

The government is expected shortly to unveil a scheme to loop the country with fibre-optic lines that will support internet access at up to 100 megabytes a second, ten times the speed of the technology being replaced. Mr Son argues that to guarantee fair access to this network and thus the most efficient use of it it should be run by an infrastructure firm hived off from NTT, owned jointly by all the telecoms operators. Instead, the government is likely to let NTT continue to run the network, but erect Chinese walls between those operations and the business of selling telephony and internet access. The communications ministry is uneasy with Mr Son s plan because it eliminates incentives to build alternative infrastructure although in practice, the chances of any other operator building a fibre-optic network to compete with NTT s seem slim.

Softbank s hard-charging leader

Mr Son argues that, whoever runs the new fibre-optic network, improved internet access is a vital part of any plan to revive Japan s stagnant economy. Online health services could help it cope with an ageing and declining population. Unfortunately, he says, the country s media, government and society look down on internet entrepreneurs, and the tax system makes it hard to build technology businesses using employee stock options, a cornerstone of Silicon Valley s success.

Somewhat optimistically, Mr Son has a 300-year plan for Softbank (by the end of which time he expects people to communicate by telepathy and live to 200). Earlier this year he invited contenders from inside and outside the company to apply to be his successor (4,000 did so), although the 53-year-old does not plan to step down for at least a decade. Thirty years from now Mr Son wants Softbank to be one of the world s top ten firms, valued at around $2 trillion. The open recruitment is an acknowledgment that Softbank has become big and that he wants to keep it entrepreneurial, so it doesn t end up a timid plodder like so many other firms in Japan.

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